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BlackBerry 10 delayed as RIM reports $518 million loss

updated 06:37 pm EDT, Thu June 28, 2012

BlackBerry smartphone pushed to Q1 2013

Research In Motion posted a half-billion dollar loss last quarter, and the company will be pushing back the release of its newest BlackBerry handsets to the first quarter of next year. The company released its financial statement for the quarter ended June 2 today, showing the recent operating loss and forecasting continuing difficulties in the quarters to come. The troubled device manufacturer will continue workforce reductions in the near future as it struggles to return to profitability.

RIM posted $2.8 billion in revenues this quarter, down 33 percent from the $4.2 billion it posted in the quarter previous. The $518 million GAAP net loss this quarter is the largest yet for the company, up from $125 million in the previous quarter. Year-over-year, the most recent figures represent a more than $1 billion reversal from the $695 million profit for the same quarter.

RIM's shortfall stems from drastically declining revenues and profit margins as well as its operating expenses. The company's gross margin has shrunk from 43.9 percent in the same quarter 2011 to 28 percent this quarter, and gross margins have fallen from $2.16 billion for the same quarter 2011 to $788 million this quarter. Operating expenses were down from the previous quarter to the current, though not by much.

RIM executives maintain that the company is "relentlessly focused" on the development process for the first smartphones to bear its BlackBerry 10 operating system. Integrating BlackBerry 10's features, though, has proved a problem for RIM's software development teams, and the company now expects that BlackBerry 10 smartphones will launch in the first quarter of 2013.

Despite the dismal numbers, the report reveals that RIM actually grew its BlackBerry subscriber base over the quarter. BlackBerry now boasts 78 million subscribers, and that number is said to be growing in all regions except for North America. The BlackBerry App World also now contains over 89,000 applications. RIM plans to build on these positive signs going forward.

Capitalizing on positive signs isn't the company's only course of action, though. RIM's Cost Optimization and Resource Efficiency (CORE) program is targeted at generating at least $1 billion in savings by the end of fiscal 2013. This will entail considerable workforce reductions, on the order of around 5,000 employees before the end of fiscal 2013. The CORE program will also involve a continued purge of layers of management, streamlining the company's supply chain, a reorganization of marketing efforts to emphasize regions where the company is strong, and a good deal of operational outsourcing.

By Electronista Staff


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