BlackBerry-maker RIM hits the skids, slashes jobs and guidance

Smartphone pioneer Research In Motion Ltd. (RIMM) could use some wind in its sails. Revenue is down 12% from the previous quarter, an unknown number of job cuts are planned throughout the company and its next set of BlackBerry devices are facing more delays.
After the Waterloo, Canada-based company released another round of disappointing earnings and slashed its guidance, yet again, company stock took a beating. After closing the day at $35.33 with a market cap of $18.51 billion, shares immediately dropped more than 15% in after-hours trading and stock is currently down more than 21%.
The BlackBerry maker sold 13.2 million smartphones in the quarter and netted $695 million in income, down 26% from the previous quarter and down nearly 10% from the year-ago period.
While RIM enjoys growth in other markets, it experienced a significant lag in North America. Co-CEO Jim Balsillie said the sales decline in the United States is “largely related to the age” of BlackBerry devices available today. And by that, he means RIM needs some new products to sell.
Before that happens though, another quarter will come and go.
BlackBerry Playbooks with 4G cellular capability won’t be available until the fall — the company originally planned to release the 4G-capable tablets this summer. Moreover, the new BlackBerry Bold that will also serve as a debut for BlackBerry 7, announced back in May, won’t be coming out until late August or September, likely missing another “summer” launch target date.
Colliding device strategies?
Most perplexing though is the company’s plan to launch its first QNX-based smartphone (RIM still calls it a “superphone”) in the first quarter of next year. That could put the first devices running on BlackBerry 7 right up against QNX-based smartphones within a four-month window.
Co-CEO Mike Lazaridis tried to explain that logic by positioning BlackBerry 7 as a platform that will primarily be aimed at messaging and communication markets while the first QNX smartphone will be at the top of RIM’s lineup alongside the Playbook. That line of thinking only goes so far, however, when you consider that the new BlackBerry Bolds will be at the top of RIM’s smartphone lineup as well. Few companies would expect even their top-line customers to upgrade from one device to another within four to six months.
As for why the company decided not to move to QNX immediately, Lazaridis said a straight shift would have meant the essential abandonment of its “strong and loyal developer community” and there would have been no products lined up for 2012 at all.
Looking back on the Playbook launch, Balsillie admitted that it “did not go as smoothly as planned,” but RIM has sold 500,000 of the devices so far and the tablet is being evaluated at more than 1,500 corporations today.
“The most important thing for us is to get the platform going and gestated. If you wait, it doesn’t get established,” Balsillie said, explaining RIM’s decision to not further delay the Playbook and QNX.
“We have a platform we can run with for a decade and it’s actually very powerful,” he said. “I’d rather take a step one and close off any challenges.”
With both Co-CEOs on the call, a rarity, Balsillie and Lazaridis talked often about the “transition” RIM has been going through of late.
“Few companies would have been able to survive and we have,” Balsillie said. Lazaridis said he believes the company has weathered the worst of it and is now in the “final phase of this transition.”
When RIM upgraded its platform most recently it ran into a series of problems at the carrier certification level that caused delays. The company has since standardized its certification process across the BlackBerry platform, Lazaridis said. Calling it the “largest certification program in our history,” RIM now has a platform that is the same across all of its BlackBerry 7 devices.
“This is the best quality code that we have ever entered into lab,” Lazaridis continued. “As we certify one, we can leverage that certification across the board with other carriers… This is part of our plan to accelerate and catch-up.”
Finally, late in the question-and-answer session, the executives were asked to once again explain the reasoning behind the longstanding Co-CEO structure in place at RIM.
Changing a business card doesn’t change anything, Balsillie said. “I just don’t know what that addresses.”
For his part, Lazaridis said the pair are having too much fun and working too hard to change anything now. “We’re changing the world,” bringing peoples’ lives closer together and “transforming the way people do their work,” he continued.
“Measure twice, cut once,” he said. “You want to make sure the decision you’re going to make is the right one.”