Research no longer in motion – BlackBerry maker to scrap 5,000 jobs, delays new operating system
Friday, June 29, 2012/
The downfall of Research In Motion continues. The Canadian maker of BlackBerry finally confirmed last night it will scrap 5,000 jobs and delay its long-awaited BlackBerry 10 operating system after posting a huge $US518 million loss for the previous quarter.
And its shares have plummeted 20% in after-hours trading.
But it’s not all bad news in the tech world. Google held the second day of its I/O Conference yesterday, and announced it would finally bring its Chrome browser to Apple’s iOS platform.
The BlackBerry restructure has been rumoured for weeks, as the company struggles to compete against mobile rivals Apple and Google. The firm has famously opted to believe individuals and enterprise customers would prefer its simple and functional devices over the more app-dependent iOS and Android platforms.
That strategy has failed. In the June quarter, RIM lost $US518 million, with an adjusted loss of $US192 million – about 37 cents per share – on revenue of $US2.8 billion. Shares have fallen 20%, even as the company announced 5,000 job cuts, almost a third of its workforce.
Its market share has plummeted from 41% in the United States in 2007, to a meagre 3.6% today, according to research firm IDC.
In a statement issued this morning, RIM chief executive Thorsten Heins said the company isn’t standing still and it is still adamant about creating and innovating with new products.
“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.”
But the delay of the BlackBerry 10 software is perhaps the biggest blow of all. In order to compete against Android and Apple, the company needs to keep releasing updated software packages. The longer the delays, the bigger the chance the company will fall even further behind.
RIM seems to admit as much, saying it expects the next several quarters “to continue to be very challenging for its business based on the increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10…”
It’s been a long decline for RIM. Last year, a senior RIM executive wrote an open letter to the company and published it online, saying the business wasn’t moving quickly enough and wasn’t fixing management problems.
Then, earlier this year, the company abandoned its dual chief executive structure and appointed Thorsten Heins as the head of the company. But there have been other missteps – the PlayBook tablet hasn’t sold as well as the company expected, and it was left with millions of units unsold.
Various reports have also suggested company executives have ignored key warnings about market trends, including the shift towards apps, the trend for executives to bring their own devices to work, and the strength of touchscreen devices over QWERTY keyboards.
Over the past five years, RIM has lost 83% of its value and in the past year it has lost 67%. It currently trades at $US9.13.
Heins admits he’s disappointed with the company’s situation.
“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.”
Meanwhile, Google has continued its I/O Conference, after a packed first day in which it announced a new Nexus tablet.
Today, it said Chrome would be coming to iOS and that Google Drive, the company’s cloud service, would also be coming to Apple devices.
The conference is set to continue tomorrow.