Is RIM Digging Its Own Grave?
Research in Motion (NASDAQ:RIMM) will delay the launch of its new smartphone operating system, BlackBerry 10, and has announced plans to cut 5,000 jobs. The decision, which RIM had warned of last month, came as the firm reported a $518 million net loss in the three months to June 2. That compared with a $695 million profit in the same period a year earlier.
Revenue in the first quarter dropped 43 percent to $2.8 billion as sales of BlackBerry smartphones fell sharply for the second straight quarter. Analysts say the results are worse than expected, and that the BlackBerry 10 delay is even more bad news that could allow for the company’s market share to crumble even further.
Apple’s (NASDAQ:AAPL) iPhone and Google (NASDAQ:GOOG) Android devices dominate the smartphone market that Research in Motion practically invented with its once ubiquitous “CrackBerry.” But in recent years, RIM has struggled to keep up with its rivals, and been pinning hopes for a comeback on BlackBerry 10. The first phone running the new OS was expected later this year, but will now ship in the first quarter of 2013.
“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 statement. “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.”
RIM shares have fallen about 70 percent over the last year, and plunged 18 percent in extended trading after the release of its first-quarter results. RIM also said it expects to make an operating loss in the current quarter.
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