RIM warns of Q1 loss, hires bankers to evaluate changes

RIM says it expects to log an operating loss for the current quarter amid competitive pressures

Research In Motion has warned that it expects an operating loss for the current quarter and has hired two investment banks to help it study alternative company strategies that might include licensing its OS.

The troubled BlackBerry maker said competitive pressures were hurting its business and that the current quarter, which ends June 2, is likely to end in a loss.

"The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace," RIM said in a press release on Tuesday. On its last quarterly earnings call, on March 29, the company said it would stop giving quarterly forecasts but warned that it expected pressure on earnings for the rest of the year. For the fourth quarter, which ended March 3, RIM reported a net loss of US$125 million.

Also on Tuesday, RIM said it had hired J.P. Morgan and RBC Capital Markets after the last earnings call to review its performance. The investment banks will help RIM with an ongoing strategic review that the company described on the March call. The bankers will help RIM "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," the company said.

RIM has struggled against the rise of Apple's iOS and Google's Android as the dominant mobile platforms. Its phone shipments plunged 21 percent in the fourth quarter, and though sales of its PlayBook tablet rose to 500,000 units, they were still dwarfed by quarterly iPad sales exceeding 10 million.

The news came amid reports that RIM is planning to lay off as many as 2,000 employees. In its Tuesday press release, RIM said there would be "significant spending reductions and headcount reductions throughout the remainder of the fiscal year," without giving any details.

RIM plans to announce its results for the current quarter on June 28.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Stephen Lawson

IDG News Service
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