Crisis for BlackBerry maker RIM deeper than thought

The outlook for BlackBerry manufacturer Research In Motion is even bleaker than thought, with the company expected to announce as many as 5,000 layoffs in the near future.

The figure, predicted by Jefferies analyst Peter Misek, is more than double the amount that previous reports had suggested, as the company prepares to record an operating loss for the second-straight quarter.

RIM has hired JP Morgan and RBC Capital Markets to help evaluate its strategies, which may include partnering other companies and licensing software.

Misek said, "It's a disaster, it's bad. The problem is you can't see a path to a sale until you stabilize the business".

Culling 5,000 jobs would see RIM's total employees reduced by almost a third, demonstrating the seriousness of the situation. The company will be desperate to steady the ship before the launch of the BlackBerry 10 later this year, but with a host of more versatile, consumer-friendly smartphones entering the market at a rate of knots, the uphill struggle may yet continue for RIM.

At the time of our previous report, the company refused to comment on the issues it dismmissed as "rumours and speculation", but CEO Thorsten Heins has now said in a statement, "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.

"The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this, and likely result in an operating loss for the quarter".

The language was softening but the message was gloomy, and Heins admitted the problems meant, "there will be significant spending reductions and headcount reductions in some areas throughout the remainder of the fiscal year".

Source: Associated Press