Embattled smartphone maker Research in Motion (RIM) can’t catch a break at the moment. Over the last 12 months the Canadian handset maker has lost 70% of its share price. It’s going to get a lot worse before it gets better as the company has confirmed it will delay the launch of its new mobile operating system Blackberry 10 and cut 5,000 jobs worldwide.
Heins Bullish About The Future
In a candid radio interview with CBC on Tuesday, RIM CEO Thorsten Heins acknowledged the challenges facing the company – especially in the US market, but Heins declared he was “positive” they will come through the difficult patch stronger than before.
He boisterously declared: “There’s nothing wrong with the company as it exists right now,” Heins said on CBC’s Metro Morning, a local radio program in Toronto, according to Retuers. “I’m not talking about the company as I, kind of, took it over six months ago. I’m talking about the company (in the) state it’s in right now.”
He added, “This company is not ignoring the world out there, nor is it in a death spiral.”
“RIM has no debt,” Heins said. “The company also has more than $2 billion (£1.25 billion) in cash on its balance sheet, and generated $710 million (£450 million) in operating cash flow in its first quarter.”
Despite Heins’ optimism it’s hard not to worry about the smartphone maker after it’s latest quarterly results revealed it is still losing market share and customers to its competitors.
5,000 Jobs To Go Worldwide
The job losses and delay of BB10 were confirmed last week after the company reported a net loss of £334m in three months to June 2nd, a lot worse than analysts had been predicting. This compares with a $695m profit in the same period last year.
Revenue in the first quarter slumped by 43% to £2.8bn and was blamed on a sharp fall in sales of their smartphones. RIM has been haemorrhaging marketshare to both Apple and Android over the last 2 years.
The Canadian firm has, of course, been pinning its hopes on a comeback with their much talked about Blackberry 10 operating system and new handsets.
RIM’s future seems to be getting bleaker by the quarter, especially with today’s announcement that they’re delaying their new OS – which it’s puts even more pressure on the company to make Blackberry 10 a success.
Blackberry 10 has been plagued with delays and was expected this March – then it was postponed to Christmas 2012 and now its been kicked into the ether of sometime in 2013.
Poor sales of the PlayBook may also be seen as a bad omen – as the tablet already runs on the QNX system on which Blackberry 10 is based upon.
“Our first quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January,” said RIM boss Thorsten Heins.
“I am not satisfied with these results and continue to work aggressively with all areas of the organisation 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.”
So What’s Next For Blackberry
It’s thought that the current board of directors is getting pressured from share holders to look at other options, including measures that would amount to an admission they can’t survive by sticking to its current strategy – that’s where Microsoft comes into play.
One option for RIM would be to abandon its own operating sysytem and adopt Microsoft’s Windows Phone 8 OS. It’s already thought that Steve Ballmer has sounded out RIM over a possible tie-up.
The deal would be very similar to what was offered to Nokia – a cash injection and RIM joining Microsoft as a hardware partner.
Microsoft would buy a stake in the company, fund marketing and other expenses – but this deal isn’t that attractive to the Ontario-based company, as they want to keep their technology independence.
According to sources familiar with the matter RIM’s board wants to plough on with the development of the BB10. Another option would be to sell RIM’s proprietary secure email network to private equity firms, but such firms are reluctant to buy the loss-making hardware side of the business, meaning the deal could see the end of BlackBerry handsets altogether.
A third option would be to open up its network to rivals, under a plan first put forward by former co-CEO Jim Balsillie.
RIM is “going to have to be much more open minded to the idea that Jim Balsillie was working on before he was ousted of opening their network to third parties,” said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto.
Leaked 2012 Roadmap
After last week’s announcement of job losses and delays to BB10 another roadmap for Blackberry plan have surfaced which appear to reveal the new heavily-revised plan for RIM over the next 12 months.
According to the snapped document, the BlackBerry London and BlackBerry Nevada will arrive in Q1 of 2013 and the BB10 upgrade for the PlayBook will follow shortly after.
That clever naming regime seems to point towards two further QWERTY keyboard handsets pegged for release next year, with the Nashville potentially arriving sometime in Q2/Q3 and Naples stepping out in Q3/Q4.
It’s not just phones which are part of RIM’s plans for BB10 though, with tablets also getting a look in.
The roadmap suggests we’re still on course to see a 4G version of the BlackBerry PlayBook (aka Winchester 2) arrive before the year is out, and then a new slate, with a possibly larger 10-inch screen, is planned for Q3 of next year, codenamed Blackforest.
Whether Blackberry get to enact this roadmap remains unclear – but with another year of poor results the Canadian handset maker