BlackBerry Crumble: Revenue Slumps By 25%

Struggling BlackBerry smartphone maker, Research In Motion (RIM), has announced that it will go back to its roots and concentrate on the corporate market, after plunging into the red.

The Canadian company reported a loss of $125m (£79m) over the last three months, with total revenue down by 25% on last year.

The quarterly results stunned the markets and fell short of Wall Street expectations, with revenue falling to $4.2bn (£2.6bn), compared to analyst expectations of $4.5bn (£2.8bn).

As the smartphone war continues to intensify in the consumer market, RIM said it was going to focus on its business customers.

The firm has struggled as many users abandon their BlackBerrys for touch-screen phones, such as Apple’s iPhone and models that run Google’s Android software.

But RIM strongly denied it was withdrawing from the consumer sector altogether.

Patrick Spence, the company’s London-based managing director of global sales, said: “Whilst we announced plans to re-focus our efforts on our core strengths, and on our enterprise customer base, we were very explicit that we will continue to build on our strengths to go after targeted consumer segments.”

Shares in RIM dropped as much as 9% after the company said it would no longer issue financial forecasts and was parting company with a number of senior executives.

Known for their security and reliability as email devices – President Obama famously refused to give up his when he took office – BlackBerry has lost out to its flashier touch-screen rivals.

In the last quarter of 2011 Apple sold 37 million iPhones, more smartphones than RIM sold in the past nine months combined.

RIM shipped only 11.1 million BlackBerrys in the latest quarter, up to March 3.

The Canadian company said it was undergoing a comprehensive strategic review, with a turnaround that would require “substantial change”.

CEO Thorsten Heins said he was open to selling the company but “it is not the main direction we are pursuing right now.”

He said: “We can’t do everything ourselves, but we can do what we’re good at.

“We believe that BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people. Therefore, we plan to build on our strength.”

Mr Heins, who joined RIM four years ago and was most recently its chief operating officer, replaced co-CEOs Jim Balsillie and Mike Lazaridis in January after the company lost tens of billions of dollars in market value.

Mr Lazaridis founded the company, and Mr Balsillie joined in its early years.

Mr Balsillie has now resigned from RIM’s board after 20 years with the company.

David Yach, chief technology officer for software, and Jim Rowan, chief operating officer for global operations, are also leaving.

But Bryan Glick, editor of Computer Weekly magazine, told Sky News it was an “extraordinary decision” by RIM to put so much focus on corporate customers.

“There isn’t really such a thing as a business smartphone market any more.

“Many firms are looking at how to allow their employees to use their own smartphone devices to access their corporate software,” he said.

RIM has sought to expand its appeal to high end consumers with touch screen technology, but models without keyboards have largely flopped, and the phones were not perceived to be as ‘sexy’ as their chief competitors.

BlackBerrys have also been losing ground in the business world, as employees demand iPhones or Android devices over BlackBerrys.

Multiple delays have dogged the forthcoming BlackBerry 10 system and BlackBerrys have lagged behind their Android competitiors in terms of running third-party applications.

RIM has also suffered from its venture into the tablet computer market.

The PlayBook, intended as a rival to Apple’s iPad, launched to poor reviews and without an email program, or the popular messaging service BlackBerry Messenger.

In December tablets that had originally cost $500 (£312) were selling for $200 (£125), below the cost of making them.

It blamed its loss in the three months to March 3 – compared with a profit of $934m in the same period a year earlier – on the declining value of its brand and difficulties in selling its PlayBook tablet computer.

BGC financial analyst Colin Gillis said RIM’s decision to focus corporate clients and lower-end consumers was a positive development.

“They are conceding the high-end consumer market with all these services that are wrapped around the platform.

“At least there’s some reality here. Are they going to compete against iTunes? No way,” he said.

BlackBerry’s troubles were compounded last year when it suffered a worldwide blackout and was slammed for its slow response to dealing with the outage. 

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