BlackBerry maker to study options, warns of loss
Agence France-Presse
NEW YORK—BlackBerry maker Research In Motion warned Tuesday it could report a loss in the current quarter and said it had hired investment firms to study its strategic options.
The move comes with the BlackBerry, which pioneered the smartphone, rapidly losing market share to Apple’s iPhones and devices powered by Google’s Android operating system.
Chief executive Thorsten Heins said RIM “is going through a significant transformation” as it moved towards the launch later this year of the BlackBerry 10, the new platform aimed at competing with Apple and Google.
As a result, “our financial performance will continue to be challenging for the next few quarters,” he said.
“The ongoing competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our first quarter results to reflect this, and likely result in an operating loss for the quarter,” Heins said.
JP Morgan Securities and RBC Capital Markets were retained to advise the company in a “strategic review,” which could mean a sale, alliance or other reorganization of the business.
They will “evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives,” the company said in a statement.
The company’s shares plunged more than 10 percent in after-hours trade following the announcement, after ending normal trading hours up 2.1 percent at $11.23.
Waterloo, Ontario-based RIM posted a net loss of $125 million for its fiscal fourth quarter to March 3, compared with a profit of $418 million a year earlier, with revenues down 25 percent.
The tough environment is a challenge for Heins, who was named president and CEO after the resignation of Jim Balsillie and co-CEO Mike Lazaridis following months of investor pressure for a change.
Some reports said RIM will shed more jobs and taking additional writeoffs as it prepares for the new platform launch.
Ramon Llamas of the research firm IDC said RIM’s latest is “not unexpected” and that the company desperately needs to reinvent itself to compete in the market.
“People look at the BlackBerry and say it’s a workhorse, it’s utilitarian,” he said. “But they don’t say it’s sexy.”
“RIM has not been able to entertain and delight users, hence the massive defections,” he added.
He said the full details of the BlackBerry 10 are not yet known, but that “this is what the company is betting on to recapture market share and win back customers, which is not an easy thing to do.”
Heins, who joined RIM from German industrial giant Siemens in 2007 and served as senior vice president for hardware engineering and later as chief operating officer, said the firm is “continuing to be aggressive as we compete for our customers’ business — both enterprise and consumer — around the world.”
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Tags: Blackberry , Internet , IT , smartphones , technology , Telecoms
