Failure to deliver: RIM President and CEO Thorsten Heins reports losses, job cuts and delay of BlackBerry 10 devicesBy Gadjo Cardenas Sevilla
Research In Motion held a sombre earnings call today to announce that they will be cutting 5,000 jobs, posting a $518 million loss, as well as delaying their next generation mobile platform BlackBerry 10 until Q1 2013. This is the latest blow to the already beleaguered Canadian mobile icon which helped create the smartphone and the existing mobile ecosystem.
"The company 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,” RIM said.
Delayed: The BB10 OS demoed on this Dev Alpha Device is 7-8 months away from market
By missing the Fall launch of BB10, which was already delayed from early this year, RIM fails to capitalize on market demand and the big buying holiday season. More importantly, this delay puts them far behind Microsoft, Google Android and Apple who are all releasing updated versions of their mobile operating systems on a variety of new hardware models.
RIM's stock price took a beating because of this worse than expected news, it was down 17% at one point, trading in after-hours in New York at $7.49. RIM's market value has now fallen under $4 billion.
RIM will lay off 5,000 employees in their global workforce reduction way into 2013. A bad sign for the company, RIM has already been through one round of restructuring that saw it lose 11% of its workforce, or roughly 2,000 jobs, last July.
Analysts and pundits are urging RIM to consider splitting up the company, sell off its patents or offer itself up for sale to stop the bleeding but RIM's board is adamant that it can weather the storm. To many it is a race against time.
RIM is outsourcing its repair operations and reduced its 10 manufacturing sites to three in order to offset operating costs.
In today's mobile landscape, RIM is no longer in a position to compete as it is now clearly in survival mode. Earlier this year when I attended BlackBerry World, there was still an undercurrent of hope and enthusiasm for BlackBerry 10 which is a completely new platform. Nothing BlackBerry makes today will be able to run on BB10, which means they will essentially start from scratch if and when they finally launch Blackberry 10.
Everyone believed then that the products would be out in time to compete with the latest Apple iPhone as well as the newer Android and Windows Phone handsets.
There's a huge problem in delaying the new OS because this will no doubt dampen the enthusiasm of developers as well as sway potential customers to go to the competition. BlackBerry has not offered any new handsets or OS upgrades since 2011 when it released its BlackBerry 7 devices.