Is RIM In TOO BIG A HOLE To Crawl Out?
Research in Motion (NASDAQ:RIMM) reported a much bigger loss than expected in its first quarter on Thursday. RIM reported revenue of $2.8 billion and a 37 cents-a-share loss, well below the consensus estimate for $3.08 billion revenue and a 3-cent loss. That loss excludes a pre-tax charge of $335 million for impairment of goodwill, the company said. If that is included, the net loss goes up to 99 cents-a-share.
The company said that it will cut 5,000 jobs, a move that it says will save more than $1 billion in annual costs, and delay the launch of its new smartphone BlackBerry 10. That postponement can potentially further add to the company’s financial troubles.
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“Our first quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January,” Thorsten Heins said in a statement. “I am not satisfied with these results and continue to work aggressively with all areas of the organization 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,” he said.
In May, the company had hired JPMorgan (NYSE:JPM) and RBC Capital to look at its strategic options, and Heins repeated that they continued to explore options with the advisors. “In parallel with the roll out of BlackBerry 10, we are aggressively working with our advisors on our strategic review and are actively evaluating ways to better leverage our assets and build on our strengths, including our growing BlackBerry subscriber base of approximately 78 million, our large enterprise installed base, our unique network architecture and our industry leading security capabilities,” Heins added.
RIM said its cash and equivalents improved from $2.1 billion at the end of the fourth quarter to $2.2 billion in the first. RIM shipped 7.8 million BlackBerry smartphones in the quarter and 260,000 PlayBook tablets.
Shares were halted ahead of the company’s first quarter results, with the last quote for the stock coming at $9, a decline of 13 cents, or 1.4 percent.
Last month, the company had warned that it could report its second consecutive operating loss this quarter. The loss is the latest setback for the company, which has fallen drastically in the face of the massive success of Apple (NASDAQ:AAPL) iPhone and devices running Google’s (NASDAQ:GOOG) Android operating software.