RIM delays new BlackBerry launch; sales fall
Toronto, June 29, 2012
Research In Motion (RIM) delayed the make-or-break launch of its next-generation BlackBerry phones until next year, in a devastating setback to 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 on Thursday, plunged 14 percent after it said it would release its revamped BlackBerry 10 devices early in 2013. It conceded 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's iPhone and phones using Google'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 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.
The sharp deterioration may push to RIM into one of the more radical options it is considering with its investment bankers. Licensing, partnerships, a split in the company or its outright sale are all on the table.
Even so, freshman Chief Executive Officer 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 due more than a year after it was initially promised.
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,' said IDC analyst Kevin Restivo. – Reuters
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