RIM Reports Bleak Q1 Results, BlackBerry 10 Delay8:23 PM EST Thu. Jun. 28, 2012
As CEO Thorsten Heins warned it would, BlackBerry maker Research In Motion reported lower-than-expected first-quarter earnings Thursday, as it struggles to keep pace with smartphone giants Apple and Google and maintain what is left of a deteriorating U.S. subscriber base.
Perhaps equally disappointing for investors and partners, RIM also said it is delaying the launch of its highly anticipated BlackBerry 10 software -- a release the company has repeatedly pointed to as a means to breathe new life into its BlackBerry line of smartphones -- until the first quarter of 2013.
"The schedule we were working toward, which would have the first BlackBerry 10 smartphones in the market this calendar year, is no longer realistic," RIM CEO Thorsten Heins said during a conference call with investors Thursday.
What’s more, RIM said it would continue to move forward with headcount reductions, eliminating a total of 5,000 jobs throughout the year. It expects the layoffs to save approximately $1 billion in operational costs.
The Waterloo, Ontario-based company reported a first-quarter revenue of $2.8 billion, down 43 percent from the $4.9 billion it reported in the same quarter last year. It also announced a net loss for the quarter of $518 million, a staggering drop from the $695 million in net income it brought in during the first quarter of fiscal 2012.
"This was a challenging quarter for the company on many fronts, and I am not satisfied with the financial performance I am reporting today," Heins said.
RIM shipped 7.8 million BlackBerry smartphones and approximately 260,000 BlackBerry PlayBook tablets during the quarter. Both shipment numbers are down from last quarter, when it reported shipping 11.1 million smartphones and 500,000 tablets.
The 16 GB PlayBook model was discontinued earlier this month, after struggling to carve a space for itself in an already saturated tablet market. RIM said it will continue to offer the 32 GB and 64 GB models, which it believes offers "more value" to its customers anyway because of their higher storage capacities.
Echoing a statement he issued to investors in May warning of bleak first-quarter financial results, Heins attributed the company’s shrinking U.S. market share and shipment numbers to tough competition in the mobile market.
According to the most recent statistics from industry analyst comScore, RIM holds 11 percent of the U.S. subscriber base, compared to Google’s 50 percent and Apple’s 31 percent.
NEXT: RIM Seeks Hope In BlackBerry 10, Organizational Makeover
Heins said BlackBerry 10, despite its delayed launch date, is what will ultimately "bridge the gap" between the financial position RIM is in today and where it hopes to be over the coming months.
"The successful launch of the BlackBerry 10 platform and the delivery of high-quality, full-feature Blackberry 10 smartphones remains the company’s number one priority," he said during the call.
He assured listeners that RIM engineers are working "relentlessly" to meet the revised 2013 launch date, and said there is a robust developer community dedicated to making the new software release a success. BlackBerry 10 is slated to deliver a number of new features to BlackBerry smartphones, including a new touchscreen keyboard and camera.
In addition to BlackBerry 10, RIM's future seems to be riding on its ability to make itself more lean and cut costs wherever possible. To do that, Heins reiterated that headcount reductions will continue until another 5,000 employees are shaved off its 16,500-employee workforce.
"I understand this is an incredibly difficult message to deliver, but it is necessary," he said, referring to the layoffs.
Other organizational changes include the appointment of Steve Zipperstein, former General Counsel of Verizon Wireless, as Chief Legal Officer. As first mentioned in May, Heins also said RIM is continuing to work with J.P. Morgan and other financial institutions to better navigate and weigh its strategic options. New partnerships, through which the company could license its services and software offerings, are also being considered.
The company warned that its next few quarters will be "very challenging" financially as it strives to get BlackBerry 10 off the ground.
PUBLISHED JUNE 28, 2012