A fall of as much as 13% was registered by Research in Motion Ltd. in German trading and 17% in US trading after the Canadian cell phone manufacturer admitted that its revenue for the quarter may drop, the first time in 9 years, and also revealed its plans to trim the workforce. In a statement released yesterday, RIM said that its revenue in the fiscal second quarter will be somewhere between $4.2 billion and $4.8 billion. This was substantially lower than the analyst estimates of around $5.47 billion. The profits per share in this quarter will range from 75 cents to $1.05, whereas analysts had predicted the number at around $1.40.
RIM has been steadily losing its US market share to the Apple iPhone and handsets running Google’s Android platform, and a major reason behind this is that the BlackBerry maker has not introduced a new model since August last year. Cheaper Android models which are gaining popularity in markets like Asia, Latin America and Europe also pose a threat to the less expensive BlackBerry models like the Curve and the Pearl. Higher end handsets also seem to be stuck in the past, with the Torch boasting last generation specifications and the latest Blackberry touch screen smartphone being years behind industry standards.
It was also said by the company yesterday that it has plans for making organizational changes along with cutting down an unspecified number of jobs in order to accelerate the introduction of new products. According to the company’s Chief Financial Officer, the benefits from the job eliminations should start appearing in the third quarter. Many analysts also agree that a more streamlined structure will have benefits for the company.
Last month, the company showcased a new version of the BlackBerry Bold smartphone which featured a physical keyboard along with a touchscreen. RIM co-CEO Jim Balsillie said yesterday that the new Bold along with some other new devices will be made available only later in the quarter. Balsillie emphasized that he and the other co-CEO Mike Lazaridis have made a commitment towards retaining the existing executive structure.
He added that completing the transition of the company and taking it to another level is a job that neither of the CEOs can do alone. However, despite the company’s claims, subscriber share is definitely declining, with RIM’s share of subscribers in the US going down by 4.7% in the three month period that ended in April.
