BlackBerry maker to study options, warns of loss (Update)

May 29, 2012
A Research in Motion Facility in Waterloo, Ontario. Blackberry maker Research In Motion warned Tuesday it could report a loss in the current quarter and said it had hired JP Morgan Securities and RBC Capital Markets to study its strategic options.

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."

Explore further: AOL to feed more video, news to Microsoft's MSN

add to favorites email to friend print save as pdf

Related Stories

BlackBerry maker out to capitalize on rivals

Apr 03, 2012

Research In Motion launched a new software platform Tuesday that lets businesses manage smartphones made by rivals that have been devouring the BlackBerry maker's market share.

RIM loses another senior executive

May 28, 2012

(AP) -- Struggling BlackBerry-maker Research In Motion Ltd. said Monday that it is losing another senior executive as its chief legal officer is retiring from the company after 12 years.

RIM shares soar on Icahn stake reports

Sep 27, 2011

Shares of Research In Motion rose sharply on Wall Street on Tuesday amid speculation that billionaire US investor Carl Icahn has taken a stake in the troubled BlackBerry maker.

RIM down over 21 percent on Wall Street

Jun 17, 2011

Shares in Research in Motion plunged on Wall Street Friday after the BlackBerry maker lowered its outlook for the year and said it would be cutting jobs.

RIM shares fall on disappointing results

Sep 15, 2011

Shares in Research In Motion (RIM) fell sharply in after-hours trading on Thursday after the BlackBerry maker said it shipped fewer smartphones and tablet computers than expected in the quarter.

Recommended for you

What's PayPal's first solo move?

2 hours ago

PayPal's impending split from long-time partner eBay Inc. will ratchet up its appeal to online retail competitors such as Amazon.com and give it the freedom to aggressively take on new mobile pay challeng ...

AOL to feed more video, news to Microsoft's MSN

7 hours ago

AOL will provide Microsoft's MSN with more video and additional news stories from popular sites such as The Huffington Post and TechCrunch in an expansion of a deal aimed at selling more digital advertising.

Microsoft to tap $2-trillion Indian cloud market

11 hours ago

Microsoft announced plans Tuesday to offer its commercial cloud services from Indian data centres as it seeks to tap what it calls a $2-trillion market in the country where Internet use is growing rapidly.

User comments : 2

Adjust slider to filter visible comments by rank

Display comments: newest first

Vendicar_Decarian
not rated yet May 29, 2012
Hmmm... Who would be interested in purchasing RIM's patent portfolio?

Google?
Lurker2358
not rated yet May 29, 2012
Market saturation.

only tech gurus buy the latest and greatest every year. Normal people stick with the old model for several years, so expect slowdowns in the smartphone, tablets, and other similar devices as the main markets are saturated.