Struggling BlackBerry maker Research In Motion might have to write-off $1-billion in unsold BlackBerry devices, which include smartphones and tablets, as the manufacturer faces impending staff layoffs and disastrous quarterly results. If RIM admits to the write-offs, it will be the company’s third since December.
According to data collected by Bloomberg, the total amount for the write-off will be approx. $1.03bn for the last quarter, having grown by 18%.
The company also announced yesterday that they have roped in the help of JP Morgan and the Royal Bank of Canada, who will be conducting a strategic review of their business. RIM also suspended all trading in RIM shares yesterday.
“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,” RIM CEO Thorsten Heins said in a statement.
According to the UK’s The Telegraph, “The BlackBerry brand has been battered in the last three years by more advanced and user-friendly mobile technology from Apple and Google. RIM’s tablet, the PlayBook, was released only last year but is already seen as a failure, and a long-awaited update to its smartphone operating system and hardware may only bring it more up-to-date with rivals.”
Heins warned consumers that their financial outlook for the first three months of the year will probably end with a loss. “(Things will) continue to be challenging for the next few quarters. (It will) likely result in an operating loss for the quarter.” RIM already operated at a loss of $125-million for the last quarter of 2011.
RIM’s shares have dropped 75% in the last 12 months, and it’s currently trading at an eight-year low. At the close of business yesterday, the shares fell 13% to $9.77 a share, compared to four years ago when they were valued at $140 a share. RIM is also rumoured to be cutting around 2 000 workers from their 16 000-strong worldwide workforce, with some analysts believing it will be closer to 10 000 by early next year.
“They need to take a long hard look at themselves. As long as they stick with this integrated strategy, they’ll always be playing catch-up but never get to where Apple and others are. At the end of the day, being an integrated business will go the way of Palm. They really need to rethink how to become part of a bigger ecosystem,” Scott Sutherland, an analyst at Wedbush Securities, told The Telegraph.
Charlie Fripp – Consumer Tech editor
