RIM to cut 5,000 jobs, delay BlackBerry 10

FILE - A Research In Motion employee leaves the company headquarters in this March 5, 2007 file photo. (Credit: Nathan Denette/AP Photo/CP, file)

(CBS/AP) TORONTO - Struggling BlackBerry maker Research in Motion (RIM) revealed Thursday that its business is crumbling faster than thought.

The mobile communications company said in a statement that its net loss for its last quarter, which ended June 2, was $518 million. RIM said it's cutting 5,000 jobs and delaying the launch of its new phone operating system, BlackBerry 10, until after the holiday shopping season.

After several delays, the first phone with BlackBerry 10 was expected later this year. It will be delayed even longer, to the first quarter of next year, RIM CEO Thorsten Heins said.

Now it will come out months after a new iPhone is expected to be released. Current and previous iPhones have made the BlackBerry look ancient.

"I am not satisfied with these results and continue to work aggressively with all areas of the organization and the Board to implement meaningful changes to address the challenges, including a thoughtful realignment of resources and honing focus within the company on areas that have the greatest opportunities," Heins said in a statement.

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The jobs cuts are part of a previously announced initiative to cut $1 billion in annual costs this year. They represent about 30 percent of RIM's workforce, which is currently at 16,500.

"It is necessary to change the scale and refocus the company," Heins said on a conference call with analysts.

"I fully understand the impact a workforce reduction of this size has on our employees and the communities in which we operate. I assure you that we wouldn't move forward with a change of this size if we didn't think it was critical for our future."

RIM shares plunged $1.38, or 15 percent, to $7.75 in extended trading, after the release of the results. If they hold that level into regular trading Friday, they will set a new nine-year low.

Heins acknowledged that he delivered "a lot of tough news."

RIM lost $518 million, or 99 cents a share, in its fiscal first quarter, which ended June 2. This compares with a profit of $695 million, or $1.33 per share, a year ago.

Excluding impairment charges, the latest loss was 37 cents per share. Analysts polled by FactSet were expecting a loss of 3 cents.

Revenue fell 43 percent to $2.8 billion, well below analyst expectations at $3.1 billion.

"When a technology gets old, it's not a slow fade. It's a sharp cliff," said Colin Gillis, an analyst with BGC Financial.

"There is very little market for old technology."

Michael Walkley, an analyst with Canaccord, called the BlackBerry 10 delay a dire sign.

"The biggest disappointment is the delay of the BlackBerry 10," he said. "It's extremely challenging for them to turn around the business when their new smartphone launching that late."

[FedUpOpinion_3207]

Blackberrys are so out-dated. This is no surprise. I work for a large company where most of us are required to use this device. I know of no one who loves their BlackBerry and many wish the company standard would go to iPhone. The browser is painfully slow and it doesn't matter which carrier (Sprint, Verizon and AT&T are used depending on home coverage of the employee). I currently have the Bold 9650 and it has an even slower response time than the Curve model had. Painfully slow. I can't tell you how many times my Blackberrys have locked up too. Only way to reset it is to remove the battery...do you know how long it takes the Blackberry to boot up again from battery removal?? A PAINFULLY long time.

[Martha12345]

Mean While : Abound Solar of Loveland, Colo., said it will suspend operations next week, after talks with potential buyers broke down. The company received about $70 million from the Energy Department before officials froze its credit line last year.

Abound is the third clean-energy company to seek bankruptcy protection after receiving a loan from the Energy Department under the economic stimulus law. California solar panel maker Solyndra and Beacon Power, a Massachusetts energy-storage firm, declared bankruptcy last year. Solyndra received a $528 million federal loan, while Beacon Power got a $43 million loan guarantee.

[wfw3536]

And I thought Obama said the private sector is doing just fine.

[formerlyluvnut]

Hmmmmm. Funny. Incompetent management has destroyed so many companies it is just pathetic.