Ottawa - Research in Motion, the beleaguered BlackBerry maker, is open to selling or licensing parts of its business, its chief executive said Thursday after the company announced a fourth quarter loss of $125 million and a higher than anticipated decline in BlackBerry sales.
The Financial Results, which marked the fifth consecutive time that the company missed its quarterly financial guidance, were preceded by an announcement that Jim Balsillie, the company's former co chief executive and co chairman, had resigned from the board.
Although Thorsten Heins, the company’s chief executive since January, is an insider, in a conference call with analysts Thursday he adopted a much more candid tone about the company’s position than his predecessors have offered.
“I recognize that these are difficult times for shareholders,” he said. “And it is likely that the next few quarters will be challenging.”
Mr. Heins said that the company was currently reviewing its businesses as well as looking at a sweeping reorganization of its management. David Yach has stepped down as chief technology officer of software and Jim Rowan has left the post of chief operating officer for global operations.
Mr. Heins said he had already decided that RIM should concentrate on selling to its original client base of business and government users. “It is very clear to me that substantial change is what RIM needs,” he said during the conference call. “We believe BlackBerry cannot succeed if we try to be everybody’s darling and all things to all people.”
The review of operations, he said, would include exploring licensing RIM’s technologies to other companies or forming partnerships with other companies. If it makes good business sense, he added, some of RIM’s operations may be sold although he said that he intended to keep the company as an integrated provider of hardware, software and, through its unique network, data and communications services.
About the only avenue that Mr. Heins appeared reluctant to follow was seeking a sale of RIM as a whole. “The best path for RIM is to manage the turnaround,” he said.
The sweeping call for change from Mr. Heins was welcomed by many analysts.
“That was an important step,” said Bill Kreher, a technology analyst at Edward Jones. “Heins appears to be more open to new ideas than the previous management team.”
Nevertheless, like his predecessors, Mr. Heins is betting that RIM’s fortunes will reverse once a new line of phones using a new operating system, BlackBerry 10, starts coming to market later this year.
While Mr. Heins still did not have a date for when those phones would go on sale, he did say that sample versions would be provided to software developers in May.
During the fourth quarter of RIM’s fiscal year, which ended March 3, sales of BlackBerry 7 phones, which were supposed to bridge the gap to the new handsets, fell so much that RIM took a $267 million write down on inventory. The company also wrote down the value of its good will by $355 million during the quarter.
Without the charges, RIM would have earned $418 million, or 55 percent less than the $934 million recorded a year earlier. Revenue declined to $4.19 billion, from $5.56 billion during the period a year earlier.
The 11.1 million BlackBerry phones shipped marked a 21 percent drop. The company shipped about 500,000 PlayBook tablets and said that retailers sold slightly more than that number during the quarter. Sales of the tablets, which use a preliminary form of the BlackBerry 10 operating system, have been fueled by prices that are below RIM’s cost for making the devices.
Over the last 18 months or so, RIM had been able to more than offset the drastic decline in BlackBerry sales in the United States by successfully promoting inexpensive BlackBerrys in less developed countries as entry level smartphones. But Mr. Heins said that business was now under threat by increasing numbers of low priced smartphones using Google’s Android operating system.
RIM, he said, will soon introduce inexpensive handsets it hopes will counter that trend.
Lemon Digital will keep you updated on these "Entry Level" Smartphones.
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