RIM cracks widen after BBM outage

A tumultuous week for Research In Motion (RIM), in which the group’s shares plummeted to a worst level since 2003, was compounded by a break on its messenger service over the weekend.

Numerous South African BlackBerry users were left without services on Saturday, and Sunday, after another global BlackBerry outage. It follows a major disruption in October 2011.

“We experienced a service issue which may have affected some of our customers in certain parts of Europe, the Middle East and Africa. Some minor issues relating to browsing and BlackBerry Messenger may still persist, but all other services are operating as normal. We apologise to any customers in these regions who may have been inconvenienced,” RIM said in a statement.

RIM, the maker of BlackBerry mobile handsets is a company in crisis, having appointed J.P. Morgan and RBC Capital Markets to plot a recovery plan.

The group’s share price declined 19%, or $1.74, to $7.39 at close on the Nasdaq on Friday, representing a nine-year low, after it said phones running its upcoming BlackBerry 10 operating system would not be available until 2013.

RIM’s shares have dropped more than 70% over the past year, and after the group reported reported a widening loss of $518 million and revenue of $2.8 billion in Q1, down 33% from $4.2 billion in the prior quarter, on Thursday (28 June), that trend is not likely to change anytime soon.

RIM said it shipped 7.8 million BlackBerry smartphones and approximately 260,000 BlackBerry PlayBook tablets.

Further signs of trouble include RIM’s intention to cut its workforce. “Restructuring efforts are underway that will include a workforce reduction of approximately 5,000 employees as part of RIM’s  efforts to realize  over $1 billion in cost savings, based on RIM’s Q4 FY2012 run rate,” it said in a statement on Thursday.

In emerging markets like South Africa, BlackBerry remains a huge success. As much as 65% of the local smartphone market is taken by BlackBerry devices, and at the start of June, BlackBerry was named the ‘Coolest Brand Overall’ for the second time in the Sunday Times Generation Next 2012 Brand Survey Awards.


RIM said in its outlook on Thursday, that it expects the next several quarters to continue to be very challenging for its business based on the  increasing competitive environment, lower handset volumes, potential financial and other impacts from the delay of BlackBerry 10, pressure to reduce RIM’s monthly infrastructure access fees, and the company’s plans to continue to aggressively drive sales of BlackBerry 7 handheld devices.

“The company expects to report an operating loss in the second quarter of fiscal 2013, as RIM continues to invest in marketing programs and continues to work through the transition to BlackBerry  10, as well as the Company’s fixed costs being allocated over a lower volume of shipments. This outlook excludes the impact of charges related to the CORE Programme.”

Related articles

RIM delays new BlackBerry launch

RIM considers splitting business in two: paper

RIM’s new BlackBerry won’t have a keyboard

BlackBerry handset manufacturers stop getting RIM contracts

BlackBerry make RIM shuffles board, shares drop again

Must Read

Partner Content

Show comments

Trending Now

Follow Us

RIM cracks widen after BBM outage