Feature Article

June 29, 2012

RIM Holds First Quarter Earnings Call, Shares Plans for Restructuring and Job Cuts

The excitement mounting in the smartphone industry has been somewhat frustrating for Research in Motion (RIM). The company has struggled to maintain its market share in an intense landscape where the iPhone and Android-based phones have dominated growth areas in which the BlackBerry once dominated.

In a conference call Thursday afternoon, RIM leaders shared first quarter 2013 results. While revenue has stabilized in the U.S., overall results are frustrating for company leaders. A strong focus has been placed on the BlackBerry 7 as the company collaborates with industry partners to maintain subscriber relationships and extend partnerships through upgrades to the BlackBerry 7.

Global subscriber base has grown in the quarter and now stands at roughly 78 million users. The 16GB model of the BlackBerry PlayBook has sold out as demand for the tablet continues to be strong. Certain carrier partners are still testing the next PlayBook.

The company’s number-one priority will be the BlackBerry 10, but is experiencing a delay in time to market due to interoperability and integration challenges. Substantial features have been successfully developed by the company’s development team, and quality continues to be a primary focus as the management of the large volume of code involved in this project.

The company now expects the BlackBerry 10 to arrive in the next calendar year as company leaders believe the quality and functionality is not yet ready to meet the needs of the company’s clients. The device is expected to deliver on demand for games, enterprise applications, rich multimedia, unified communications and more.

Revenue for RIM for the first quarter of fiscal 2013 was reported as $2.8 billion – a 33-percent decrease from the previous quarter as a result of a decline in BlackBerry shipments, lower average selling prices on new entrants and pricing initiatives on the BlackBerry 7 handheld devices.

U.K. and Canada represented 62 percent of total revenue, with other larger markets listed as Indonesia, South Africa and Venezuela.

In the first quarter, 7.8 million smartphones were shipped, yet channel inventory is down. Trends in certain markets reveal that channels are not carrying as much inventory or shipping as many devices as previous quarters. Customers were also moving from higher tier contracted plans to lower tiered pre-paid plans, hurting overall revenue.

The next several quarters are expected to be very challenging for the company, and leaders anticipate that they will be reporting an operating loss in the second quarter of fiscal 2013. To combat these challenges, RIM is examining a number of key money saving initiatives, including job cuts.

By the end of the fiscal year 2013, it is expected that as many as 5,000 positions will be cut in a global workforce reduction. More details regarding the company’s restructuring efforts will be shared throughout the year.

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Edited by Braden Becker

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