It was long expected that Research In Motion would be operating at a loss and putting out some pretty dismal fiscal numbers when their first quarter results were revealed on Thursday, but few thought that things would be this bad.
RIM has posted its most shattering earnings report in company history. It announced a loss in the neighbourhood of half a billion dollars and will cut 5,000 jobs. To make matters even worse, the Waterloo company announced that it would be delaying the launch of BlackBerry 10 until next year.
Some are starting to wonder if RIM can even release a line of BlackBerry 10 phones. The bleeding is so bad that it seems nothing can save the company. Options are on the table, like the rumoured-but-denied split and a possible takeover from another company, but it doesn’t look like much can save the once-proud Canadian innovator.
In the first quarter, RIM posted a loss of $518 million. That amounts to 99 cents per share. Revenue was down 33 percent from the previous quarter to $2.8 billion, while shipments tumbled from 13.2 million in the previous quarter to 7.8 million.
The downward spiral sent share prices dipping once more. Shares were down almost 17 percent in afterhours trading while the news reverberated.
Add news of the BlackBerry 10 delay into the mix and RIM looks like a company irrevocably changed.
“This latest delay makes it increasingly unlikely that RIM in its current form will ever be able to make BlackBerry 10 fly,” said independent technology analyst Carmi Levy. “It wouldn’t surprise me if RIM as we know it morphs significantly into another form long before these new save-the-company devices are finally, belatedly released.”
It may not be wise for RIM to undertake what is being termed as a complete overhaul of its software and hardware infrastructure, especially in today’s fickle market, but CEO Thorsten Heins doesn’t seem game to budge on the issue.
“I will not deliver a product to the market that is not ready to meet the needs of our customers,” Heins said. “There will be no compromise on this issue.”
In the next market cycles over the next months, RIM will once again be bypassed by new products from Apple and Google. They will once again scramble to play catch-up in an environment that they no longer dominate. At this point, the RIM name no longer matters. Recovering from that reality would take a miracle.