RIM Ships 500,000 PlayBooks
RIM’s revenues declined in the first fiscal quarter of 2012 and is planning layoffs as it goes through a ‘transition’
Research In Motion earned $4.9bn (£3bn) in revenue for the first quarter of fiscal 2012, down 12 percent from the previous quarter. Net income also declined, and RIM executives on a 16 June earnings call acknowledged that the BlackBerry maker is undergoing a turbulent period in its long history.
RIM’s BlackBerry PlayBook tablet, a 7-inch entrant into the increasingly competitive tablet market, shipped approximately 500,000 units in the first quarter. In the same time frame, RIM shipped approximately 13.2 million BlackBerry handsets. RIM has acknowledged in the past that BlackBerry sales are softening.
Shortfall
“The shortfall in the United States is primarily related to the age of the BlackBerry portfolio,” Jim Balsillie, co-chief executive of Research In Motion, told analysts during the company’s 16 July earnings call. Despite that softness in the US market, he cited apparent strength in certain international markets. Overall, international revenue in the first quarter grew 67 percent year-over-year.
RIM has made no secret of its plans to introduce a set of “superphones” based on its QNX operating system, which currently powers the company’s PlayBook tablet. However, those superphones aren’t widely expected to reach store shelves before the second half of 2012, requiring RIM to rely on BlackBerry OS 7 and upcoming devices such as the BlackBerry Bold 9900 and 9930, which were unveiled during May’s BlackBerry World conference.
The Bold 9900 features a touch-screen display and physical QWERTY keyboard. While the device’s design aesthetic fits in neatly within RIM’s broader device portfolio, it failed to excite analysts and mobile experts who expected the company to attempt something more radical. Meanwhile, RIM continues to face substantial competition on a number of fronts, including Apple’s new robust messaging service for its iOS mobile devices.
During the earnings call, Balsillie suggested that RIM would lay off employees and start the “streamlining of operations” in order to make the company more efficient.
He also defended his power-sharing arrangement with co-chief executive Mike Lazaridis, a focus of analyst grumbling. “Mike and I have been partners in this business for nearly 20 years,” he said, adding that the challenges facing RIM are ones “few companies would have been able to survive, but we have”.
Near-term prospects
The co-chief executive arrangement has “led to the success of RIM over the past two decades”, Lazaridis chimed in.
Balsillie kept using the word “transition” to describe RIM’s current state, and both chief executives took pains to emphasise they had a plan to guide their company back to profitability, despite continued aggression by competitors such as Apple’s iPhone and the growing family of Google Android smartphones. Both expressed confidence at RIM’s ability to execute on the transition to QNX-based BlackBerry devices, and to keep adding to the PlayBook’s capabilities – despite what Balsillie acknowledged as a tablet launch that “did not go as smoothly as we planned”.
Even before the earnings call, a number of analysts had taken a dim view of RIM’s near-term prospects.
“We believe RIM has now squandered nearly every opportunity and competitive advantage it enjoyed through ineffective R&D resource management, delayed product launches and misreads of the competitive environment,” Morgan Stanley’s Ehud Gelblum wrote in a note to clients, according to a 16 July Reuters report.
