* RIM says will cut "significant" number of job
* JP Morgan, Royal Bank of Canada hired as advisers
* Shares down almost 13 percent in after-market trade
By Alastair Sharp
TORONTO, May 29 Research In Motion Ltd
has hired bankers for a far-reaching strategic review
and to look for partnerships as the BlackBerry-maker warned it
would likely report a shock fiscal first-quarter operating loss.
RIM virtually invented the concept of on-your-hip email with
its first BlackBerry devices, but now finds itself struggling
badly in the smartphone market as it trails far behind Apple Inc
and other rivals such as Samsung Electronics
that use Google Inc's Android software.
RIM said it would also cut a "significant" number of jobs,
although it did not say how many. Two sources with close
connections to RIM have said it plans to slash its workforce
closer to 10,000 by early next year from 16,500 currently.
The lack of details about the size of the loss and the job
losses disappointed some analysts.
"They're clearly moving in the wrong direction right now, so
I found it a little frustrating that there wasn't more detail,"
said Alex Gauna, an analyst at JMP Securities.
"That is a disaster. It's really bad. We did not expect an
operating loss this quickly," said Peter Misek, an analyst at
Jefferies & Co.
RIM's shares, down more than 75 percent over the past 12
months and trading at eight-year lows, slumped nearly 13 percent
to around $9.77 a share in after-market trading, although they
pulled back slightly to be last quoted at $10.38. About four
years ago they traded at more than $140.
Mark McKechnie, an analyst at ThinkEquity LLC, put RIM's
value at "about $10 per share," reflecting what its portfolio of
technology patents might bring in a sale.
RIM is also struggling to retain its top talent after a
series of high-level executive departures in recent weeks. RIM
said on Monday that its chief legal officer was resigning and
its head of global sales resigned last week to take a job at
audio company Sonos.
The Waterloo, Ontario-based company hired bankers from J.P.
Morgan Securities LLC and RBC Capital Markets to
help the company evaluate strategies, including a possible
overhaul of its business model, as well as other moves such as
expanding the BlackBerry platform through partnerships and
TAKEOVER TALKS SET ASIDE
Last year, RIM held numerous takeover discussions with
potential buyers ranging from Amazon and Microsoft Corp
to private equity firms, sources have previously told
Reuters. But those talks never resulted in an M&A transaction
under former co-chief executives Mike Lazaridis and Jim
Balsillie. By the end of last year, RIM management had set aside
any options for a sale and focused on trying to turn the
company's fortunes around.
JPMorgan and RBC were brought in shortly after the
announcement that RIM would pursue strategic alternatives in
March, said one source close to the matter.
"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.
RIM was not specific about the size of the likely loss in
the quarter ending June 2. Before the warning, analysts had
expected RIM's earnings to fall to 42 cents a share and revenue
to slip to $3.64 billion, according to analyst views collated by
Thomson Reuters I/B/E/S. RIM is due to release the results on
In March, RIM posted a net loss of $125 million on the back
of an inventory write-down for phones launched last year.
Excluding those one-time items, RIM reported an adjusted profit
of $418 million.
Heins stressed that he planned to maintain spending and
hiring for the development of the next-generation BlackBerry 10
phones and to expand its catalog of third-party applications. A
dearth of apps compared with the number available for Apple and
Android-based devices has been a major drag on RIM's sales.
RIM's biggest selling point is that other smartphone makers
still cannot compete with the security features on RIM's
devices, something that has made the BlackBerry a crucial tool
for police, government and military use.
RIM said its subscriber base grew to 78 million users, up 1
million from the previous quarter ended March 29. But growth was
slower than in any recent quarter.
RIM's market share is falling by the month and the company
is pinning its hopes on the BlackBerry 10 models, featuring a
new operating system that RIM says will let it compete more
effectively against Apple and others.
But the new devices won't be released until later this year,
pointing to further difficult quarters to come.
"I don't see the tide turning," said Misek. "The problem is
the BlackBerry 10 handsets aren't coming out next quarter, so
you know next quarter is going to most likely be worse. Then you
look at the November quarter, when we'll probably get the BB10
handsets and at the same time we'll have the iPhone 5. So that
quarter is probably going to be bad.
"So we have a string of bad quarters coming and it really is
tough to see how it's going to get better."