RIM reports Q1 loss and 5,000 job cuts – talk of a major Nokia-style deal with Microsoft

29 Jun 2012

Research in Motion (RIM) chief executive Thorsten Heins has said he is not happy with the company’s performance in Q1, revealing its first quarterly loss in eight years. The company has had to delay the launch of BlackBerry 10 and will reduce staff numbers by 5,000 people.

The company reported revenues of US$2.8bn, down 33pc from US$4.2bn in the prior quarter. The company reported a net loss of US$518m, its first in eight years.

Coding and implementation of BlackBerry 10 are taking longer than expected and the company now expects to launch the first BlackBerry 10 smartphones in Q1 of 2013.

The company also plans to cut an additional 5,000 jobs beyond its recent round of layoffs in a move calculated to save the company US$300m.

“Our first-quarter results reflect the market challenges I have outlined since my appointment as CEO at the end of January,” Heins said.

“I am not satisfied with these results and continue to work aggressively with all areas of the organisation 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.”

Deal with Microsoft on cards?

It has been reported that the board of RIM is under increasing pressure to sell its network business or form an alliance with Microsoft as the rate of decline of the former smartphone market leader accelerates.

Among the options being presented is the potential of abandoning its own operating system and adopting Microsoft’s Windows 8 – a move that would no doubt prove unpalatable to many BlackBerry diehards and supporters of a company that made the mobile messaging business a reality.

However, it is believed the RIM board also sees this move as unconscionable and would rather stay on the road of developing BlackBerry 10.

Heins appeared to be channelling this motive in reporting the Q1 results. “Our top priority going forward is the successful launch of our first BlackBerry 10 device, which we now anticipate will occur in the first quarter of calendar 2013.

“In parallel with the rollout of BlackBerry 10, we are aggressively working with our advisers 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 78m, our large enterprise installed base, our unique network architecture and our industry-leading security capabilities,” Heins said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years