* RIM delays launch of BB10 smartphones to early 2013
* To slash about 5,000 jobs to cut costs
* Fiscal Q1 rev falls 43 pct to $2.8 bln
* Adj fiscal Q1 loss $0.37
* Shares tumble 14 pct after-hours
By Alastair Sharp
TORONTO, June 28 Research In Motion Ltd
delayed the make-or-break launch of its next-generation
BlackBerry phones until next year, in a devastating setback to
the once-dominant technology company whose sales are crumbling.
Shares of the company, which also announced a
steeper-than-expected quarterly operating loss and deep job cuts
on Thursday, plunged 14 percent after it said it would release
its revamped BlackBerry 10 devices early in 2013. It conceded
the development had "proven to be more time-consuming than
The delay in releasing the devices - RIM's last best hope of
stemming its eclipse at the hands of Apple Inc's iPhone
and phones using Google Inc's Android software -
confirmed the worst fears of analysts and investors.
The size of the loss, RIM's first in eight years, and the
likelihood that sales will keep sliding into 2013, severely
reduce the options for the company if it is to survive.
RIM's announcement that it would slash 5,000 jobs, or 30
percent of its workforce, only reinforced the impression of a
company that could be in terminal decline.
"It's like watching a puppy die. It's terrible," said
analyst Matthew Thornton of Avian Securities in Boston.
"Wow, what a disaster," said Edward Snyder, managing
director of Charter Equity Research in San Francisco. RIM is now
in "a handset death spiral," he said. "From a numbers point of
view, it could hardly be worse, and it's going to deteriorate
from here," he said.
RIM, which virtually invented mobile email, has fallen from
a leadership position to an also-ran in smartphones over a few
years filled with delayed and uninspiring products, service
outages and other embarrassments.
Now the new BlackBerry line will miss both the
back-to-school and Christmas shopping periods, while the
competition brings out new phones with more bells and whistles.
Apple is widely expected to unveil an iPhone 5 later this
year, while a slew of manufacturers using Android are constantly
pushing out new gadgets. Microsoft Corp is also
planning to update its Windows software for mobile devices.
"There's really no guarantee that once they come out on the
other side of BlackBerry 10 that it's going to be something that
people will want," said Eric Jackson, a hedge fund manager at
Ironfire Capital in Toronto.
RIM's board is under mounting pressure to consider
unpalatable options such as selling its network business or
forming an alliance with Microsoft, sources familiar with the
situation told Reuters.
Microsoft CEO Steve Ballmer approached RIM earlier this year
looking to strike a partnership similar to the one the software
giant has with Nokia Oyj, the sources said. Under
that partnership, Nokia will use Microsoft's latest Windows
operating system on its smartphones.
In such a scenario, RIM could also look for Microsoft to buy
a stake in the company and fund marketing and other expenses,
the sources said. However, this option is not attractive to RIM
because it would mean the end of the Waterloo, Ontario-based
company's technology independence, they said.
Even so, freshman CEO Thorsten Heins gave no indication on a
Thursday conference call that he was losing faith in the current
tack of cutting costs while waiting for the BlackBerry 10
launch, which is now more than a year overdue. The new devices
are now set to land in a slow period when consumers are tapped
out after their holiday spending.
"It's akin to launching fireworks underwater," said IDC
analyst Kevin Restivo.
RIM expects the job cuts to cost $350 million in the current
fiscal year. It has pledged to slash $1 billion from its
operating costs in the year, but now considers that target as a
minimum it will pursue, given the additional BlackBerry 10
delay. It said it had already cut layers of management,
streamlined its supply chain and outsourced repair work.
Analyst Shaw Wu of Sterne Agee in San Francisco said RIM
would now have to be very careful. "Layoffs are not free -
there's a use of cash with that. They have to be very careful
with their cash balance. It's a matter of survival now."
RIM's cash position - which has become a focus of concern
for analysts as the company dips into the red - increased to
$2.2 billion by the end of the quarter, and it aims to maintain
that level this quarter.
The company conceded that may slip as it pays severance to
reduce the workforce, but it declined to estimate the cash
position going into 2013.
Shares of RIM, which have dropped about 70 percent over the
past year, were down 14 percent at $7.86 in after-hours Nasdaq
trading. At that price, the market is valuing the company at
$4.12 billion, a far cry from its once-lofty market
capitalization of about $84 billion.
RIM had warned it would post an operating loss but did not
provide specifics. Excluding special items, the
loss came in at $192 million, or 37 cents a share, for the first
quarter ended June 2. Revenue declined 43 percent to $2.81
Analysts on average expected a loss of 7 cents a share on
revenue of $3.07 billion, according to an informal Reuters poll.
For the year-earlier quarter, RIM reported a profit of $695
million, or $1.33 a share, on sales of $4.91 billion.
RIM said it expected to post another operating loss in the
current quarter, as it ships fewer smartphones. It shipped 7.8
million BlackBerry smartphones in the last quarter, only about
half of the more than 14 million of two quarters ago. Until now,
it had shipped more than 10 million devices every quarter since
late in 2009.
RIM sent out 260,000 of its poor-selling PlayBook tablet
computers, which it has discounted sharply after initially
pricing them at levels comparable with Apple's iPad.
Apple sold more than 11 million iPads last quarter. RIM said
last month it would no longer produce the cheapest model of the
PlayBook, which uses the same QNX-based operating system that
the company is struggling to integrate into its future phones.