Research In Motion on Thursday reported a quarterly loss as BlackBerry shipments slumped again and said former co-CEO Jim Balsillie stepped down as director, part of a shake-up of the company's senior ranks by its new chief executive.
RIM's shares dropped as much as 9 percent after the company said it would no longer issue financial forecasts and is reviewing strategic opportunities such as partnerships and joint ventures licensing, and other ways to leverage its assets.
Chief Executive Thorsten Heins, who took from Balsillie and co-CEO Mike Lazaridis in January, would not rule out a sale of the company, though he said the company was still focusing on a turnaround.
I did my own reality check on where the entire company really is. Having had the benefit of going through this process from the vantage point of CEO, it is now very clear to me that substantial change is what RIM needs, he said in a conference call with analysts.
For RIM graphic: http://link.reuters.com/keb47s
The Waterloo, Ontario-based company shipped 11.1 million BlackBerry smartphones in the fourth quarter ended March 3, down 21 percent from the third quarter, but slightly ahead of analysts' expectations.
Even so it was the first quarterly decline in the period covering Christmas since 2006 and only the second time RIM has reported the metric dropping for that crucial period.
RIM sold more than 500,000 PlayBooks in the fourth quarter, a number inflated by deep discounts offered to boost sales of the product.
The decline in BlackBerry shipments suggests that RIM, at best, is treading water until it releases its next-generation of BlackBerry smartphones late this year. Most analysts consider that a do-or-die launch for the company as it falls further behind Apple Inc's iPhone and iPad and devices powered by Google's Android.
PAYING THE PRICE
The company is now paying the price for failing to heed calls to move quickly to license its operating system and consider other strategies to compete with industry titan Apple, said Peter Misek, managing director of Jefferies & Co.
It's going to be absolute gong show for the next few quarters, he said. They're going to scramble around now for the next three to six months, and every poor shareholder that had faith in them is going to be potentially impoverished. I'm so angry as a Canadian - every Canadian investor should be angry.
After Heins took over in January, he immediately raised investor doubts about his turnaround chops by declaring RIM didn't need drastic change, a stance he later clarified as meaning RIM was not going to be split up or sold.
But the results issued Thursday showed a major shakeup in the works at the Waterloo, Ontario-based company.
RIM said Balsillie - long one of the company's public faces - had resigned from the board. David Yach, a chief technology officer, and Jim Rowan, a chief operating officer, also stepped down.
Ultimately, RIM is taking half measures, baby-stepping their way to a reorganization and they're not moving fast enough, said Ed Snyder, an analyst with Charter Equity Research. They need a wholesale change in the culture and the management of the company.
RIM has also decided to end the practice of providing specific financial guidance for the current and future quarters, saying only it expects continued pressure on revenue and earnings throughout fiscal 2013.
That expectation reflects weakness in the company's U.S. business and competitive pressure in global markets as it sells more low-end devices.
RIM historically has provided a forecast for BlackBerry shipments, earnings per share and revenue, but has faced scathing criticism in the past year for missing these targets.
BY THE NUMBERS
In its fourth-quarter, the company announced a net loss of $125 million, or 24 cents a share, after booking write-downs on its legacy BlackBerry 7 phones and goodwill.
On an adjusted basis, profit dropped to $418 million, or 80 cents a share, from $934 million, or $1.78, a year earlier. Revenue slumped to $4.19 billion from $5.56 billion.
Analysts, on average, had expected RIM to earn 81 cents a share on revenue of $4.54 million, according to Thomson Reuters I/B/E/S.
They clearly have no fix on when this process will bottom, and until it really does, it's going to be very difficult for a lot of investors to come back in, said Eric Jackson, a hedge fund manager at Ironfire Capital in New York.
Shares of RIM were trading down 2.4 percent at $13.40 after the bell. Soon after the company released its results, the stock fell as much as 9 percent. The shares have fallen as much as 80 percent since February 2011.
(Additional reporting by Susan Taylor, Allison Martell in Toronto, and Sinead Carew in New York; Writing by Cameron French; Editing by Frank McGurty)