November 29, 2023

DealBook: Research in Motion Projects a Quarterly Loss

6:24 p.m. | Updated

OTTAWA — Research in Motion, the beleaguered BlackBerry maker that is trying to revive its sales, warned investors on Tuesday that it was likely to post its second-consecutive quarterly loss next month.

In a bid to avoid the fate of Palm, a once high flying mobile device maker that was broken up and sold before effectively vanishing, RIM also said on Tuesday that it had retained J.P. Morgan Securities and RBC Capital Markets, a unit of the Royal Bank of Canada, to help guide it through a previously announced strategic review.

The review may lead to partnerships with other companies, the licensing of BlackBerry software or “strategic business model alternatives,” an apparent reference to the possible sale of all or part of the company.

“These advisers have been tasked to help us with the strategic review we referenced on our year-end financial results conference call and to evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives,” Research in Motion said in a statement.

In the latest announcement, Thorsten Heins, who became president and chief executive this year, said that declining sales and lower prices of BlackBerry handsets were likely to lead to the loss. The company’s loss during its previous quarter resulted from special charges.

“RIM is going through a significant transformation as we move towards the BlackBerry 10 launch, and our financial performance will continue to be challenging for the next few quarters,” he said.

Shaw Wu, an analyst with Sterne Agee in San Francisco, said it appeared that the RIM’s finances were quickly deteriorating.

“The biggest shock is that this was a company that was still able to say that even though they were in a tough position, they were still profitable,” Mr. Wu said. “Now they can’t claim that any more. This is what happened to Palm when things turned really sour.”

The company’s statement indicated that it was likely to increase the $2.1 billion in cash it had at the end of its last quarter. But Mr. Wu said that given the forecast for a loss, that increase would probably result from RIM collecting debts rather than growing its business.

Mr. Heins reiterated that the BlackBerry 10 phones were on schedule for their much delayed introduction. But he once again did not provide a date for that event beyond indicating that it would take place “in the latter part of calendar 2012.”

BlackBerry sales continued to grow in developing markets, Mr. Heins said, but that good news was “partially offset by high churn in the United States.” Customers in those markets also favor lower-cost BlackBerrys, which generate correspondingly lower profit margins for RIM.

Mr. Heins also said the company aimed to cut costs by $1 billion during the current fiscal year. That is likely to fuel widespread speculation in Canada’s technology industry that substantial job reductions are likely to come at RIM, which is based in Waterloo, Ontario.

“While there will be
 significant spending reductions and headcount reductions in some 
areas throughout the remainder of the fiscal year, we will continue
 to spend and hire in key areas such as those associated with the 
launch of BlackBerry 10, and those tied to the growth of our 
application developer community,” Mr. Heins said in the statement.

RIM’s first quarter of its 2013 fiscal year closes on Saturday. The company will report its results on June 28.

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U.S. Stock Futures Are Flat in Pre-Market Trading

The decline to 388,000 in claims for unemployment benefits last week was less than expected, but the drop still signaled improvement in the labor market.

The data also followed an encouraging ADP report on private-sector jobs and precedes Friday’s employment report from the government.

“Claims are going in the right direction, and that gives us hope that we’ll see a good employment number tomorrow,” said Jerry Harris, president of asset management at Sterne Agee in Birmingham, Ala.

The week has been marked by some of the year’s lowest volumes as traders opt to ride the quarter’s gainers amid global risks. The SP 500 is up 5.6 percent for the quarter, based on Wednesday’s close.

“Today will be quiet as people have already established their positions in preparation for a report that is expected to be positive tomorrow,” Harris said.

The Dow Jones industrial average was up 4.84 points, or 0.04 percent, at 12,355.45. The Standard Poor’s 500-stock Index was down 0.75 point, or 0.06 percent, at 1,327.51. The Nasdaq Composite Index was up 0.98 point, or 0.04 percent, at 2,777.77.

The Institute for Supply Management-Chicago said its index of Midwest business activity fell in March to 70.6 from 71.2 in February. The data was near economists’ expectations and stocks reacted little.

David Sokol, the man widely seen as the leading successor to Warren Buffett to head up Berkshire Hathaway, has resigned after buying shares in chemical company Lubrizol before pushing Buffett to acquire it.

In an interview on CNBC, Mr. Sokol said he did nothing wrong in buying the shares.

Berkshire’s Class B shares fell 1.8 percent to $83.90.

The Macau unit of Las Vegas Sands said it is being investigated by the Hong Kong Securities and Futures Commission for alleged regulatory violations. Shares fell 4.9 percent to $41.41.

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