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December 16, 2011

Research in Motion: Another announcement, another delay

The BlackBerry-maker has released a disappointing set of financial figures. CBR looks at what this may mean for RIM

By Allan Swann

BlackBerry maker Research in Motion (RIM) announced today that its CEOs will be effectively giving up their salaries next year, after the company announced falling profits, poor sales performance of its Playbook tablet and, most importantly, a six-month delay to its next generation of BlackBerry smartphones.

The new BlackBerry range of smartphones were due to launch in the first half of next year to compete with Apple’s iPhone and Google’s Android smartphones. Co-CEO-Chairmen Jim Balsillie and Mike Lazaridis told investors at its third quarter results that it was having trouble obtaining enough CPU chips and the delays were unavoidable.

Corporate users, once RIM’s bread and butter, are moving to Apple or Google’s platforms in droves. RIM announced it will be rolling out BlackBerry Mobile Fusion, a platform for managing mobile devices from all operators – a big break from the company’s normal focus on BlackBerry-only services.

The BlackBerry 10 devices (formerly known as BBX) are much anticipated as they run the company’s brand new QNX operating system, which also powered its BlackBerry PlayBook tablet. It was also announced that these will now be 4G-LTE compatible, which is of less interest to UK readers as Ofcom recently announced the delay of 4G mobile services in the UK to 2015.

Two weeks ago RIM announced a $485m write-down on the failed tablet as a profit warning. It has sold just 150,000 units in the last quarter. By comparison, the Apple iPad 2 is expected to sell 14 million. The PlayBook has been a disaster for the company – it is due to get a software update that will allow it to finally do email in February. This update was originally due in summer 2011, and would allow the PlayBook to access Google’s Android Store. BlackBerry is also working on the PlayBook 2, an executive recently told CBR.

RIM now expects to sell between 11m and 12m BlackBerry smartphones in the key Christmas quarter. By comparison, it sold 14.1m BlackBerrys in the last quarter. Its third-quarter earnings were $265m compared with $911m this time last year. Revenue fell by 6% to $5.17bn, compared with $5.5bn last year.

RIM’s sales outside of the US continue to grow strongly, driven by markets such as Indonesia where it is seen as a status device. However, it continues to lose market share in most developed countries to Apple’s iPhone and Google Android.

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The announcement saw the company’s share price fall by a further 6% – this means RIM has seen its share price tumble by 80% in the last year. Investors have long been calling for the duo’s heads, and rumours have long circled that RIM may be sold.

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