RESEARCH IN Motion, the struggling maker of the BlackBerry smartphone, fell 11 per cent after forecasting an operating loss for the first quarter and hiring banks to advise on strategic options.
JPMorgan Chase and RBC Capital Markets have been hired to help RIM evaluate options, including forging partnerships, licensing its software and looking at “strategic business model alternatives,” the Waterloo, Ontario-based company said yesterday.
RIM also is attempting to streamline operations by reducing spending and headcount. An exodus of customers to Apple’s iPhone and Google’s Android devices has taken a toll on RIM’s sales and profit over the past year, putting pressure on management to make changes.
An operating loss would be the company’s first since 2004. Analysts had estimated an operating profit of $261 million for the period, which ends June 2nd. “They’re trying to telegraph that expectations are too high and that the next few quarters are going to be very challenging,” said Matt Thornton, an analyst at Avian Securities in Boston.
RIM shares fell to $10.04 in early trading in New York yesterday. The stock had already lost 74 per cent of its value in the past 12 months. New CEO Thorsten Heins, who took over from co-founders Mike Lazaridis and Jim Balsillie in January, said he’s considering strategy changes after customer and market-share losses led to five straight quarters of sales shortfalls.
Last month RIM was reportedly close to picking an adviser, with JPMorgan as the frontrunner.
“Bringing in a blue-chip bank at least gives you the seal of approval that you’re doing the correct due diligence and taking shareholder interest into account here,” said Thornton, who has a neutral rating on RIM’s stock.
RIM is putting the final touches on its new BlackBerry 10 operating system and will release the first smartphone built on the software later this year. If it pursues a strategic change, the company would prefer to license its BlackBerry software, a person with knowledge of the matter said last month. Barring that, RIM would like to find a strategic investor, the person said. RIM doesn’t plan to sell itself, according to the person. – (Bloomberg)
