Sat, Jun 30, 2012 - Page 15 News List

RIM to cut 5,000 jobs, delay new phones

AUSTERITY MEASURES:The embattled company said it would have to take drastic measures to stay afloat after losing 37.5 percent of its US market share in five years


Struggling BlackBerry maker Research In Motion Ltd (RIM) said it will delay the launch of new phones deemed critical to the company’s survival and revealed its business is crumbling faster than thought.

The Canadian company posted results on Thursday for its latest quarter that were worse than analysts had expected. It is cutting 5,000 jobs and unexpectedly delaying the launch of its new phone operating system, BlackBerry 10, until after the holiday shopping season.

After several delays, the first phone with BlackBerry 10 was expected later this year. It will be delayed even longer, to the first quarter of next year, RIM chief executive officer Thorsten Heins said.

“I will not deliver a product to the market that is not ready to meet the needs of our customers,” Heins said on a conference call with analysts. “There will be no compromise on this issue.”

The job cuts are part of a previously announced initiative to cut US$1 billion in annual costs this year. They represent about 30 percent of RIM’s workforce of about 16,500 people.

“It is necessary to change the scale and refocus the company,” Heins said. “I fully understand the impact a workforce reduction of this size has on our employees and the communities in which we operate. I assure you that we wouldn’t move forward with a change of this size if we didn’t think it was critical for our future.”

RIM shares tumbled US$1.27, or 14 percent, to US$7.86 in extended trading, after the release of the results. If they kept that level into regular trading yesterday, they will have set a nine-year low.

Heins acknowledged that he delivered “a lot of tough news.”

“This was a challenging quarter for the company on many fronts,” he said. “And I am not satisfied with the financial performance we are reporting today.”

RIM has hired a team of bankers to help it weigh its options as it loses market share and its business erodes. Heins said they continue to study those options, but he declined to elaborate and said the board would have to approve any changes.

RIM lost US$518 million, or US$0.99 a share, in its fiscal first quarter, which ended on June 2. That compares with a profit of US$695 million, or US$1.33 per share, a year ago.

Excluding impairment charges, the latest loss was US$0.37 per share. Revenue fell 43 percent to US$2.8 billion.

RIM said it shipped just 7.8 million BlackBerry smartphones in the quarter, down 41 percent from 13.2 million a year earlier.

Heins said the company is expecting the next several quarters to be “very challenging.” He said RIM is in the midst of a platform transition and faces an increasingly competitive environment. Research firm IDC says BlackBerry’s US market share has plummeted from 41.1 percent in 2007 to 3.6 percent in the first three months of this year.

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