RIM loses more money, can’t launch BB10 this year

Research In Motion saw revenue plunge 33 per cent in the quarter ending June 2 to $2.8 billion compared to $4.2 billion in the previous quarter, causing it to suffer a net loss of $518 million, the company said in a news release.
More imporantly the company said the launch of its next-generation BlackBerry 10 devices won’t meet the promises of being on the market by the end of this year. Instead, it will be released some time in the first three months of next year. That means it will miss the crucial 2012 December holiday buying season.
It also said that as part of an effort to save $1 billion in costs it will cut 5,000 jobs from its 16,500 workforce worldwide over the next 9 months.
“Our first quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January,” Thorsten Heins said in a news release.
“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, including a thoughtful realignment of resources and honing focus within the company on areas that have the greatest opportunities.
“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. 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.”
The delay in getting BB10 devices to market will be of great concern to financial and industry analyts, because it puts RIM further behind competitors as they launch new handsets. Meanwhile loyal BlackBerry customers will have to decide either to wait or jump ship. Heins said the integration of features and the associated large volume of code into the new platform “has proven to be more time consuming than anticipated.”
In comments to financial analysts, he didn’t rule out breaking up parts of the company for sale, saying a review with investment advisors covers every scenario from the company continuing as an independent entity “to whatever model you could think about.”
And Heins warned the new isn’t going to get any better in the near future, expecting to suffer another operating loss in the next quarter. “The company expects the next several quarters to continue to be very challenging for its business based on the increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10, pressure to reduce RIM’s monthly infrastructure access fees, and the company’s plans to continue to aggressively drive sales of BlackBerry 7 handheld devices.”
The good news is that it still has just over $2 billion in cash, which gives it some flexibility.
Customers looking for some progress in products might be molified by word from Heins that the LTE version of its 7-inch PlayBook tablet — which has sold poorly — is in the final stages of testing with some carriers and is expected to hit the market “in the near future.”
As for the delay in launching BlackBerry 10 devices, Heins told analysts that a number of carriers are fine with waiting until early next year, because a number of them will be launching new LTE networks then. That’s a hint that the new handsets will be LTE-capable.
Because the new platform will be different from the current BlackBerry operating system, Heins also wanted to make clear there will be lots of applications for it. There will be a “broad spectrum” of BB10 apps ready at the launch, he said. Many of the 20,000 apps written for the PlayBook will run on BB10, he said, and RIM is expecting “tens of thousands more” to be submitted by developers.
As he has said before, Heins said he won’t be rushed on BB10. “I will not deliver a product to the market that is not ready to meed the needs of our customers … There will be no compromise on this issue.”
To combat the loss of revenue — which Heins blamed on “pricing pressure due to competition” and older versions of BlackBerrys still in customers’ hands, he said RIM is aggressively pushing new versions of handsets that run the latest BlackBerry 7 operating system. The company is also working hard with enterprises to get their staff to upgrade to BB7 units.
Asked by an analyst if the delay could put BB10 technically behind smartphones that will launch sooner, Heins said the new handsets have a “:high end spec” and shouldn’t be outdated.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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