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Last updated: June 29, 2012 5:11 pm
Research In Motion has been forced to delay the launch of its next generation BlackBerry 10 handset until the first quarter of next year and has posted larger than expected quarterly losses, raising further questions about its turnround strategy.
RIM said that integration of BlackBerry 10 features into its new operating system had “proven to be more time consuming than anticipated”, but Thorsten Heins, chief executive, said the group remains committed to “the whole BlackBerry 10 platform”, which it hopes to license to partners.
RIM has pinned its turnround hopes on the launch of the new operating system and the related new handsets, which had already been delayed until late this year, prompting some analysts to question whether RIM could survive as an independent company.
Asked during a conference call with analysts whether BlackBerry 10 devices might be “out of date” by the time they launch, Mr Heins said: “We didn’t just design a product, we designed a platform. Without going into specifics, it is a good question, but I’m confident this product will deliver on its performance.”
Nevertheless, RIM’s shares, which have fallen by over 75 per cent in the past year, fell another 15.3 per cent in after-hours trading to $7.73 a share on Thursday after the results news. By midday on Friday in New York, the stock was at $7.65, or down 19 per cent on its previous closing price.
The share price decline also reflected the dismal fiscal first-quarter earnings released after the market closed on Thursday.
The company reported a net loss of $518m, or 99 cents a share, and a steep decline in revenues, down to $2.8bn, 43 per cent below a year earlier. However, RIM said that its market share losses in the US, where the company has faced particularly strong competition from rivals including Apple and Google Android handset makers, showed signs of “stabilising”.
RIM shipped 7.8m BlackBerrys during the quarter, well below the already reduced estimate of 9m that analysts had been expecting following a profit warning issued by Mr Heins a few weeks ago.
Mr Heins confirmed that RIM would cut its workforce of 16,500 by 5,000 as part of a $1bn-a-year cost-cutting programme. Revenue for the first quarter was $2.8bn, down 43 per cent from $4.9bn in the same quarter a year earlier.
RIM acknowledged that it faced continuing cost pressures and fierce competition, which are likely to lead to an operating loss in the current quarter. But the company noted that despite its problems, net cash rose to $2.2bn from $2.1bn last quarter.
RIM confirmed earlier this month that it had appointed two investment banks to advise it on its strategic options. “We are aggressively working with our advisers 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 78m, our large enterprise installed base, our unique network architecture and our industry-leading security capabilities,” Mr Heins said.
The RIM chief executive added that RIM will focus in future on producing products for consumers, the company “bring your own device” market and enterprise customers. Mr Heins said he also plans to shrink the number of different BlackBerry products in the portfolio.
Mr Heins said that negotiations to license the BlackBerry 10 platform to other companies are already under way and that the company plans to “aggressively build on its existing BlackBerry user base, especially the 56m users of BlackBerry messenger service”.
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