WATERLOO – The company is still selling millions of BlackBerrys and has $2.2 billion in the bank, but Canada’s tech darling for so many years, Research In Motion, is in deep, telling the world today it will let 5,000 employees go and delay, again, the launch of its new phones and operating system, BlackBerry 10, to 2013.
As for the highlights from the corporate release:
• Cash, cash equivalents, short-term and long-term investments increased to $2.2 billion at the end of the first quarter
• Cash flow from operations was approximately $710 million in the first quarter
• Shipments of BlackBerry smartphones were 7.8 million and shipments of BlackBerry PlayBook tablets were approximately 260,000
• Launched World Tour BlackBerry Jam developer sessions in 23 countries resulting in strong adoption and support by application and developer partners for BlackBerry 10 platform
• BlackBerry App World continues to grow with over 89,000 applications available
• The overall BlackBerry subscriber base continued to grow, and the subscriber base grew in all regions except for North America
There were also some serious lowlights (although the release didn’t tag them as such):
• RIM posted revenue of $2.8 billion in Q1, down 33% from $4.2 billion in the prior quarter
• The company posted a first-ever quarterly net loss in Q1 of $518 million
• BlackBerry 10 smartphone launch now scheduled for Q1 of calendar 2013
• Restructuring efforts underway that will include a workforce reduction of approximately 5,000 employees as part of RIM's efforts to realize over $1 billion in cost savings, based on RIM's Q4 FY2012 run rate
"Our first quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January,” said president and CEO Thorsten Heins in the release. “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.
“Our top priority going forward is the successful launch of our first BlackBerry 10 device, which we now anticipate will occur in the first quarter of calendar 2013. In parallel with the roll out of BlackBerry 10, we are aggressively working with our advisors on our strategic review and are actively evaluating ways to better leverage our assets and build on our strengths, including our growing BlackBerry subscriber base of approximately 78 million, our large enterprise installed base, our unique network architecture and our industry leading security capabilities."
Heins added that behind the BB 10 delay is a desire to get it right. "I will not compromise the product by delivering it before it is ready,” he said. “I am confident that the first BlackBerry 10 smartphones will provide a ground-breaking next generation smartphone user experience. We are encouraged by the traction that the BlackBerry 10 platform is gaining with application developers and content partners following the successful BlackBerry Jam sessions that we have held around the world since the beginning of May. Similarly, the reception of the BlackBerry 10 platform by our key carrier partners has been very positive and they are looking forward to going to market with BlackBerry 10 smartphones in the first quarter of calendar 2013."
The release also noted that the cuts made so far and the ones announced today are by no means the end. The Company announced its CORE (Cost Optimization and Resource Efficiency) program in March of this year, reads the release. “The program is focused on delivering operational savings through various initiatives, with financial objectives for the program targeted to drive at least $1 billion in savings by the end of fiscal 2013, based on RIM's Q4 FY2012 run rate. As a result of the shift in BlackBerry 10 launch timeline, the increasingly competitive environment, as well as the identification of additional cost saving and efficiency opportunities, the company may increase the scope and magnitude of these programs, and considers these original estimates as minimum numbers it will be pursuing.”
To date, RIM has started:
• A reduction in the number of layers of management
• The continued streamlining of its supply chain, which includes the consolidation of its manufacturing centres from 10 factory sites to three
• Outsourcing key parts of its repair operations
• Better targeted sales and marketing channels
As for the near future RIM doesn’t expect things to get very rosy any time soon. It “expects the next several quarters to continue to be very challenging for its business based on the increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10, pressure to reduce RIM's monthly infrastructure access fees, and the Company's plans to continue to aggressively drive sales of BlackBerry 7 handheld devices,” says the press release. (Read: Drastic price cutting.)
“The company expects to report an operating loss in the second quarter of fiscal 2013, as RIM continues to invest in marketing programs and continues to work through the transition to BlackBerry 10.
