RIM saw its revenue decline in the first quarter of fiscal 2012. The BlackBerry maker shipped 500,000 PlayBook tablets. And layoffs are coming.
Research In
Motion earned $4.9 billion 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 June 16 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.
"The shortfall
in the United States is primarily related to the age of the BlackBerry
portfolio," Jim Balsillie, co-CEO of Research In Motion, told analysts during
the company's July 16 earnings call. Despite that softness in the U.S. 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-CEO 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."
The co-CEO
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 CEOs took
pains to emphasize 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 analyst Ehud
Gelblum wrote in a note to clients, according to a July 16 Reuters report.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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