Research in Motion - History - Decline

Decline

In June 2011, the company announced its prediction that Q1 2011 revenue will drop for the first time in nine years, and also unveiled plans to reduce its workforce. The market followed, with RIM stock falling to its lowest point since 2006. From June 2008 to June 2011, RIM's shareholders lost almost $70 billion, or 82 percent, as the company's market capitalization dropped from $83 billion to $13.6 billion, the biggest decline among communications-equipment providers,

In July 2011, the company cut 2,000 jobs, the biggest lay-off in its history. The lay-off reduced the workforce by around 11%, from 19,000 employees to 17,000.

RIM lost some market share worldwide to Apple's iPhone and to smartphones running Google's Android operating system, which caused a decline in profit and share value. On December 16, 2011 RIM shares fell to their lowest price since January 2004 and the stock dropped 77 percent in 2011 alone. By March 2012 shares were worth less than $14, from a height of over $140 in 2008. The BlackBerry PlayBook, launched in 2011 as a business-oriented alternative to the Apple iPad, saw only limited commercial success. Meanwhile, chief executive Thorsten Heins reaffirmed RIM's business focus, explaining that consumer-friendly features like entertainment applications are not important to the company's core customers.

In the fourth quarter of fiscal year ended at March 3, 2012 RIM shipped 11.1 million BlackBerry smartphones, fell 21 percent from the previous quarter and it was the first decline in the quarter covering Christmas since 2006. For its fourth quarter, RIM announced a net loss of $125 million (the last loss before it occurred in the fourth quarter of fiscal 2005). RIM was one of the biggest world market share losers in 2011 due to Samsung and HTC booming with Android OS, while RIM's share in the US market dropped to just 3 percent from 9 percent a year earlier.

RIM plans to streamline operations and save $1 billion in the fiscal year by cutting at least 2,000 jobs worldwide around June 1, 2012 with possibility to cut as many as 6,000 totally in further period. At the moment RIM has around 16,500 staff globally with the peak at near 20,000 before.

After the Morgan Stanley downgraded RIM, on June 25, 2012 RIM shares hit the lowest mark at $9.01, although closed at $9.11 and it mean 94 percent shedding of their value of the 2008 RIM's shares peaked price.

On June 28, 2012, RIM reported its 2013 Q1 Fiscal results. Highlights include a GAAP net loss of $518 million in Q1, the delay of the new BlackBerry 10 OS to Q1 of calendar 2013, and a planned workforce reduction of 5,000. In the aftermath, RIM shares fell 19%, to close the week at $7.39, a 9-year low.

Shares price fell further on July 16, closing at $7.09 on the Toronto Stock Exchange, the lowest level since Sep 8, 2003, after a jury in California said RIM must pay $147.2 million as a result of an infringement on a patent on a system for companies manage workers’ BlackBerry devices remotely, held by Delaware-based Mformation.

In August 2012, RIM announced plans to take their BlackBerry phones back to what they felt made them successful in the first place: mobile phones appealing to business professionals. Thorsten Heins (RIM CEO) also announced a new OS, BB10, which he felt would "reverse RIM's fortunes." This did little to appease shareholders, however, as following his speech about future plans for BlackBerry, the share price declined another five percent.

After much criticism and numerous delays, RIM announced that their new operating system BlackBerry 10 (BB10) will launch on January 30th, 2013 in numerous countries with two all-new devices to follow shortly thereafter. The QNX based OS is a ground up rebuild from the current system used.

Read more about this topic:  Research In Motion, History

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