Gadgetsnu

RIM delays BlackBerry 10, to cut 5,000 jobs

Research In Motion (RIM), the struggling BlackBerry maker, has revealed its business is crumbling faster than it thought. RIM lost $518 million, or 99 cents a share, in its first quarter ending June 2.

That compares with a profit of $695 million, or $1.33 per share, a year ago. Excluding impairment charges, the latest loss was 37 cents per share. Analysts polled by FactSet were expecting a loss of 3 cents.

Revenue fell 43 per cent to $2.8 billion, well below analyst expectations at $3.1 billion.

RIM is cutting 5,000 jobs and unexpectedly delaying the launch of its new phone operating system, BlackBerry 10, until after the holiday shopping season.

“After several delays, the first phone with BlackBerry 10 was expected later this year. It will be delayed even longer, to the first quarter of next year,” RIM CEO Thorsten Heins said.

The delay comes as North Americans are abandoning BlackBerrys for iPhones and Android phones. Analysts have long said the new BlackBerrys will come out too late to reverse RIM’s fortunes.

RIM said it shipped just 7.8 million BlackBerry smartphones in the quarter under review, down 41 per cent from 13.2 million a year earlier.

The BlackBerry maker has hired a team of bankers to help it weigh its options as it loses market share and its business erodes. Heins said they continue to study those options, but he declined to elaborate and said the board would have to approve any changes.

RIM was banking its future on the new BlackBerry 10 system, which is meant to offer the multimedia, Internet browsing and apps experience that customers now demand.

Now, it will come out months after a new iPhone is expected to be released. Current and previous iPhones have made the BlackBerry look ancient.

Heins had vowed to do everything he could to release BlackBerry 10 this year but said the timetable simply wasn’t realistic. He said RIM’s top priority remains a successful launch of the new BlackBerrys.

“I will not deliver a product to the market that is not ready to meet the needs of our customers,” Heins said on a conference call with analysts. “There will be no compromise on this issue.”

The jobs cuts are part of a previously announced initiative to cut $1 billion in annual costs this year. They represent about 30 per cent of RIM’s workforce of about 16,500.

“It is necessary to change the scale and refocus the company,” Heins said. “I fully understand the impact a workforce reduction of this size has on our employees and the communities in which we operate. I assure you that we wouldn’t move forward with a change of this size if we didn’t think it was critical for our future.”

RIM shares tumbled $1.27, or 14 per cent, to $7.86 in extended trading, after the release of the results. If they hold that level into regular trading Friday, they will set a nine-year low.

Heins acknowledged that he delivered “a lot of tough news.”

“This was a challenging quarter for the company on many fronts,” he said. “And I am not satisfied with the financial performance we are reporting today.”

He said the company will release fewer models than in the past. He also said RIM will launch a BlackBerry 10 model with a physical keyboard close to the launch of a touch-screen model.

RIM earlier said it would come out with the touch-screen model first, but didn’t say when it would make one with a physical keyboard, a feature that many people stay with BlackBerrys for.

Heins said the company is expecting the next several quarters to be “very challenging.” He said RIM is in the middle of a platform transition and faces an increasingly competitive environment.

Research firm IDC says BlackBerry’s US market share has plummeted from 41.1 per cent in 2007 to 3.6 per cent in first three months of 2012.