RIM Posts Massive Losses, Delays BlackBerry 10 to 2013, Plans To Layoff 5,000 people
The financial market had been expecting significant negative news from Research In Motion at the company’s first quarter of fiscal 2013 earnings report on Thursday but somehow RIM managed to exceed their expectations. And not in a good way.
RIM reported a $518 million loss on revenue of $2.8 billion compared to last year’s $695 million net income on $4.9 billion revenue. That represents a 43 percent drop in revenue and a $1.2 billion swing from net income to net loss year on year.
In the past three months, the company shipped 7.8 million BlackBerry smartphones and 260,000 PlayBook tablets. In the previous quarter, RIM recorded a net loss of $125 million on revenues of $4.2 billion, shipped approximately 11.1 million BlackBerry phones, and over 500,000 PlayBook tablets.
While RIM continues its death spiral, it held its faith over the last year to deliver its next generation BlackBerry platform, the BlackBerry 10. Unfortunately for the company, CEO Thorsten Heins has a bit of a bad news. “Our top priority going forward is the successful launch of our first BlackBerry 10 device, which we now anticipate will occur in the first quarter of calendar 2013”.
The delay of BlackBerry 10 means RIM will miss the crucial Christmas shopping period in which Apple, Microsoft, and Google will have their own brand new mobile devices and operating systems ready.
This presents a massive blow to RIM as the company desperately needs to deliver a refreshed set of hardware and software solution this year to compete at the same level as its major competitors. RIM will be limping throughout 2012 with outdated phones running outdated software and lacking major innovation which would have given it at least a lift.
Consumers who will have signed up for competing devices by the time RIM releases its new phones next year are very unlikely to switch given the short time frame and in some countries, due to the contracts they would have signed with their carriers.
“I am not satisfied with these results and continue to work aggressively with all areas of the organization and the Board to implement meaningful changes to address the challenges,” said Heins.
While RIM did not comment further on recent rumors that it is considering to split up the company, Heins had this to say, “In parallel with the roll out of BlackBerry 10, we are aggressively working with our advisors on our strategic review and are actively evaluating ways to better leverage our assets and build on our strengths, including our growing BlackBerry subscriber base of approximately 78 million, our large enterprise installed base, our unique network architecture and our industry leading security capabilities.”
In other words, Heins and his executives and advisors have yet to decide on what to do regarding the future of the company, although during the earnings call, Heins mentioned that the company is considering to license BlackBerry 10 to interested parties. Question is, who would be interested in licensing a platform that even RIM can’t deliver when it absolutely has to?
RIM also announced further layoffs with 5,000 more jobs to be cut by February 2013.
Locally however, RIM has actually been relatively successful in getting the developer community on board with the promise of BlackBerry 10 and is actively recruiting new staff to ensure it remains the premium smartphone brand that consumers are going for.
Its recent hire of the highly influential Muhammad Syumandityo Noor as developer evangelist is an effective move to get Indonesian developers on board. The Jakarta session of BlackBerry 10 Jam sold out in a matter of hours, prompting RIM to release an additional batch of tickets. RIM’s investment in the country continues to flow with the collaboration with ITB to set up an innovation center in Bandung.
On the other hand, RIM remains a target of the Indonesian government as it is still trying to get RIM to not only open a data center in the country but also move its manufacturing plant from Malaysia to Indonesia. Given the devastating state of the company, it’s highly unlikely that RIM will invest in anything of such significance.
Even though RIM enjoys a rosy market in Indonesia, the fundamentals of the company are very weak and it may not be able to sustain itself as it continues to face significant quarterly losses this year. Its performance in Indonesia will not be enough to supplant the losses elsewhere as the local market is already shifting towards Android and iOS. It would take an Apple-like miracle for RIM to remain an independent company beyond 2013.
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