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New Claims From Jobless Are Lowest in 5 Months

September 30, 2011 by Leave a Comment

Initial claims for state unemployment benefits fell 37,000, to 391,000, the Labor Department said, well below economists’ expectations of 420,000. But the department cautioned that the way it adjusted the data for seasonal fluctuations might have overstated the improvement.

Separately, the Commerce Department said the nation’s gross domestic product grew at an annual rate of 1.3 percent in the second quarter instead of the previously reported 1 percent. Consumer spending and export growth were both stronger than estimated.

“When you connect these data points together, they indicate a very tepid recovery. We are still experiencing positive growth, which is better than we feared a few months ago,” said Paul D. Ballew, chief economist at Nationwide in Columbus, Ohio.

The cautious optimism generated by Thursday’s data was tempered somewhat by a report showing that the housing sector remained weak last month.

A survey of chief executives in the United States released on Thursday by the Business Roundtable showed that their views of the economy’s prospects deteriorated in the third quarter, with the number who expected to cut jobs roughly doubling.

The drop in initial claims for unemployment benefits took them below 400,000 for the first time since early August. The department, however, said the labor market’s weakness in recent years might have led the model it uses to seasonally adjust the data to overstate last week’s drop.

The decline also reflected the fading impact of Hurricane Irene, which caused claims to spike in the week ended Sept. 10.

Still, the total number of unemployed continuing to claim benefits after an initial week of aid fell to 3.73 million in the week ended Sept. 17 from 3.75 million a week earlier.

The Sept. 17 week corresponds with the survey period for the Labor Department’s household employment measure, which is used to construct the national unemployment rate.

In August, the jobless rate remained at 9.1 percent, and a separate survey of employers showed that hiring had ground to a halt, which increased recession fears.

Those worries are beginning to fade. Factory output continues to expand and businesses have maintained their appetite for spending on capital goods.

“Indications are that the third quarter is doing better than previously thought. We now anticipate third-quarter real G.D.P. growth of just above 2 percent,” said Nigel Gault, chief United States economist at IHS Global Insight in Lexington, Mass.

Housing, however, remains a weak spot.

The National Association of Realtors said its index of pending home sales, based on contracts signed in August, fell 1.2 percent, to 88.6, its lowest point since April. The association said contract signings, which usually precede actual closings by a month or two, were held back by tight credit and, in the Northeast, Hurricane Irene.

With millions of Americans locked into mortgages worth more than their homes, historically low interest rates are failing to lift sales. Freddie Mac said on Thursday that the average rate on 30-year fixed-rate mortgages fell to a record low of 4.01 percent this week.

Article source: http://www.nytimes.com/2011/09/30/business/economy/second-quarter-gdp-grew-at-1-3-rate.html?partner=rss&emc=rss

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Some Hints of Optimism in Economic Data

September 1, 2011 by Leave a Comment

In addition, a private manufacturing index rose more than expected.

But construction spending fell a sharp 1.3 percent in July, with big declines in government projects, and productivity narrowed in the second quarter, making Thursday another day of mixed signals on the state of the United States economy.

The Labor Department said on that weekly applications fell 12,000 to a seasonally adjusted 409,000 last week, the first decline in three weeks.

A strike by Verizon workers drove applications higher during the previous two weeks. The strike ended last week and is no longer affecting applications.

Applications have fallen from an eight-month high of 478,000 in April. Still, they typically need to drop below 375,000 to signal sustainable job growth, analysts say. They haven’t been at that level since February.

Meanwhile, the Institute for Supply Management’s index indicated that manufacturing expanded again in last month, its 25th consecutive monthly increase. Analysts surveyed by FactSet had expected a contraction.

Although the index fell to 50.6 last month from 50.9 in July, a level above 50 signals that the economy is expanding.

In a separate report, the Labor Department said worker productivity fell this spring in the United States at a faster pace than previously estimated, while labor costs were rising at a faster clip. Both developments could pose threats to a fragile economic recovery.

Productivity declined at an annual rate of 0.7 percent in the April-June period, a bigger drop than the 0.3 percent decline reported a month ago. Labor costs rose at an annual rate of 3.3 percent, faster than the 2.4 percent increase originally reported.

The changes reflected downward revisions made last week to overall economic growth that showed the economy’s output barely growing in the spring. Declining productivity, if it persists for a prolonged period, would represent a serious economic threat, while rising labor costs would cut into corporate profits.

Article source: http://www.nytimes.com/2011/09/02/business/economy/us-jobless-claims-dip-after-verizon-strike-ends.html?partner=rss&emc=rss

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First Drop in Number of Problem Banks in U.S. Since 2006

August 23, 2011 by Leave a Comment

The number of banks on the government’s list of institutions most at risk for failure fell in the second quarter, the first drop since before the financial crisis began.

Twenty-three lenders came off the list of so-called problem banks during the second quarter, bringing the total to 865, according to data released Tuesday by the Federal Deposit Insurance Corporation. Not all the troubled lenders will inevitably fail, but the F.D.I.C. considers them most at risk, making the quarterly update one of the clearest measures of the banking industry’s health.

It was the first decrease in the number of problem banks since the third quarter of 2006. 

The report also contained other signs of improvement. There were 48 bank failures in the first half of 2011, far fewer than the 86 failures in the first six months of 2010. Last year’s total of 157 collapsed banks was the highest since the last severe recession, in the early 1990s.

 And the F.D.I.C. insurance fund that protects the nation’s depositors showed a surplus for the first time in two years. It stood at $3.9 billion, compared with a negative $1 billion balance at the end of the first quarter.

Still, the magnitude of problem banks — roughly one of every nine lenders — remains relatively high. And the number could rise again if the economy suffered another downturn, a prospect that seems increasingly likely amid all the grim data that has surfaced in the weeks since the list was compiled at the end of the June.

Martin J. Gruenberg, the acting F.D.I.C. chairman, played down that risk in some of his first public remarks since being nominated to run the agency in June.

“Banks have continued to make gradual but steady progress from the financial turmoil and severe recession that unfolded from 2007 and 2009,” Mr. Gruenberg said in a statement.

Beyond the drop in problem lenders, there were other signs that the industry was getting back on its feet. The nation’s 7,513 banks and savings institutions reported a total profit of $28.8 billion in the second quarter, up nearly 38 percent from a year ago and the eighth consecutive quarter that earnings have increased. Bank losses continued to ease, while loan balances rose — albeit slightly — for the first time since the second quarter of 2008.

Much of the uptick in lending could be attributed to loans made to businesses and other financial institutions. Real estate lending continued to be very weak.

Total revenue fell for the second quarter in a row. Fee income declined as more stringent regulations curbed overdraft charges and other penalty fees, while interest income was lower because of an increase of money in low-yielding accounts at Federal Reserve banks. The pressure on revenue could increase in the second half of the year, especially if lending margins collapse because of the Fed’s recent pledge to keep interest rates near zero for the next two years.

The recent market turbulence stemming from the debt crises in Europe and the United States continues to weigh on the industry. Deposits increased by almost 3 percent during the second quarter, with the bulk of the cash flooding accounts at the nation’s largest banks.

“Recent events have reminded us that the U.S. economy and U.S. banks still face serious challenges ahead,” Mr. Gruenberg said in the statement. “The F.D.I.C. will remain alert to the challenges going forward.”

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DealBook: Profit Drops 31% at Société Générale

August 3, 2011 by Leave a Comment

The headquarters of Société Générale, the French banking group, in La Defense, outside Paris.Jean-Claude Coutausse/Bloomberg NewsThe headquarters of Société Générale, the French banking group, in La Defense, outside Paris.

Société Générale, the second-largest French bank after BNP Paribas, on Wednesday reported that income fell 31 percent in the second quarter compared with the period a year earlier, driven by a write-down on Greek sovereign debt.

The bank reported second-quarter net income of 747 million euros ($1.06 billion), missing analysts’ expectations. It also said its goal of 6 billion euros in profit next year would be “difficult to achieve.”

The warning, while significant, was “already embedded in the consensus,” according to Pascal Decque, an analyst at Cheuvreux who expects something closer to 5.5 billion euros.

“Growing concerns over European sovereign debt resulted in risk aversion and erratic market movements, in line with political developments,” the bank said.

Frederic Oudea, chief of Société Générale.Benoit Tessier/ReutersFrederic Oudea, chief of Société Générale.

The bank’s shares fell 1.81 euros, or 5.57 percent, to 30.69 euros in midmorning trading in Paris.

European leaders approved a plan last month to provide Greece with a rescue package worth 109 billion euros. That plan asked bondholders to accept a restructuring on the troubled nation’s debt.

BNP Paribas said on Tuesday that it would book a 534 million euro charge on Greek sovereign debt, while another French bank, Crédit Agricole, said the rescue would cost it about 150 million euros.

“These results incorporate the write-downs booked on Greek government bonds, whose impact is nevertheless limited,” Frederic Oudea, head of Société Générale, said in the bank’s earnings statement. It puts the amount of the hit at 395 million euros.

Société Générale follows other major European lenders, including BNP Paribas and Deutsche Bank, that have taken write-downs as part of an agreement they came to with European officials.

“The group net income target of 6 billion euros in 2012 now appears difficult to achieve within the scheduled timeframe,” the bank said in a statement. The warning comes after UBS abandoned its earnings target last month and amid large job cuts at HSBC, Credit Suisse and Barclays.

Société Générale also reported that net profit at its international retail banking business, which includes its Greek arm Geniki, fell to 116 million euros in the quarter from 125 million euros in the period a year earlier.

Société Générale said that revenue at its investment banking unit increased by 7.4 percent, to 1.8 billion euros, based on growth in its advisory business, where it has been adding employees. Still, analysts were disappointed by the performance, which included declines on its fixed-income and equities desks.

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DealBook: HSBC to Trim 30,000 Jobs to Cut Costs

August 1, 2011 by Leave a Comment

HSBC headquarters in Hong Kong.Tyrone Siu/ReutersHSBC headquarters in Hong Kong. The bank plans to continue hiring in Asia and Brazil.

3:55 p.m. | Updated

LONDON — HSBC, the big European bank, said Monday that it was cutting 30,000 jobs, as part of a wide-ranging cost-cutting program to improve profitability.

The large-scale cuts, which would represent about 10 percent of HSBC’s work force, are part of the company’s strategy to reduce expenses by $2.5 billion to $3.5 billion over the next two years. The layoffs include 5,000 positions the bank has already started to eliminate this year by closing some businesses.

“They are obviously tackling their pretty poor cost-to-income ratio with the job cuts,” Jane Coffey, head of equities at Royal London Asset Management, said.

HSBC is the latest bank to announce job cuts amid regulatory uncertainty and global economic weakness. Credit Suisse said last week that it planned to eliminate 2,000 positions, or 4 percent of its jobs. Goldman Sachs and Morgan Stanley are also reducing their head counts. (A person with direct knowledge of the HSBC decision put the layoffs at 10,000 on Sunday.)

Stuart T. Gulliver, chief of HSBC.Dimas Ardian/Bloomberg NewsStuart T. Gulliver, chief of HSBC.

The job cuts come as HSBC reported decent earnings in the second quarter. On Monday, the bank said that profit rose 36 percent to $9.2 billion in the first six months of this year, up from $6.7 billion in the same period last year. It set aside $5.3 billion for bad loans and other credit risks, 30 percent less than in the first half of last year.

Stuart T. Gulliver, who took over as HSBC’s chief executive in January, said he was “pleased with these results, which mark a first step in the right direction on what will be a long journey.”

Shares of the British bank rose 4.4 percent in London after the bank reported better-than-expected first-half profit.

Most of the job cuts are focused on the more mature markets, including Europe and the United States. The financial firm closed its retail banking operation in Russia and Poland, shut 66 bank branches in Mexico and sold insurance businesses in Britain, Bermuda and Mexico.

HSBC announced Sunday that it would sell 195 of its branches in upstate New York to the First Niagara Financial Group for about $1 billion. The bank is also in talks with potential buyers for its credit card business in the United States. Mr. Gulliver said. Capital One Financial, said analysts, could be among the suitors.

Despite the retreat in the developed countries, HSBC plans to continue hiring in Asia and Brazil. The bank’s costs rose to 57.5 percent in relation to revenue in the first half, from 50.9 percent a year earlier, partly because a war for talent in Asia pushed up staff costs. Mr. Gulliver said he expected such expense to remain high despite some signs that China’s economy had started to cool.

HSBC’s earnings and share price fared better over the last year than its British competitors, including Barclays, because the bank generates a large amounts of profit from fast-growing regions, with more than half of earnings coming from Asia.

Gain in commercial and retail banking operations and its wealth management unit more than compensated for a drop at HSBC’s investment banking unit. Pretax profit rose 3 percent to $11.5 billion in the first half from $11.1 billion in the period last year, while earnings at its investment banking unit fell to $4.8 billion from $5.4 billion.

Still, Mr. Gulliver is seeking to reduce costs in light of stricter financial regulation and a difficult economic environment in Britain, its home market, and the rest of Europe. Mr. Gulliver said he expected the economic outlook for Asia and other emerging markets to “remain positive.”

“Growth in the U.S. and Europe is likely to remain sluggish as long as the impact of high debt levels and government budget cuts weigh on economic activity,” he said.

This post has been revised to reflect the following correction:

Correction: August 1, 2011

An earlier version of the story imprecisely described the layoffs. HSBC plans to cut 30,000 jobs through 2013. The bank has previously started to eliminate 5,000 of those positions.

Article source: http://dealbook.nytimes.com/2011/08/01/hsbc-to-cut-25000-more-jobs/?partner=rss&emc=rss

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DealBook: UBS Issues Profit Warning on Weaker Economy

July 26, 2011 by Leave a Comment

Oswald J. Grübel, chief of UBS, said the Swiss bank was likely to Christian Hartmann/ReutersOswald J. Grübel, chief of UBS, said the Swiss bank was likely to “book significant restructuring charges later this year” following a series of cost cuts.

UBS warned on Tuesday that it would probably miss an earnings target set two years ago, after its profit fell by half in the second quarter and the economy weakened.

Profit dropped to 1 billion Swiss francs, or $1.2 billion, in the April-June period, from 2 billion francs in the period a year earlier, the company said in a statement. The weak results came in the wake of a dismal performance at its investment banking unit, where pretax profit slumped to 376 million francs from 1.3 billion francs in the period a year earlier.

UBS, the biggest Swiss bank, said in 2009 that it intended to reach a pretax profit of 15 billion francs by 2014. But the chief executive, Oswald J. Grübel, said on Tuesday that target “is unlikely to be achieved” in the original time frame.

“Banks’ returns have declined over all in the last 12 months, reflecting deleveraging and the actions being taken in advance of increased capital requirements,” he said in the statement.

“We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency,” he said.

Mr. Grübel added that UBS was likely to “book significant restructuring charges later this year” following a series of cost cuts.

New financial regulation in Britain is expected to reduce earnings at its investment banking unit by about 100 million francs before the end of this year, the bank said.

Mr. Grübel has been focusing UBS on its main wealth management and investment banking activities to repair a bank that was among the hardest hit in the financial crisis.

But some analysts have recently started to doubt Mr. Grübel’s plan would be enough to steer the bank back to strength. Its investment banking unit has continued to struggle and the stricter capital requirements have hurt profitability.

A string of departures by bankers, and lower appetite for risk among clients, have hampered efforts to repair the unit.

UBS said on Tuesday that it planned to cut costs of as much as 2 billion francs over the next two to three years. At the same time, a decline in demand for its services because of a weaker economic outlook is expected to “constrain growth prospects.”

UBS said it attracted 8.7 billion francs in net new money in the second quarter, less than the 22.3 billion francs in the first quarter. Pretax profit at its main wealth management and asset management operations fell in the second quarter from a year earlier, while wealth management in the Americas returned to profit.

Revenue at the entire bank fell 14 percent to 7.2 billion francs.

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Caterpillar Profit Rises 44% but Misses Wall St. Estimates

July 23, 2011 by Leave a Comment

Continued robust demand for Caterpillar’s heavy equipment raised the company’s second-quarter profit 44 percent, the company said Friday, but higher costs and cautious comments about China’s economy set off a 5.8 percent decline in its share price.

The company raised its sales outlook for the year, but cost increases, mostly related to its recent acquisition of the mining equipment maker Bucyrus, will prevent rising sales from helping profit more than previously expected.

Caterpillar’s quarterly profit fell short of Wall Street estimates for the first time since the recession ended.

Many investors that were very optimistic about Caterpillar appeared to pause and reassess the prospects for months ahead, said Jeff Windau, an analyst at Edward Jones, who thinks Caterpillar still has strong long-term growth potential.

“There’s a lot to digest in this quarter,” Mr. Windau said.

The company said it earned $1.02 billion, or $1.52 a share, up from $707 million, or $1.09 a share, a year earlier.

Excluding costs associated with the Bucyrus acquisition, profit per share would have been $1.72.

Revenue rose 37 percent to $14.2 billion, easily topping Wall Street estimates.

Caterpillar predicts 2011 sales of $56 billion to $58 billion with Bucyrus. Previously, it predicted sales of $52 billion to $54 billion.

Stock in Caterpillar, which is based in Peoria, Ill., fell $6.45 to close at $105.15 a share.

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Off the Charts: The Boom and Crash Cycle of I.P.O.’s

July 8, 2011 by Leave a Comment

In just a few months, the market has gone from raising record amounts of money to reaching a 10-year high in the number of proposed offerings withdrawn because there was no market.

During this year’s second quarter, 98 offerings — which had been projected to raise $21 billion — were withdrawn, according to calculations by Dealogic. The number of canceled offerings was the highest since 129 proposed offerings were canceled in the fourth quarter of 2000, as it became clear that the technology bubble had burst.

The recent boom in initial public offerings was spread much wider than the one that ended in 2000. The earlier boom was concentrated in the United States, but the latest included many more companies from booming developing markets, particularly in China.

In the fourth quarter of 1999, the total amount raised by I.P.O.’s hit $66.1 billion, which was then the highest level ever. More than three-quarters of that was raised in the American market and most of it was for technology companies. In the final quarter of 2010, $127 billion was raised and less than one-quarter of that was raised by offerings in the United States.

In the latest quarter, the total raised was about half the level of the fourth quarter of 2010, although the decline in the number of completed offerings, to 406 from 516, was not as sharp.

As can be seen from the accompanying graphic, the market for initial public offerings virtually collapsed in 2002 and 2003, but then began to recover as stock markets rose and many countries reported strong growth. Thanks to strong volumes of foreign offerings, the I.P.O. market had become strong before the financial crisis killed the market in 2008 and 2009.

The volume of withdrawn offerings provides a clear indication of rapid changes in markets. Those are deals that underwriters thought they could sell. They went to the expense of preparing offering documents but then were unable to sell, at least at prices acceptable to the companies.

The failed offerings cover the spectrum, both geographically and in the nature of the business. In June, three proposed I.P.O.’s that had been expected to yield more than $1 billion each were withdrawn. One was a Hong Kong company that mines iron ore in Australia, another a French company that makes glass containers and the third an Indian company that builds and leases communications towers for cellular telephone service providers.

Unlike the collapse of the market in 2000, the latest decline does not follow a widespread collapse in the prices of previously hot new offerings. During the final three months of 2010, when the total amount raised by new offerings set a record, Dealogic counted nine offerings that doubled in price on the first day of trading. This week, all of those stocks were still trading above the offering price, although only two — Youku.com, a Chinese Internet television company, and TPK Holding, a Taiwanese maker of screens for smartphones and other devices — traded for more than they did on the first day.

Floyd Norris comments on finance and the economy on his blog at nytimes.com/norris.

Article source: http://www.nytimes.com/2011/07/09/business/the-boom-and-crash-cycle-of-ipos.html?partner=rss&emc=rss

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DealBook: Pace of Mergers Takes a Midyear Pause

July 5, 2011 by Leave a Comment

The revival in mergers this year has taken some time to catch its breath.

After a blistering start to the year, deal volume slowed down in the second quarter as uncertainty again weighed on the markets. While many deal makers say that the number of transactions will continue to rise, the pace of that activity remains uncertain.

Deals totaling about $1.4 trillion were announced in the first half of the year, according to Thomson Reuters data, a 35 percent increase over the same time last year. That is the strongest start to deal-making since the financial crisis, as corporate boards, armed with cash and cheap financing, felt comfortable enough to seek out growth by acquisitions.

But the confidence of executives appears to have been shaken by fears of a slowing economic recovery and persistent worry over Greece’s fiscal troubles. About $631.4 billion worth of deals were announced in the second quarter, down 20 percent from the first quarter.

The biggest question is whether management teams can be persuaded to pursue acquisitions they have already been weighing.

“Is this a real slowdown, or is this temporary?” asked Mark Shafir, the global head of mergers and acquisitions at Citigroup. “We think that unless there is a major slowing of world economy, there’s some room to grow.”

Bankers and lawyers say that over the first half of the year, the majority of deals struck have been by strategic buyers looking to augment existing businesses. As some companies have struggled to find ways to grow organically, buying new business has gained favor in some corporate suites.

Johnson Johnson’s $20.8 billion acquisition of Synthes reflected the American health giant’s desire to expand its presence in the increasingly lucrative medical devices sector. With low debt, $28 billion in cash on hand and enormous free cash flow, Johnson Johnson was long seen by analysts as ready to make a big purchase.

It’s unusual, but many deals announced this year have yielded rises in the stock of the acquirer. While many times the buyer’s shares go down amid fears that the deal may be overvalued, advisers say that the phenomenon highlights shareholder approval in the right cases.

“Investors are being supportive and sometimes highly supportive of ideas that make sense,” said Michael Boublik, Morgan Stanley’s chairman of mergers and acquisitions for the Americas.

One of the consequences of the mostly stable economic conditions from the first half of the year is that potential buyers and sellers are finding it easier to come to an agreement over the valuation of a particular deal. The average premium for an American target company to its stock price four weeks before a deal announcement shrank to 30.7 percent, from 37.6 percent.

Takeovers by private equity firms in the first half also rose over the same time last year, to about $114 billion. But that is a decline from the latter half of last year, when the largest takeovers since the financial crisis, like the $5.3 billion buyout of Del Monte Foods, were announced.

Deal experts say that while buyout firms are still poised to benefit from the positive mergers environment, they face more constraints than they did in the credit boom. The resurgence of determined corporate buyers has made many auctions costlier. And while debt financing remains cheap and plentiful, private equity firms are more hard-pressed to write big equity checks.

And club deals — when several buyout firms band together to buy a target they could not afford on their own — have become less common, amid pressure by institutional investors.

“Our sense is that private equity activity levels are continuing to be more important to the M. A. market than they were two years ago,” said Stephen Arcano, the leader of the mergers practice at Skadden, Arps, Slate, Meagher Flom. “But I don’t think we’re poised for a surge in private equity activity.”

Yet private equity firms have been busy selling companies to generate returns for their investors. In perhaps the most extreme instance, Kohlberg Kravis Roberts sold Primedia for $525 million, closing out a 22-year investment in the media company.

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RIM Profit Falls Below Estimates

June 17, 2011 by Leave a Comment

Adding to its problems, the company also reduced its outlook for the second time this year, sending its stock sharply lower in after-hours trading.

The company that effectively invented the smartphone market has been battered in its home turf by the Apple iPhone and handsets using Google’s Android operating system.

In addition, its answer to Apple’s enormously popular iPad tablet, the BlackBerry PlayBook, was introduced this spring with software flaws and without several features. And RIM has still not set a release date for BlackBerrys using a new operating system.

Though the company’s co-chief executive, James L. Balsillie, continued to promote the company’s longer-term outlook on Thursday, RIM cut its fiscal year estimates on Thursday. It predicted that it would earn $5.25 to $6 a share, down from its previous forecast of $7.50 a share during the current fiscal year. It also reduced its revenue forecast to $4.2 billion, from $4.8 billion.

RIM also said its profit during the first quarter, which ended May 28, fell 9.6 percent to $695 million, or $1.33 a share, on revenue of $4.9 billion. During the same period last year, it reported a profit of $769 million, or $1.38 a share, on revenue of $4.24 billion.

The disappointing news failed to meet analysts’ estimates and sent RIM’s shares tumbling 14 percent in after-hours trading on Thursday. Its shares closed at $35.33, up 0.45 percent, before the earnings were released.

RIM shipped 13.2 million BlackBerrys during the period, an amount below its own forecast.

It also said earnings per share for the second quarter ending Aug. 27 were expected to be 75 cents to $1.05, lower than analysts’ estimates of $1.40 polled by Bloomberg.

About the only figure that exceeded expectations was the PlayBook. RIM said that it shipped about 500,000 of the tablet computers to retailers and wholesalers during the quarter, compared with an average analysts’ forecast of 366,000.

Nevertheless, the number pales when compared with the 3.27 million iPads Apple sold during the first quarter of that product’s availability. RIM declined to specify how many PlayBooks were actually purchased by retail customers.

RIM, which at one point had been going through such a rapid expansion that it was having difficulty finding space for employees, said that it planned to cut jobs as part of a reorganization but it offered no specifics.

Mr. Balsillie predicted during a conference call with analysts that the company’s fortunes were about to take a turn for the better.

“We have a strong business,” Mr. Balsillie said. “We have made major platform upgrade. We are almost through this transition.”

Some analysts were not as optimistic that the new phones would arrive quickly enough to help.

“People are not waiting. They’re going to other platforms,” Peter Misek, an analyst at Jefferies Company, told Reuters. “I would expect there’s going to be significant layoffs. This is not good.”

Some investors have been calling for Mr. Balsillie and Mike Lazaridis, the co-chief executive, to step down to allow new management to take over.

Both men rejected that idea. Mr. Lazaridis said that under the current circumstances “strong, consistent leadership is essential.”

Earlier this year, Mr. Balsillie and Mr. Lazaridis had promoted the PlayBook as the beginning of RIM’s conversion. The tablet computer uses a new operating system and a touch-screen interface that will eventually migrate onto BlackBerry phones.

While reviewers found several merits in the device — unlike the iPad, the PlayBook can play Adobe Flash video — many said the first version contained numerous small software flaws, suggesting that it was rushed to market.

Mr. Balsillie acknowledged on Thursday that “the PlayBook launch did not go as smoothly as we planned.”

To support its stock price, RIM also announced on Thursday that it planned to buy back up to 5 percent of its shares.

Though RIM continues to lose market share in North America, it is experiencing robust overseas growth. The company said that overseas revenue rose 67 percent in the first quarter over the same period a year earlier. Much of its foreign business is based on lower-cost BlackBerry handsets, which produce lower margins for RIM.

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