Research In Motion has announced its financial earning reports and it was a greater fall than expected. The report shows RIM has made its first biggest operating loss in its eight years of business. As a result, the company has decided to push back the release of its next generation BlackBerry 10 device until the first quarter of 2013 and cut 5,000 jobs, which is about 30 percent of its workforce.
RIM reported its Q1 2012 results, which showed 33 percent revenue decline to $2.8 billion compared to last quarter, and adjusted net loss came in at $192 million, or 37¢ a share.
A year ago RIM reported net income of $695 million, or $1.33 a share, on sales of $4.91 billion.
About the delay in the launch of BB 10 device, Thorsten Heins, newly-appointed CEO explained the reason as "not due to quality." He detailed, "Over the past several weeks, RIM's software development teams have made major progress in the development of key features for the BlackBerry 10 platform; the integration of these features and the associated large volume of code into the platform has proven to be more time consuming than anticipated. RIM's development teams are relentlessly focused on ensuring the quality and reliability of the platform and I will not compromise the product by delivering it before it is ready. I am confident that the first BlackBerry 10 smartphones will provide a ground-breaking next generation smartphone user experience."
Prior to the devastating setback to the embattled company, it planned to release the new lineup in late 2012.
Forrester Research analyst Charles Golvin told the Wall Street Journal: "The window for BlackBerry to remain a platform with viable growth potential is closing, and this development illustrates the pace at which it is closing. In the upcoming period before the BlackBerry 10 launch we expect a new iPhone, more Android devices running Google's latest version, and a massive push from Microsoft behind all the next versions of Windows. For the first BlackBerry 10 device to win the attention of customers and developer at its new launch date it will have to prove itself better than the alternatives by leaps and bounds - the likelihood of that is very, very low."
5,000 Job Cuts
Heins announced job cuts are mandatory in order to maintain the company's restructuring plan. Moreover, the layoff will save $1bn from the balance sheet.
He said: "I understand this is an incredibly difficult message to deliver, but it is necessary."
RIM will initiate layoffs by the end of the year, seven out of its 10 manufacturing plants will be closed, and some repair operations will be outsourced, Heins informed.
Following the report, RIM share price plummeted 17 percent. Now the company's market capitalization is below $4bn and stock price has fallen 73 percent since the first quarter of last year.
