BlackBerry Crumbling Amid Job Cuts Warning
The maker of BlackBerry smartphones has warned that it will post an operating loss for the second quarter in a row and will lay off a large number of employees this year.
Struggling Research in Motion (RIM) has also hired teams of bankers to carry out a far-reaching strategic review of its deteriorating business.
JP Morgan and RBC Capital Markets will look into partnering with other companies and licensing software, in addition to other alternatives to help turn around the once-pioneering organisation.
Canada-based RIM made no mention of a sale of the company although its new chief executive Thorsten Heins did not rule that out after the firm's last earnings report in March.
RIM did not detail the coming layoffs, other than to say the company expects "significant spending reductions and headcount reductions in some areas throughout the remainder of the year."
The company, which hopes to make £643m (1bn US dollars) of savings this year, currently has about 16,500 employees.
Mr 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 (current quarter's) results to reflect this, and likely result in an operating loss for the quarter."
Mr Heins, formerly a little known chief operating officer at RIM, took over in January after RIM founder Mike Lazaridis and longtime executive Jim Balsillie stepped down as co-CEOs after the company lost tens of billions of pounds in market value.
That came after millions of BlackBerry customers were hit by a three-day phone blackout due to a server crashing.
Peter Misek, an analyst from investment firm Jefferies, said the latest development was a "disaster".
"The problem is you can't see a path to a sale until you stabilise the business," he said.
Mr Misek said he expects as many as 5,000 layoffs soon.
RIM's US share of smartphone sales dropped from 44% in 2009 to 10% in 2011 as their popularity plummeted.
The company is losing market share across the globe to Apple and phone makers such as Samsung and HTC, which use Google Android software.
RIM is working on the launch of a new operating system, but that is happening just major markets are abandoning their BlackBerrys for iPhones and Android phones.
The much-delayed 'BlackBerry 10' software platform is expected to be out later this year, although its success could be limited if Apple introduces its hotly anticipated new iPhone at the same time as expected.
RIM has tried to make phones with touchscreens that resemble the iPhone, but those offerings have largely flopped. RIM's tablet, the PlayBook, also failed to take off.
Commentators said RIM was following the same trajectory as struggling Finnish handset maker Nokia and California-based Palm, both of which attracted consumers with trend-setting phones and technologies in their heyday, only to be out-manoeuvred by competitors.