RIM: a large drop in earnings, BlackBerry 10 delayed
Market watchers were expecting a difficult beginning of the 2013 financial year for Research in Motion, but to this they can now add a delay in the launch of the BlackBerry 10 platform and 5000 jobs being cut.
For the first quarter of the 2013 financial year, finished at the end of May, Research in Motion (RIM) has continued in their downwards spiral which began in 2011. Their earnings dropped 43% over a year earlier, with the group posting a net loss of 518 million dollars compared to earnings of 695 million dollars in the same period last year (GAAP filings), with the loss being 192 million dollars when exceptional events are not taken into account.
The manufacturer shipped 7.8 million smartphones and 260 000 PlayBook tablets in the quarter (although all of these tablets weren’t necessarily sold to end users). The promise of BlackBerry 10, their future platform, is weighing on the sale of these current mobile products in addition to the strong competition in the sector.
BlackBerry 10 has until now been seen as RIM’s last chance to regain market share, but this has now been delayed until the second half of 2012. Thorsten Heins, CEO of the Canadian manufacturer, has indicated that its launch has been delayed until the first quarter of 2013.
BlackBerry 10 delayed, a third of all staff redundant
They have justified this decision by indicating that despite the progress they have made, the final touches to the platform are taking longer than planned and that they don’t want to release the product until it is perfect. While they state that they are confident that their future platform will be a success and will attract the support of developers, this means that the first BlackBerry 10 smartphones won’t be available for the end of year Christmas period – a very important time for the sale of mobile products.
This is very bad news as all hope about the company picking up again was based on this new platform being launched in the second quarter of the year – with a lot of analysts hoping that this can reverse the company’s fortunes.
It goes without saying that the coming quarters will continue to be very difficult for the manufacturer who has announced that 5000 jobs will be cut out of a total of 16 500. Thorsten Heins justifies this 30% cut as the manufacturer must reduce their work force to adapt to the tough conditions that have come about over the last few quarters. These reductions have come about through the CORE restructuring program which ails at saving 1 Billion dollars in the short term.
And since the company is not expecting any improvement in the coming quarters, despite their efforts to push handsets running the current BlackBerry OS 7, their share price has dropped another 14% to $7.85 dollars per share – their lowest level in nine years.
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