BlackBerry 10 delayed, RIM future in doubt after bleak earnings report
BlackBerry fans: It just got worse. BlackBerry maker Research in Motion (RIM) announced that the BlackBerry 10 smartphone and BlackBerry 10 operating system's launches will be delayed, 30 percent of RIM employees will be laid off and that RIM posted a loss of $518 million in the latest quarter.
The Waterloo, Ontario company announced the bad news in its fiscal first quarter report on Thursday, prompting shares to tumble 15 percent to $7.75 in late trading. BlackBerry 10 was widely seen as the company's last hope to catch up with rivals Apple and Android. Smartphones running Google's Android platform accounted for 59 percent of the global market in the first quarter of 2012, with Apple's iPhones taking 23 percent. BlackBerry's share of the global market was 6.4 percent, compared with 13.6% a year ago.
BlackBerry 10's launch has been postponed until the first three months of 2013, a delay of seven to nine months. Within that time, Apple will launch a new iPhone, Android developers will launch new phones running Ice Cream Sandwich and Jelly Bean and more Windows Phone 8 phones will be released. By the time BlackBerry 10 comes out it may be too late.
In an earnings call with analysts, CEO Thorsten Heins said building the BlackBerry 10 "has proven to be more challenging and time consuming than anticipated," and that a as result the expected 2012 launch "was no longer realistic."
"I will not deliver a product to the market that is not ready to meet the needs of our customers, or provide anything less than an outstanding user experience with the quality I expect a BlackBerry product to have," he said. "There will be no compromise on this issue."
Analysts were not impressed. Many believe RIM needs to take radical action to survive, such as switching to a Windows operating system or selling off RIM's intellectual property assets.
"In our view, the risk of total value destruction over the next few years is possible as at this point we cannot see the light at the end of the tunnel," said Bank of America/Merrill Lynch analyst Tal Liani.
"While all the key indicators continue to decline, management appears to be taking a 'damn the torpedoes, full speed ahead' approach to running the business," said Ehud Gelblum, an analyst at Morgan Stanley.
"We fear that the company could be driving 100 mph straight into a brick wall. We also worry that no company can operate normally, let alone develop, launch and market a brand new, company-wide and globally impacting platform while laying off nearly one-third of its workforce — it's just physically impossible from both a worker morale and a manpower talent point of view."
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