RIM Shares Drop 15% After Big Loss

Research In Motion Ltd. RIMM -0.54%shares plunged 15% after the BlackBerry maker posted a big quarterly loss and said its next smartphone—a device the company has bet its survival on—won't be ready until next year.

The surprise delay shook investors, who had expected the phone in time for the crucial holiday-shopping season. RIM has bet on the BlackBerry 10 phone to reverse a sharp drop in sales that has pushed it into the red and triggered a massive restructuring.

The Canadian company posted a $518 million loss and a 33% drop in revenue in the latest quarter. It said Thursday it would cut as many as 5,000 jobs, or just shy of a third of its current workforce of 16,500.

RIM shares, which had been trading near multi-year lows, dropped $1.32 to $7.81 in after-hours trading. RIM's market value has now fallen under $4 billion, even though the company has $2.2 billion in cash.

The BlackBerry 10 could further strain RIM's finances as it battles with slowing device sales in the face of blistering competition from Apple Inc.'s AAPL -0.95%iPhone and devices that run off of Google Inc.'s GOOG -0.88%Android operating system.

RIM said Thursday its new phones will launch in the first quarter of 2013. That means the devices will not only miss the holiday selling season but likely arrive after Apple has already updated its iPhone and after the arrival of several new Android devices.

Chief Executive Thorsten Heins, on a conference call, said the delay was "not due to quality," but due to difficulties in integrated new features its engineers were developing. He said the earlier schedule the company had set "is no longer realistic."

RIM is also in the midst of a strategic review, but Mr. Heins said he's not yet ready to share results of that review. RIM has hired investment bankers to evaluate options, and Mr. Heins hasn't ruled out a sale of the company. He said his focus is on launching the BlackBerry 10, and turning things around as a stand-alone company.

Asked specifically on the call Thursday if he was considering more radical strategic shifts, Mr. Heins said many options remain open for RIM—from remaining a stand-alone company to "whatever model you can think about," adding that any new tack would be up to the board.

"Now is not the time to share any detail," he said. "It will be the board deciding what strategic direction they want to take the company."

Mr. Heins also said the company is in "intensive talks" over possible deals to license the BlackBerry 10 operating system, its popular instant-messaging service and other RIM technologies, but didn't give details. RIM executives on the conference call also said the company would "streamline" the number of BlackBerry models the company offers.

"The window for BlackBerry to remain a platform with viable growth potential is closing, and this development illustrates the pace at which it is closing," Forrester Research analyst Charles Golvin said.

RIM said it shipped 7.8 million BlackBerry handheld devices in the latest fiscal quarter ended June 2. That compares with 11.1 million in the preceding quarter and 13.2 million in the year-ago period.

The company said it expects the next several quarters "to continue to be very challenging" due to competition, lower BlackBerry shipments and its plans to "aggressively drive sales" of older BlackBerry models.

RIM said its cash position grew slightly in the quarter, to $2.2 billion from $2.1 billion. With no debt, that's still a considerable cushion, but analysts worry that the costs of launching BB10, along with falling margins that RIM is likely to suffer from its current stable of older phones, could strain its finances. RIM's Chief Financial Officer Brian Bidulka said the timing of RIM's layoffs and restructuring costs could impact its cash position in the near term, but it expects to maintain its current level of cash through the next quarter.

In previous statements, RIM said it was looking to work towards at least $1 billion in cost savings by the end of fiscal 2013. Today the company said it "may increase the scope and magnitude of these programs, and considers these original estimates as minimum numbers it will be pursuing."

RIM said it is consolidating its supply chain from 10 manufacturing sites to three and outsourcing some of its repair operations. It also said it would reduce layers of management "to drive better clarity, efficiency and accountability across the organization."