RIM plans for operating loss and significant job cuts

RIM plans for operating loss and significant job cuts

Research in Motion (RIM) is likely to make an operating loss for its first quarter this year, and expects to make 'significant' job cuts in the coming months.

CEO Thorsten Heins made the announcement in a business update overnight. The manufacturer's first quarter finishes on 2 June, with results expected to be announced at the end of next month.

Heins said he expected its financial performance 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 Q1 results to reflect this, and likely result in an operating loss for the quarter.'

Reports in the Canadian press have suggested RIM is on the verge of making cuts to its workforce, with as many as 2,000 jobs under threat. A string of senior management staff have left the company in recent weeks, including global head of sales Patrick Spence and its chief legal officer Karima Bawa. While Heins admitted there will be 'significant spending reductions and headcount reductions in some areas', he said the business will continue to invest and hire in areas such as the BlackBerry 10 operating system and its app development programme.

Heins has hired investment banks JP Morgan and RBC Capital Markets to help implement the strategic review RIM announced following its full year results. He said: '[The banks] 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.'

Heins said he was encouraged by growth in its global subscriber base, which hit 78 million thanks to demand in international markets. Its BBM user base also increased to 56 million worldwide. He has also been heartened by the support from the developer community, which has seen its apps increase by 220% to 80,000. More than 15,000 apps are now available for its PlayBook tablet, up from 2,000 12 months ago. The manufacturer is also on course to release its BlackBerry 10 operating system later this year.

Heins said another positive for the business was that he expects to strengthen its financial position this quarter from the $2.1bn it had at the end of its last financial year. Heins added: 'Although we are facing challenges, we remain excited about BlackBerry 10 and believe that this platform coupled with the results of the strategic review will create long-term value for our stakeholders.'

IHS Global Insight telecoms analyst Dexter Thillien said: 'The availability of BBM on other platforms would further the attraction of BlackBerry devices, and it is also likely, should RIM continue to perform badly, that competitors may wait for the company to go under and acquire its most compelling assets at a knock-down price, as happened with fellow Canadian company Nortel.'

Editor: Graeme Neill

Written by Mobile Today
Mobile Today


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