RIM seeks bailout buddies as banks count Heins' beans
CEO predicts more half-baked finances
RIM has hired bankers to give it a health check and possibly pair up the BlackBerry maker with other businesses. The mobe manufacturer added that it is likely to make an operating loss this quarter and struggle financially for several more.
The beleaguered Canadian biz also confirmed it will dramatically cut costs including "significant" redundancies following talk this week that up to 6,000 staff could be let go.
CEO Thorsten Heins - who replaced co-CEOs Mike Lazaridis and Jim Balsillie in January - said "our financial performance will continue to be challenging for the next few quarters".
"The ongoing 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 results in an operating loss," he said.
In March, RIM revealed it made a net loss of $125m (£80m) for its Q4 fiscal 2012 compared to a profit of $265m (£169m) for the same period a year earlier, as sales slid 19 per cent to $4.2bn (£2.69bn).
At the time it announced the Cost Optimisation and Resource Efficiency (CORE) programme, which is designed to slash spending by $1bn (£640m) by the end of fiscal 2013.
Heins said it will review the organisational structure "with the goal of eliminating fragmentation, duplication, and inefficiencies". He added: "While there will be significant spending and headcount reduction in some areas throughout the remainder of the fiscal year."
He stopped short of quantifying the size of redundancy plans for its 16,500 strong workforce. The axe is expected to start swinging at the start of June.
According to reports, RIM brought on board JP Morgan Securities LLC and RBC Capital Markets to assess the business and financial output back in March.
In is understood that the BlackBerry maker last year held talks with potential suitors including Amazon and Microsoft that came to nothing. There were also suggestions it was talking to Samsung, but the South Korean electronics giant denied this.
Heins said: "These advisers have been tasked to help us with the strategic review we referenced on our year-end financial results conference call and to evaluate the relative metrics and feasibility of various financial strategies."
He said this included "opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives".
In Q1, Canalys stats showed RIM's smartphone market share more than halved to 6.7 per cent as sales dropped 29 per cent – in a sector that grew 44 per cent globally.
Hopes of a revival are pinned on the BlackBerry 10 operating system, but investors were less than impressed with a demo and its developer tools in a May showing, sending the share price down by nearly 5.76 per cent.
And lest we forget, the next Jesus Mobe is due to be released later this year, meaning further competition for RIM. ®