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Research In Motion Ltd. has embarked upon an unprecedented retreat, slashing its profit outlook and setting plans for job cuts as Canada's most important technology company struggles through some of the greatest challenges in its history.

RIM, which once dominated the market for smart phones, is rapidly losing market share as Apple Inc.'s iPhone and devices powered by Google Inc.'s enormously popular Android operating system batter the Waterloo, Ont. technology giant. Investors have hammered RIM shares in recent weeks amid mounting concern about the company's prospects, but results issued late Thursday triggered a new wave of worries about RIM's future.

Revenues of $4.9-billion (U.S.) for the first fiscal quarter showed a rare decline from the previous quarter and fell well short of analysts' expectations. Profit of $695-million in the quarter dropped 10 per cent from a year earlier.

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And RIM sharply reduced its forecasts for the rest of the year, cutting expectations for full-year profit to between $5.25 and $6.00 a share from $7.50 a share expected less than two months ago. Revenue for the second quarter is expected to be in the range of $4.2-billion to $4.8-billion, nearly $1 billion below previous estimates.

Shares of RIM dropped about 14 per cent in after-hours trading after the company issued its latest results. The stock has plunged by nearly 50 per cent this year, erasing about $15-billion in market value, as investors increasingly give up hope that RIM can revitalize its past fortunes.

RIM said it will begin a program to "streamline operations across the organization, which will include a headcount reduction," but didn't provide details.

"Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2," said co-CEO Jim Balsillie. But Mr. Balsillie and co-CEO Mike Lazaridis spent much of a conference call with analysts defending their reputations, playing up the strength of impending products and refusing to step down.

"We're currently approaching the tail end of a significant transition in our business, and quite frankly few companies would have been able to survive, but we have," Mr. Balsillie told analysts.

"I think that Mike would agree that neither of us could have taken the company this far alone, and that completing the transition and taking the company to the next level of success and growth, is also something neither of us can do alone - and something that would be incredibly challenging for someone from outside the company to manage successfully at this critical time in RIM's development."

The stark problems at RIM, which is struggling in the shift from a device-centric world to one where software ecosystems reign, are beginning to attract unfavourable comparisons with other troubled technology giants - such as Nokia, the Finnish giant that is also struggling in the crosshairs of Apple and Google.

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To Mike Abramsky, a technology analyst at RBC Capital Markets, the sentiment about RIM "is worse than Nokia's right now," even though Nokia's problems run much deeper. "The skepticism and polarization over RIM's future is extremely high, it's almost historically high - and to some extent even unprecedented with regard to all but a few technology stocks," says Mr. Abramsky. "It's partially reflective of RIM's lack of execution, or poor execution, particularly with some of the new products, like PlayBook. And partially reflective of concerns over the entire sector, where at least for now everybody except Apple and Google seem to be hurting."

RIM has pinned part of its hopes for a turnaround on the Playbook, a portable computer that competes squarely with Apple's iPad. RIM has so far shipped 500,000 Playbooks, well below some analysts' expectations.

There are also brewing problems for RIM overseas, a former point of pride for the company as it expanded globally. As market share withered in the U.S., RIM had counted on growth in markets such as Latin America to compensate. Mike Walkley, an analyst at Canaccord Genuity, said this is a "critical juncture for the company," because RIM's crucial push overseas has hit a standstill as growth inside North America stalls. At the same time, company has postponed shipments for the next generation of BlackBerrys running a new version of RIM's operating system

"We've just seen international growth … come to a screeching halt, with order cancellations and carriers now moving to affordable, 3G Android phones," Mr. Walkley said, noting that him and others have seen a huge loss of share to Apple and Android devices at the four major U.S. wireless carriers.

"The reason RIM was able to put up good growth was because of international. You have a perfect storm. With a gap in the product portfolio, their big growth driver has all of a sudden turned negative," he said.

New devices will begin shipping in the fall, but devices running an even more advanced operating system powered by QNX - the system that powers RIM's PlayBook tablet - won't be out until 2012.

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But even with new devices out as early as August, many worry that RIM will still remain behind.

"In absolute terms, it's much better than what RIM has had," Mr. Walkley said. "But in relative terms, they're going to look and feel even further behind than where Apple and Android are today."

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