RIM to cut 5,000 jobs and delay BlackBerry 10

Canadian company’s deterioration gathers pace, with the BlackBerry maker announcing worse than expected losses

Research In Motion’s dramatic deterioration has gathered pace, with the maker of BlackBerry announcing worse than expected losses and 5,000 new job cuts.

The Canadian company behind what was once the world’s most popular smartphone appeared trapped in a tailspin after announcing yet another delay to the new touchscreen handsets which investors hoped would help it to stay in the race against Apple’s iPhone.

RIM’s first BlackBerry 10 handset had been expected to hit the shops in time for Christmas, but fresh delays mean its launch has been put back to the first three months of 2013.

“RIM is facing existential crisis,” said technology analyst Horace Dediu of Asymco. “It’s moving down the slippery slope of market distress into increasing financial distress.”

Revenues were down 33% to $2.8 billion in the three months to 2 June, compared to the previous quarter and analyst forecast of a $3.1bn taking. Revenues for the same period a year ago were $4.9bn.

The first quarter loss, which RIM had warned investors was coming, was a worse than expected $518m, compared with a $125m shortfall in the first three months of the year and a profit of $695m during the same period in 2011.

The company shipped 7.8m phones in the quarter, missing Wall Street expectations of 8.74m, and distributed 260,000 of its PlayBook tablets. The job cuts follow an announcement earlier this year than the company would lay off 2000.

“I am not satisfied with these results and continue to work aggressively with all areas of the organisation and the board to implement meaningful changes,” said chief executive Thorsten Heinz, who took over from the company’s founder Mike Lazaridis and his long serving lieutenant Jim Balsillie in January.

The number of subscribers to BlackBerry services rose marginally, remaining at the headline number of 78m.

Speculation is mounting that the company, which hired two investment banks to advise on its strategic options, may be broken up and sold.

The arrival of the next generation of handsets had been delayed because of the “large volume of code” which needed to be processed, said Heinz. He added that the company expects the next several quarters to remain “challenging” and the company expects operating losses to continue into the second quarter.

Lack of demand means RIM kit is beginning to stockpile, with an estimated 55 days of unsold inventory. The company said its customers are not replenishing their BlackBerry stock as rapidly as in the past.


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