Research In Motion (Nasdaq: RIMM) will provide an update on upcoming layoffs and may possibly reveal more details about the new BlackBerry 10 when it releases quarterly financial results after the market closes Thursday.
RIM is facing the most difficult period in its history. The company that fathered the ground-breaking BlackBerry in 1999, is weighing all options with a team of bankers it has hired as its market share is eroded by Apple’s iPhone and devices running Google’s Android operating software.
On Thursday, RIM will offer an update on its restructuring plan, which includes significant layoffs. The Canadian company is trying to save about $1 billion this year.
Jefferies analyst Peter Misek expects RIM to cut about 6,000 of its roughly 19,500 employees this year.
Even with the launch of the a new operating system for BlackBerry 10, many believe it’s too late to reverse RIM’s fortunes after the company failed to heed the onslaught of touchscreen phones, like those made by Apple Inc.
A full-year loss would be a reversal for a company that earned an operating profit of $4.6 billion in fiscal 2011.
“They’re way too far behind to catch up,” said Scott Sutherland, an analyst with Wedbush Securities in San Francisco. He has the equivalent of a hold rating on RIM and estimates the company will have an operating loss of $55 million this year. “BB10 will buy them some time, but long term unless they change their strategy, I think they are in a decline.”
Compounding RIM’s gloomy prospects for this year, the new phones will probably miss the back-to-school season, making it “likely too late and fraught with risks,” Ehud Gelblum, an analyst at Morgan Stanley in New York, said in a note to investors this week.
BlackBerry’s aging Web browser and shortage of applications has driven consumers into the arms of competitors led by Apple, which introduced the iPhone in mid- 2007. RIM’s first foray into touch-screen devices with the BlackBerry Storm in late 2008 was panned by critics as a device that appeared to have been rushed to market with software flaws.
The BlackBerry PlayBook tablet released last April was given good reviews for its hardware but again blasted for lacking key features: built-in e-mail, calendar or contacts programs. Sales reflected the poor reviews. RIM in its last quarter said it sold more than 500,000 PlayBooks to Apple’s 11.8 million iPads.
RIM probably sold 300,000 PlayBooks and 7.4 million BlackBerrys last quarter, Morgan Stanley’s Gelblum predicted. That compares with 11.1 smartphones sold in the previous quarter.
And there are concerns that a shift from a physical keyboard on the new phone could alienate its hardcore base, which detest touchscreen technology. So much rides on the success of the new phone, that CEO Thorsten Heins has said the company’s turnaround hinges upon it.
Boosted by overseas growth, RIM had 78 million worldwide subscribers as recently as last month, but Misek expects the company to start losing subscribers – two to three million a quarter. He’ll be watching Thursday’s comments to see how many subscribers RIM has kept.
Analysts polled by FactSet on average expect Research In Motion Ltd. to report a quarterly loss of 3 cents per share on revenue of $3.08 billion. In the same quarter a year ago, RIM earned $695 million, or $1.33 per share, on revenue of $4.9 billion.
(Bloomberg news contributed to this report.)