RIM warns of operating loss

Embattled BlackBerry maker RIM has warned that it expects to post an operating loss in its fiscal first quarter to end June 2. The firm said it has now has hired JP Morgan and RBC Capital to conduct a far-reaching strategic review and to look for partnerships, while also announcing plans to cut a “significant” number of jobs.

“The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter,” said Thorsten Heins, RIM’s president and CEO.

“We are continuing to be aggressive as we compete for our customers’ business – both enterprise and consumer – around the world, and our teams are working hard to provide cost-competitive, feature-rich solutions to our global customer base.  On the positive side, we expect to further increase our cash position in Q1 from the approximately $2.1bn we had at the end of fiscal 2012.”

With BlackBerry 10 due to be launched later this year, this quarter was always going to a difficult one for RIM, which hoped that sales of BlackBerry 7 devices in emerging markets like India and Latin America would offset some of its losses in developed markets in North America in Europe, according to Dexter Thillien, telecoms analyst at IHS Global Insight.

“The company didn’t provide any shipments guidance, but the loss would suggest weakness in those markets continues to remain high with the company struggling to sell smartphones and tablets in the face of fierce competition. BlackBerry 10 is last chance saloon for RIM but the delay in getting it to market is a major drawback for the company, as a late launch could potentially put it into competition with new devices from Apple and Samsung,” he said.

Thillien added that the example of Nokia and the Lumia show that launching a good device is not enough in today’s market, but that any new device needs to be compelling and offer the right ecosystem alongside the hardware.

“RIM is already making plans for a post-BlackBerry 10 launch, having hired two banks to undertake a strategic review of the company, with all options on the table including the possibilities of licensing and partnerships. The company does retain some strength in its messaging capacities through email and instant messaging, but there are some risks to a new open strategy,” said Thillien.