BlackBerry maker hires banks to explore options
Troubled technology firm Research in Motion (RIM) opened the door to a sale or break-up yesterday after appointing bankers to help carry out a review.
The struggling BlackBerry maker has hired JP Morgan and Royal Bank of Canada as it said it could post a first quarter operating loss.
The bankers have been asked to look at an overhaul of RIM’s business model and efforts to expand the Blackberry platform through partnerships and licensing deals.
RIM, which virtually invented the concept of on-your-hip email with its first BlackBerry devices, also said it would cut a “significant” number of jobs, adding to a string of senior executives who have resigned in recent weeks. No official figures were provided but sources said it was likely the workforce would be cut from 16,500 to 10,000 by early next year.
RIM shares, which are down more than 75 per cent over the past 12 months and trading at eight-year lows, slumped nearly 13 per cent to around $9.77 (£7.80) in aftermarket trading.
“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 suffered a series of disasters last year, including a blackout which deprived users of access to email, and moved chief operating officer Thorsten Heins up to top spot in January in place of co-chief executives Jim Balsillie and Mike Lazaridis, who resigned after intense investor pressure.
Yesterday Heins said: “The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter.”
He plans to keep spending and hiring for the development of the next-generation BlackBerry 10 phones and to expand its catalogue of third-party applications.
A dearth of apps compared with the number available for Apple and Android-based devices has been a major drag on the sales of RIM.
The firm, based in Waterloo in Ontario, said its subscriber base grew to 78m users, up 1m. But growth was slower than in any recent quarters.