Sales and earnings plummet as the Waterloo, Ont.-based BlackBerry maker’s free fall continues
Research In Motion Ltd.’s tailspin is continuing.
The Waterloo, On.-based BlackBerry maker [NASDAQ: RIMM] announced Thursday that after charges it lost $128 million in its fourth quarter, which ended March 3, and sold sharply fewer BlackBerrys.
As a result CEO Thorsten Heins said “substantial change” is needed at the company and he will reveal a new management team Friday. At least two senior executives have already left.
Heins said RIM will re-focus on luring enteprise customers, and look to partnerships for delivering consumer content to attract the growing BYOD movement instead of trying to go it alone.
“RIM was late to bring your own device movement and saw a significant slowing down in our enterprise subscriber growth rate as a result,” he told financial analysts. “I am committed with my team to reclaiming market share in this space.”
Considering the quarterly loss was on $4.2 billion in revenue, it isn’t a lot. However, it was unexpected. In addition, that $4.2 billion was 19 per cent less than RIM’s revenue in the third quarter (when it had a $256 million profit) and down 25 per cent from the revenue it had in the fiscal fourth quarter of 2010.
The company also announced that former co-chair and co-CEO Jim Balsillie, who for years headed RIM’s marketing, was resigning from the board of directors.
The troubled company, which has been losing market share in North America for a year, also said it shipped 11.1 million smart phones in Q4, down 21 per cent from Q3.
Things are so unstable the company said it will stop giving financial predictions, as most publicly traded companies do.
The situation isn’t catastrophic; the company had $2.1 billion in cash, cash equivalents, short-term and long-term investments at the end of the fiscal year that ended March 3, which increased by approximately $610 million in the four quarter.
Ignoring the one-times charges, RIM said, it would have had $418 million of net income in Q4.
Unimpressive results weren’t unexpected. Until RIM releases its next-generation smart phones using the advanced BlackBerry 10 operating system in six months or so, the company has to rely on handsets running the recently-released BlackBerry 7 OS. But they have failed to make an impression on North American buyers.
Heins said that the lack of a handset that can use the 4G LTE wireless data technology has hurt sales. But he said customers will have to wait until BB10 devices go on sale towards the end of the year.
Heins, who took over in January
after the resignations of Balsillie and Mike Lazaridis, tried to be optimistic and grounded in the conference call with financial analysts.
The entry level BlackBerry Curve 8520 has been a huge success outside North America. Forty million have been sold, he said. The New BlackBerry Bold 9900 is doing well among professionals and prosumers — although not as well as expected.
The company has strengths, including strong carrier relationships, a global data network, growing subscriber base, strong intellectual property and the QNX platform that is the base for the BB10 platform.
But many wonder what financial shape it will be in by the time BB10 smartphones are out for sale.
Until then, Heins admitted, it will be “critical” to “aggressively” push customers to upgrade handsets to devices that run BB7, so later they can switch to BB10 smart phones.
Heins said he and his management team will undertake a full review of RIM’s operations to overhaul everything that stands in the way of operating efficiencies. That includes considering partnerships with other manufacturers to make RIM hardware.
RIM devices should be “aspirational, high-end objects of desire with the best functionalty for communications,” he said, but not necessarily made by the company.
Already he has discovered a “level of complexity that is not condusive to the efficient operation of our business” and a “lack of accountability in number of area that inhibits talented people from making decisions and being able to plan decisively.”
Over the coming months that will change, he said.
Asked by one analyst if selling the company is on the table, Heins said he and the board believe managing a turnaround is best for the future. But, he added, if he came across “any element” in the strategic review it will be considered. “It is not the main direction I am pursing,” he added.
“We believe the best way to drive value for our stakeholders is to execute on our plan to turn the company around,” he said.
Still, he added, “this is not without risk and challenges, and there is no guarantee of success.” Related Download Sponsor: IBM Canada Ltd Pushing the frontiers – CFO Insights from the Global C-suite Study Based on a global survey of 576 CFO interviews, this whitepaper from IBM's Institute for Business Value provides analytical insights into the traits of leading CFOs and what they are doing to become more efficient, forward-looking and proficient at creating profitable growth. Register Now