Research In Motion (NASDAQ:RIMM) said it expects to post an operating loss for its fiscal first quarter due to deteriorating sales and price cuts it made to devices, according to CEO Thorsten Heins. The beleaguered company also confirmed it hired JPMorgan Chase & Co. and RBC Capital Markets to advise it on strategic options.
Starting with its last quarterly earnings update in late March, RIM stopped giving specific financial guidance, given the difficulties it is facing. However, Heins said in a statement that "lower volumes and highly competitive pricing dynamics in the marketplace" will likely lead to an operating loss. RIM's shares were halted in extended trading after the announcement.
"We are continuing to be aggressive as we compete for our customers' business--both enterprise and consumer--around the world, and our teams are working hard to provide cost-competitive, feature-rich solutions to our global customer base," he said. "On the positive side, we expect to further increase our cash position in Q1 from the approximately $2.1 billion we had at the end of fiscal 2012."
Heins confirmed that after RIM posted its year-end financial results in late March it hired the banks to help the management team and board review RIM's business and financial performance. "These advisors have been tasked to help us with the strategic review we referenced on our year-end financial results conference call and to evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives," Heins said.
Heins pointed out that it's not all negative news for the company. He said that more than 5,000 developers, partners, carriers and enterprise customers from 115 different countries participated in the company's annual BlackBerry World conference earlier this month. He also said RIM's developer partners "have been enthusiastic with the BlackBerry 10 Dev Alpha prototype unit we distributed at BlackBerry World and many are well underway in developing applications to be ready for the launch of BlackBerry 10 in the latter part of calendar 2012."
The backdrop of Heins' comments is a series of reports detailing coming job losses at the company. RIM may cut at least 2,000 employees in the next couple of weeks as it embarks on a restructuring program meant to focus the company's operations as it moves toward the launch of BlackBerry 10, according to a report in the Globe and Mail. The report, which cited unnamed sources, said that RIM, which has around 16,500 employees, may cut even deeper than 2,000. According to a Reuters report, which also cited unnamed sources, RIM aims to get its headcount down to 10,000 people by early next year.
In his statement, Heins reiterated that the company has started a restructuring program designed to drive $1 billion in savings by the end of fiscal 2013 based on its run rate in its fiscal fourth quarter of 2012.
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