Arab Today, arab today sales drop as rim new blackberry launch
Last Updated : GMT 08:52:09
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Arab Today, arab today

Sales drop as RIM new BlackBerry launch

Arab Today, arab today

Arab Today, arab today Sales drop as RIM new BlackBerry launch

Toronto - Arabstoday

Research In Motion Ltd. delayed the make-or-break launch of its next-generation BlackBerry phones until next year in a devastating setback for the once-dominant technology company whose sales are crumbling. Shares of the company, which also announced a steeper-than-expected quarterly operating loss and deep job cuts Thursday, plunged 14 percent after it said it would release its revamped BlackBerry 10 devices early in 2013. It conceded that the development had “proven to be more time-consuming than anticipated.” The delay in releasing the devices – RIM’s last best hope of stemming its eclipse at the hands of Apple Inc.’s iPhone and phones using Google Inc.’s Android software – confirmed the worst fears of analysts and investors. The size of the loss, RIM’s first in eight years, and the likelihood that sales will keep sliding into 2013, severely reduce the options for the company if it is to survive. RIM’s announcement that it would slash 5,000 jobs, or 30 percent of its workforce, only reinforced the impression of a company that could be in terminal decline. “It’s like watching a puppy die. It’s terrible,” said analyst Matthew Thornton of Avian Securities in Boston. “Wow, what a disaster,” said Edward Snyder, managing director of Charter Equity Research in San Francisco. RIM is now in “a handset death spiral,” he said. “From a numbers point of view, it could hardly be worse, and it’s going to deteriorate from here,” he said. RIM, which virtually invented mobile email, has fallen from a leadership position to an also-ran in smartphones over a few years filled with delayed and uninspiring products, service outages and other embarrassments. Now the new BlackBerry line will miss both the back-to-school and Christmas shopping periods, while the competition brings out new phones with more bells and whistles. Apple is widely expected to unveil an iPhone 5 later this year, while a slew of manufacturers using Android are constantly pushing out new gadgets. Microsoft Corp. is also planning to update its Windows software for mobile devices. “There’s really no guarantee that once they come out on the other side of BlackBerry 10 that it’s going to be something that people will want,” said Eric Jackson, a hedge fund manager at Ironfire Capital in Toronto. RIM’s board is under mounting pressure to consider unpalatable options such as selling its network business or forming an alliance with Microsoft, sources familiar with the situation told Reuters. Microsoft CEO Steve Ballmer approached RIM earlier this year looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft’s latest Windows operating system on its smartphones. In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company’s technology independence, they said. Even so, freshman CEO Thorsten Heins gave no indication on a Thursday conference call that he was losing faith in the current tack of cutting costs while waiting for the BlackBerry 10 launch, which is now more than a year overdue. The new devices are now set to land in a slow period when consumers are tapped out after their holiday spending. “It’s akin to launching fireworks underwater,” IDC analyst Kevin Restivo said. RIM expects the job cuts to cost $350 million in the current fiscal year. It has pledged to slash $1 billion from its operating costs in the year, but now considers that target as a minimum it will pursue, given the additional BlackBerry 10 delay. It said it had already cut layers of management, streamlined its supply chain and outsourced repair work. Analyst Shaw Wu of Sterne Agee in San Francisco said RIM would now have to be very careful. “Layoffs are not free – there’s a use of cash with that. They have to be very careful with their cash balance. It’s a matter of survival now.” RIM’s cash position – which has become a focus of concern for analysts as the company dips into the red – increased to $2.2 billion by the end of the quarter, and it aims to maintain that level this quarter. The company conceded that may slip as it pays severance to reduce the workforce, but it declined to estimate the cash position going into 2013. Shares of RIM, which have dropped about 70 percent over the past year, were down 14 percent at $7.86 in after-hours Nasdaq trading. At that price, the market is valuing the company at $4.12 billion, a far cry from its once-lofty market capitalization of about $84 billion.

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