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RIM posts big Q1 loss, to cut 5,000 jobs

Thursday - 6/28/2012, 5:07pm  ET

Associated Press

TORONTO (AP) - Struggling BlackBerry maker Research in Motion Ltd. revealed Thursday that its business is crumbling faster than thought.

The Canadian company posted worse results for its latest quarter than analysts had expected. It's cutting 5,000 jobs and delaying the launch of its new phone operating system, BlackBerry 10, on which it's pinning its hope for a comeback.

After several delays, the first phone with BlackBerry 10 was expected later this year. It will be delayed even longer, to the first quarter of next year, CEO Thorsten Heins said.

The delay comes just as North Americans are abandoning BlackBerrys for iPhones and Android phones. Analysts have long said the BlackBerrys will come out too late to reverse RIM's fortunes. RIM's hopes hang on the BlackBerry 10 system, which is meant to offer the multimedia, Internet browsing and apps experience customers now demand.

The jobs cuts are part of a previously announced initiative to cut $1 billion in annual costs this year. They represent about a quarter of RIM's work force.

RIM shares plunged $1.66, or 18 percent, to $7.47 in extended trading, after the release of the results. If they hold that level into regular trading Friday, they will set a new nine-year low.

"This was a challenging quarter for the company on many fronts," Heins said on a conference call with analysts. "And I am not satisfied with the financial performance we are reporting today."

RIM lost $518 million, or 99 cents a share, in its fiscal first quarter, which ended June 2. This compares with a profit of $695 million, or $1.33 per share, a year ago.

Excluding impairment charges, the latest loss was 37 cents per share. Analysts polled by FactSet were expecting a loss of 3 cents.

Revenue fell 43 percent to $2.8 billion, well below analyst expectations at $3.1 billion.

"When a technology gets old, it's not a slow fade. It's a sharp cliff," said Colin Gillis, an analyst with BGC Financial.

"There is very little market for old technology."

Michael Walkley, an analyst with Canaccord, called the BlackBerry 10 delay a dire sign.

"The biggest disappointment is the delay of the BlackBerry 10," he said. "It's extremely challenging for them to turn around the business when their new smartphone launching that late."

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