RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

Summary: RIM cuts its earnings and revenue outlook for the fiscal year and plans layoffs as it streamlines. Product delays are killing the company, but at least PlayBook sales are better than expected.

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Research in Motion said it will cut jobs and streamline its operations in an effort to get products to market faster. The company's first quarter revenue fell short of expectations and it cut its outlook for the fiscal year.

The BlackBerry maker reported earnings of $695 million, or $1.33 a share, on revenue of $4.9 billion. Wall Street was expecting earnings of $1.32 a share on revenue of $5.15 billion.

According to co-CEO Jim Balsillie, the fiscal year has "gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2. Product delays---notably a new set of BlackBerries---will be delayed into the "very late part of August." On the conference call, Balsillie was joined by co-CEO Mike Lazaridis, who was on deck to talk technology and product roadmaps.

Related: RIM: New BlackBerry devices will be 'worth the wait'

Balsillie emphasized that the co-CEO arrangement worked for RIM and few companies could have weathered such a dramatic product transition. "We know what we have to do jointly," said Lazaridis. He acknowledged that RIM is going through a tough time and that some decisions are hard to understand from outside the company.

As a result of the dismal results, RIM will cut costs including a headcount reduction. RIM has to cut costs because ongoing product delays hamper growth and the fiscal 2012 outlook is well below expectations.

The company projected that fiscal second quarter revenue will be between $4.2 billion and $4.8 billion with earnings of 75 cents a share to $1.05 a share. Wall Street was looking for earnings of $1.40 a share on revenue of $5.46 billion. For fiscal 2012, RIM expects earnings of $5.25 to $6 a share. Wall Street was looking for $6.29 a share and just a quarter ago, Balsillie was talking about annual earnings of $7 a share.

Wall Street analysts were expecting RIM to cut the fiscal 2012 outlook, but not to that degree.

The lone bright spot for RIM was sales of the PlayBook. RIM sold 500,000 tablets, well ahead of Wall Street estimates of 300,000 to 400,000. Balsillie said that 105,000 enterprise customers had the PlayBook and RIM was working on joint-sales arrangements with SAP, Verizon and others. The company shipped 13.2 million BlackBerry devices in the quarter.

However, PlayBook sell-through remains a mystery. "We don't have specific numbers on PlayBook sell-through, but we are very pleased with the sell-through and we are very pleased with the seating in the corporations," said Balsillie.

To support its shares, RIM said that it has authorized a plan to buy up to 5 percent of outstanding shares over the next year. RIM said that it has nearly $3 billion in cash and buying back shares won't hurt its growth plans.

As for afterhours trading, RIM shares took a hit.

The big question for RIM going forward is whether a new set of BlackBerry devices as well as QNX-based superphones in 2012 can revive the company. Balsillie said RIM is poised for growth in the last two quarters of its fiscal year, but that assumes these products will be successful. For now, RIM has another more than two months of pain ahead as it waits for new products to hit carriers.

Without those new devices, RIM is in limbo on the revenue front. And the later those devices come, the more likely RIM’s “superphones,” devices based on the QNX operating system, will slip farther into 2012. Morgan Stanley analyst Ehud Gelblum says RIM is mired in a “continued product vacuum.”

By the numbers for the first quarter:

  • Cash flow from operations in the first quarter was about $1 billion.
  • Gross margins were 43.9 percent, down from 45.4 percent a year ago.
  • Research and development spending was $423 million, up from $288 million a year ago.

Related:

Research in Motion: Did PlayBook R&D jeopardize its superphones?

RIM: Is the growth gone?

Topics: Mobile OS, Banking, Enterprise Software, BlackBerry

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39 comments
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  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    I knew lay offs would be coming, but thats some good news that the Playbook was doing better than what WS had expected... I'm hoping this will means RIM will change their mind set
    5FingerDiscount
    • I really hope you get to experience that feeling ..

      @5FingerDiscount [i]"...I knew lay offs would be coming, but thats some good news that the Playbook was doing better than what WS had expected..."[/i]

      I'm glad the impending loss of livelihood and income of a large number of people comes as "good news" to you.

      Drive safely ... you sorry @$$, $.0.b.
      thx-1138_
      • I think you missed the point...

        @thx-1138_@...

        Maybe there should have been a period instead of a comma but the "good news" is clearly refering to the fact that "...the Playbook was doing better than what WS had expected..."

        "Drive safely ... you sorry @$$, $.0.b."

        Maybe you should read more carefully before you launch your attack.
        Mycah Mason
  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    500K is sold to the sales channel. How many were actually sold to customers?
    johnsuarez10
    • How many were actually sold to customers?

      @johnsuarez10 Some 5 or something?
      browser.
      • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

        I think it's 2, the CEO had to buy one and the guy in the commercial got a deal on one, hahahaha. Buh bye playbook!
        maverick-id
    • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

      @johnsuarez10 For the record, they wouldn't say.
      Larry Dignan
      • And, as to 'bright spot', O2 from UK just stopped selling Playbooks citing

        @Larry Dignan: ... <b>low quality of end-user experience</b>.
        DDERSSS
    • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

      @johnsuarez10

      They didn't say, but they DID say that they met their sales goals....which is what counts more than absolute numbers, that the sales are about what they expected they would be.
      Doctor Demento
  • RIM - RIP already!

    Bye bye RIM! We wont miss you for sure. You please RIP. It is because of you that I have had a frustrating experience with my phone [shoved down my throat] for last 5 years.
    browser.
    • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

      @browser.
      Seconded. I hate my Blackberry Curve.

      User experience sucks beyond belief. My previous HTC 710 with WinMo 6 on it was better, and I hated that too.
      neil.postlethwaite
      • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

        @neil.postlethwaite@...

        I third that...

        UI fluidity, usability, speed, temps, frequent lock ups, the 10 minute boot up and more would get me so angry with my old Storm 2... I just wanted to find a sharp corner of a desk and smash the phone to pieces. Also the fact the stupid Verizon sales rep which pushed me into getting the phone which I usually don't let happen I thought I would take a chance on getting yet another Blackberry. He promised OS6 was coming to the phone which would be much faster and so on...

        Fool me once, shame on you... Fool me twice shame on me... After raising H E double hocky sticks with them with the anticipated release of the Trophy I finally got my new phone which is a HTC Trophy Windows Phone 7 and am in love! Fast, fluid, decent battery, no lock ups, quick boots when resuming from being off...

        Blackberry needs to really think about what they're doing... If it isn't working wipe the slate clear and start from scratch and develop something like that to keep returning business and creating new business... If MS can do with from WinMO to Windows Phone 7 they should be able to as well. I from now on will buy only WP7!
        audidiablo
  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    Won't ever go back to Blackberry. Most frustrating setup to do along with monthly charges. Iphones and Androids do it better and free. No need to "wipe" the device if you have an issue with an email account. Never understood that. We had a wait to get on our Blackberry server...now it's been a mass exodus.
    psymth@...
  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    too pricey..too small..too thick..not enough applications...well behind the competition in this unit which is too bad as RIM used to be at the bleeding edge and now well behind Apple.
    nfiertel
  • Doomed Company

    Just like Microsoft.
    james347
    • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

      @james347 Unlike RIM Microsoft continues to print money.
      jessiethe3rd
  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    Don't blame Apple, blame Google, most people I knew last year on Verizon that had a BB went with Android...
    Hasam1991
    • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

      @Hasam1991 and then switched to iPhone when it became available
      pupkin_z
      • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

        @pupkin_z
        I wonder then how android has 36% market share and the toy OS has just 19
        pinkfloydhighhopes
  • RE: RIM plots layoffs, cuts fiscal year earnings outlook; PlayBook a bright spot

    This is what happens when a company has a monopoly for about 6 to 7 years. Very little incentive for innovation, upgrades, or customer service. They should admit their loss jump to the Android OS customize it accordingly and use an email android app that links to their blackberry servers. If they don't - I see BK in the not too distant future. Nokia got a clue - they just picked the wrong partner.
    Al in SoCal