RIM hires bankers for strategic review, forecasts first quarter loss

Tue May 29, 2012 10:10pm EDT
 

By Alastair Sharp

TORONTO (Reuters) - Research In Motion Ltd has hired bankers for a far-reaching strategic review and to look for partnerships as the BlackBerry-maker warned it would likely report a shock fiscal first-quarter operating loss.

RIM virtually invented the concept of on-your-hip email with its first BlackBerry devices, but now finds itself struggling badly in the smartphone market as it trails far behind Apple Inc and other rivals such as Samsung Electronics that use Google Inc's Android software.

RIM said it would also cut a "significant" number of jobs, although it did not say how many. Two sources with close connections to RIM have said it plans to slash its workforce closer to 10,000 by early next year from 16,500 currently.

The lack of details about the size of the loss and the job losses disappointed some analysts.

"They're clearly moving in the wrong direction right now, so I found it a little frustrating that there wasn't more detail," said Alex Gauna, an analyst at JMP Securities.

"That is a disaster. It's really bad. We did not expect an operating loss this quickly," said Peter Misek, an analyst at Jefferies & Co.

RIM's shares, down more than 75 percent over the past 12 months and trading at eight-year lows, slumped nearly 13 percent to around $9.77 a share in after-market trading, although they pulled back slightly to be last quoted at $10.38. About four years ago they traded at more than $140.

Mark McKechnie, an analyst at ThinkEquity LLC, put RIM's value at "about $10 per share," reflecting what its portfolio of technology patents might bring in a sale.   Continued...

 
A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. REUTERS/Mark Blinch