Research In Motion's shares have fallen by 22 percent since trading opened on the Toronto Stock Exchange on Friday, after the company cut its financial forecasts for the year and said it would lay off workers.
Research In Motion's shares have fallen by 20 percent since trading opened on Friday, after the company cut its financial forecasts.Photo credit: Ben Woods
In its financial report (PDF) for the first quarter of its fiscal 2012 year, Research In Motion (RIM) said revenue in the quarter was $4.9bn (£3bn), 12 percent down on the previous quarter — although 16 percent up on the same quarter a year earlier. The BlackBerry maker said it expected revenues for the second quarter to be between $4.2bn-$4.8bn, with earnings per share of between $0.75-$1.05 — analysts had previously forecast $1.40 per share.
The results were issued on Thursday. When the Toronto Stock Exchange opened on Friday, RIM shares fell by around 22 percent within two hours.
"Fiscal 2012 has gotten off to a challenging start," RIM co-chief executive Jim Balsillie said in the results statement. "The slowdown we saw in the first quarter is continuing into Q2, and delays in new product introductions into the very late part of August [are] leading to a lower-than-expected outlook in the second quarter."
Fiscal 2012 has gotten off to a challenging start. The slowdown we saw in the first quarter is continuing into Q2.– Jim Balsillie, RIM
However, Balsillie said, the company remains profitable with growing market share in many areas of the world and "a strong balance sheet with almost $3bn in cash".
"We believe that with the new products scheduled for launch in the next few months and realigning our cost structure, RIM will see strong profit growth in the latter part of fiscal 2012," Balsillie added.
That cost-structure realignment will partly consist of losing employees. Further down the statement, RIM said it would "begin a programme to streamline operations across the organisation, which will include a headcount reduction".
"This realignment will be focused on taking out redundancies and a reallocation of resources to allow us to focus on the areas that offer the highest growth opportunities and align with RIM strategic objectives, such as accelerating new product introductions," the statement read.
RIM said it planned to start the job cuts in the second quarter of the fiscal year. However, the company did not respond to a request for comment on the number of jobs that would go or which areas of the business would be affected. RIM also said it would, after 10 July, buy back up to five percent of its outstanding common shares.
According to the results, 78 percent of RIM's revenue in the first quarter of fiscal 2012 came from hardware, 20 percent from services and just two percent from software and "other revenue". The company shipped around 13.2 million BlackBerry smartphones in the quarter, and around 500,000 PlayBook tablets.