Rob Gillies June 29, 2012
Giant challenge... BlackBerry needs to remain relevant to halt decline.
Struggling BlackBerry maker Research in Motion has revealed its business is crumbling faster than previously thought.
The Canadian company posted worse results for its latest quarter than analysts had expected. It's cutting 5000 jobs and delaying the launch of its new phone operating system, BlackBerry 10, on which it was pinning its hope for a comeback.
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, chief executive Thorsten Heins said.
The delay comes just as North Americans are abandoning BlackBerry devices in favour of iPhones and Android phones. Analysts have long said BlackBerry 10 would come out too late to reverse RIM's fortunes. RIM's hopes hang on the revised operating system, which is meant to offer the multimedia, internet browsing and apps experience customers now demand.
The jobs cuts are part of a previously announced initiative to cut $US1 billion in annual costs this year. They represent about a quarter of RIM's workforce.
"This was a challenging quarter for the company on many fronts," Heins said on a conference call with analysts. "And I am not satisfied with the financial performance we are reporting today."
RIM lost $US518 million in its fiscal first quarter, which ended June 2. This compares with a profit of $US695 million a year ago.
Revenue fell 43 per cent to $US2.8 billion, well below analyst expectations at $US3.1 billion.
"When a technology gets old, it's not a slow fade. It's a sharp cliff," said Colin Gillis, an analyst with BGC Financial.
"There is very little market for old technology."
Michael Walkley, an analyst with Canaccord, called the BlackBerry 10 delay a dire sign.
"The biggest disappointment is the delay of the BlackBerry 10," he said. "It's extremely challenging for them to turn around the business when their new smartphone [is] launching that late."