RIM Delays BlackBerry 10 Launch, Cuts 5,000 Jobs
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Struggling BlackBerry maker Research In Motion, besieged by competition from the likes of Apple and Android device makers and internal missteps, is now pushing back the launch of smartphones running its upcoming BlackBerry 10 platform, the very devices executives are betting the company's future on.
The delay is part of a widening eddy of bad news that is threatening to take the company under, mixing in with a $518 million loss in the past fiscal quarter and further restructuring that will include cutting 5,000 jobs.
All of this was laid out June 28 by RIM CEO Thorsten Heins on a conference call with analysts and journalists talking about the weak fiscal first-quarter financial results for the battered company. Heins walked a precarious path during the talk, touting the features expected when the BlackBerry 10 devices are finally released sometime early next year and the hopes tied to the restructuring effort while at the same time recognizing RIM's continuing financial struggles and the need to rapidly pare costs, including slashing almost a third of its 16,500-strong workforce.
"This was a challenging quarter for the company on many fronts," he said at the beginning of the call. "I am not satisfied with the financial performance we are reporting today."
RIM, which once dominated the enterprise mobile device space, has found itself under increasingly greater pressure over the past several years, thanks in large part to the rapidly rising popularity of Apple's iPhone and the myriad devices on the market running Google's Android mobile operating system. It s also been hampered by execution problems within the company--the newly announced delay in the release of BlackBerry 10 devices was not the first.
In the days leading up to the announcement of the quarterly numbers, analysts had expected poor results, and that is what they got. Revenues came in at $2.8 billion, a 43 percent drop from the $4.9 billion during the same period in 2011, and the net loss has continued to grow, from $125 million the previous quarter to $518 million. During the same quarter last year, RIM earned $695 million.
The company shipped 7.8 million BlackBerry smartphones during the quarter, a 41 percent drop from the 13.2 million a year ago. The drastic drop also was seen in its global market share, according to IDC analysts. In the first three months of the year, RIM's share of the smartphone market was 6.4 percent, less than half of the 13.6 percent in the first quarter of 2011, according to IDC numbers.
In their report in May, IDC analysts said RIM was hampered by users awaiting the release of the BlackBerry 10 devices and by the fact that more enterprises are letting employees bring their own devices into the work environment, enabling iPhone and Android devices to eat into BlackBerry's domain.
While the numbers were poor, as anticipated, the delay in the BlackBerry 10 devices was an unexpected setback. Heins, who was appointed CEO in January, has been saying for months that the new devices would determine the company's future, and that it was crucial to get them onto the market in time for the all-important holiday shopping season. However, while touting the strength of the platform, Heins said that RIM engineers were still working to integrate key features into the devices, and that creating the software code for BlackBerry 10 was taking more time than expected.
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