Battered RIM in retreat
Blackberry maker purges at the top, refocuses on enterprise
Research In Motion Ltd. has moved into retrenchment mode.
The troubled Blackberry maker says it will no longer provide financial guidance after posting its fifth earnings disappointment in as many quarters and has unveiled a top-level shakeup that includes the departure from the board of former co-chief executive Jim Balsillie.
After reporting fourth quarter sales late Thursday that badly trailed expectations, the Waterloo device maker said it will refocus on its core enterprise market — and consider options to turn around the company that could include partnerships with rivals.
Earlier in the week RIM said it would delay its annual spring meeting with analysts until after it releases its new family of BB10 smartphones late this year.
“It is very clear to me that substantial change is what RIM really needs,” Thorsten Heins, chief executive of the company for just over10 weeks, said in a call with analysts to discuss fiscal 2012 fourth quarter and year-end results.
He detailed management changes that include the resignation of Balsillie and the departure of chief technology officer for software David Yach and Jim Rowan, who was the chief operating officer for global operations.
RIM also said it expects continued pressure on sales and earnings through fiscal 2013 and said it would stop providing specific quantitative guidance in order to focus on “long-term value creation.”
Publicly traded companies typically provide analysts with targets for sales, earnings and other financial performance indicators on a regular basis.
Shares tumbled as much as 9 per cent in late trading after the company posted a loss on a writedown of assets and unsold Blackberrys in the fourth quarter.
The stock has lost more than two thirds of its value over the past year as RIM’S aging lineup of handsets has been overtaken by more powerful devices from Apple and manufacturers running the Android operating software.
The company swung from a profit of $934 million (U.S.), or $1.74 a share during the year-ago period to a loss of $125 million, or 24 cents, on writedowns of assets and on poor selling Blackberry 7 smartphones.
Excluding one-time items, the company reported an adjusted profit of $418 million, or 80 cents a share. Revenue fell by 25 per cent to $4.2 billion. Analysts, on average, expected the company to post pershare earnings of 81 cents on reve- nue of $4.54 billion. Blackberry shipments fell to 11.1 million in the fourth quarter from 14.1 million in the previous three months.
Heins, who replaced Balsillie and CO-CEO Mike Lazaridis in January, said RIM plans to refocus on the core enterprise market where the company has seen customer defections to rival devices made by companies including Apple Inc. and Samsung Electronics.
He also said RIM has initiated an efficiency push and a review of strategic opportunities including partnerships and joint ventures, licens- ing, “and other ways to leverage RIM’S assets and maximize value for our stakeholders.” Noting the launch of RIM’S new BB10 line of smartphones is “on track” for the latter part of 2012, he said the BB10 QNX operating system could be used to engage partners in the smartphone market. The company added two million Blackberry subscribers in the fourth quarter that ended March 3 to bring its global user base to 77 million — though the additions amount to about half the new subscribers signed up in each of the previous two quarters. RIM shipped 500,000 Playbook tablet PCS in the period after price discounting, compared to 150,000 unit sales in the third quarter. Gross margin compressed from 44.2 per cent last year to 33.4 per cent before adjustments. International sales accounted for 68 per cent of revenue as subscriber growth continues in emerging markets including India and Indonesia. RIM shares, which resumed trading after the earnings release, closed during the regular session in New York at $13.73, a gain of 6 cents.