RIM revenue plummets; new CEO to consider licensing

RIM said it is renewing its focus on enterprises

Revenue continues to shrink at Research In Motion, and the company reported a loss for the fourth quarter as it struggles to stay relevant before launching a new smartphone platform.

On Thursday, the company reported results for its fiscal fourth quarter ended March 3. It also announced additional personnel changes, including that Jim Balsillie, former co-CEO of the company, has given up his board seat. Balsillie and company founder Jim Lazaridis recently handed over their positions as co-CEOs to Thorsten Heins, who had been chief operating officer.

For RIM's fourth quarter, revenue dropped 25 percent from the previous year to US$4.2 billion. The company recorded a net loss of $125 million, or $0.24 per diluted share.

Analysts were expecting just slightly better revenue. Those polled by Thomson Financial thought revenue would reach $4.54 billion.

RIM shipped 11.1 million phones in the fourth quarter, 21 percent fewer than in the third quarter. It also shipped 500,000 PlayBook tablets. That's up from just 150,000 in the third quarter. The company has sold a total of 1.3 million tablets, it said.

In his first earnings call since he took over as CEO, Heins said he has a different view of the company now that he's spent 10 weeks studying it. "The impression I had at day two of being CEO is now pretty different from the facts I know after being CEO for 10 weeks," he said on the call. After he first took over, his comments were largely supportive of the company's existing strategies, but he has now announced plans to make a number of changes.

One decision he's made over those 10 weeks of studying the company is that he will focus on enterprise customers, he said. "We plan to refocus on the enterprise business and capitalize on our leading position in this segment. RIM was late to the BYOD movement and we saw a significant slowing down in our enterprise subscriber growth rate as a result," he said. BYOD refers to the "bring your own device" trend, where workers are allowed to choose their own phones to connect to business applications.

At the same time, RIM wants to position its forthcoming BlackBerry 10 platform to appeal to all segments, including consumers. "That doesn't mean we have to do it alone," he said. "Whether it means we'll build hardware or whether we engage in other partnerships is exactly part of the strategic review," he said. That means the company is considering licensing its software to other hardware makers, if that option makes sense as part of a strategic evaluation of the company that Heins is undertaking.

RIM will keep making high-end devices itself, he said. "I want the RIM device to be a high-end object of desire," he said.

Heins also expects to pare down some of the company's services offerings aimed at consumers, although he didn't specify which. "We're looking at ways to scale back these activities and refocus on our integrated services offering" that leverages RIM strengths such as the BBM service, its security offerings and management products, he said. BBM is RIM's popular instant messaging service.

At least until BlackBerry 10 comes out, RIM will continue to focus on entry-level products, particularly outside of North America, where it has already sold more than 40 million of its entry-level Curve phones. It reported that 68 percent of total revenue came from outside of the U.S., Canada and the U.K.

RIM will also introduce some new BlackBerry 7 phones, including entry-level models, and initiate programs to try to boost sales. Those efforts are aimed at trying to sustain sales before the launch of the first BlackBerry 10 phone later this year.

The company continues to only vaguely say that it will deliver the phones based on the new platform in the "latter part of this year." It has blamed the delay on a decision to use a more advanced chipset that won't be available until the middle of the year. RIM will offer prototype devices to developers during its annual BlackBerry World event in May to help them build apps that will be available at the launch of the phone. Heins said the company plans to have phones for carriers to review early in the summer, with shipments coming later in the year.

The company has decided to stop offering guidance on future unit shipments, revenue and earnings. It generally warned, however, that it expects continued downward pressure on earnings throughout the year.

RIM also announced additional leadership changes. David Yach, who has been CTO of software for the company for 13 years, is retiring. Jim Rowan, chief operating officer of global operations, who has been with the company for four years, is leaving to pursue other interests. RIM said it is searching for a new COO to run the entire company's operations.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is Nancy_Gohring@idg.com

Copyright © 2012 IDG Communications, Inc.

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