RIM to post Q1 operating loss, hires banks for 'strategic review'

Yes, it's more bad news for Research in Motion, as sales of its aging BlackBerry lineup continue to erode and new smartphone products remain months away. And now it may finally be looking to sell itself, too.

The keynote speech in Orlando, FL where BlackBerry 10 was announced in May. Brian Bennett/CNET

Research in Motion will post an operating loss in the first quarter, the company said, further illustrating the titanic obstacles it faces as it struggles to right its smartphone business.

The reversal of fortune caps a tough stretch for the maker of the once-popular BlackBerry. Sales of its current BlackBerry 7 phones are deteriorating and upcoming BlackBerry 10 products are still months away, leaving the company to endure a tough product gap.

"The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace," said CEO Thorsten Heins in a company statement. He also warned of possible job cuts, though he offered few specifics beyond saying he also plans to add employees to support the launch of the BlackBerry 10 line later this year.

RIM has hired J.P. Morgan and RBC Capital to advise it on its business and financial performance. The company also referred to looking at "strategic business-model alternatives," often corporate-speak for the exploration of a potential sale.

In addition to the first-quarter loss, Heins reiterated his warning that the next few quarters will be difficult as the company works to get its business back on track.

Heins and RIM are banking that its next-generation BlackBerry 10 platform will spark renewed interest in the company and its products. Over the past year, the company has seen its stock plummet and its prospects for continued smartphone relevance crater.

At the same time, Apple and Android vendors continue to press their advantage. Samsung, HTC, and other smartphone makers keep rolling out flashy new Android devices, and Apple is expected to release its next iPhone in the fall.

Not all is bad. RIM said its subscriber base has increased to 78 million, largely driven by lower end international markets. Its BlackBerry Messenger service also grew to 59 million users.

While RIM has essentially ceded the mature markets to Android and iPhone, the company has looked overseas for continued growth, -- for instance, by launching two BlackBerry 7 phones in India and Latin America.

The company said it now has more than 80,000 apps, a 220 percent increase from a year ago. The lack of apps is often cited as a key weakness with the BlackBerry platform.

The company plans to report its full first-quarter results on June 28.

About the author

Roger Cheng is the executive editor in charge of breaking news for CNET News. Prior to this, he was on the telecommunications beat and wrote for Dow Jones Newswires and The Wall Street Journal for nearly a decade. He's a devoted Trojan alum and Los Angeles Lakers fan.

 

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