TORONTO - Research In Motion says there will be "significant" layoffs and cost-cutting initiatives this year as the BlackBerry-maker hires two outside firms to advise on its troubled business and financial performance.
The Waterloo, Ont.-based company said Tuesday that both J.P. Morgan Securities LLC and RBC Capital Markets have been brought on board as RIM expects to face an operating loss in the first quarter.
"The ongoing competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace," chief executive Thorsten Heins said in a release.
RIM (TSX:RIM) will respond by reining in costs and cutting staff by unspecified numbers throughout rest of the year, he said. The company aims to save $1 billion by the end of fiscal 2013.
Reports have suggested RIM will cut at least 2,000 jobs, or about 12 per cent of its global workforce, as part of a massive restructuring. Some layoffs estimates made by analysts have been closer to 5,000, though the company has declined to comment.
"We will continue to spend and hire in key areas such as those associated with the launch of BlackBerry 10 (the new operating system), and those tied to the growth of our application developer community," Heins said.
The company intends to provide further details later in the year.
In the meantime, RIM is working with both advisory firms to evaluate various strategies, which include potential partnerships and licensing as well as other alternatives, Heins said.
Those sorts of initiatives have been widely expected by the market, and so have drastic cuts to its spending and staff levels.
Cormark Securities analyst Richard Tse said very little in RIM's announcement should have come as a surprise.
"We all knew the next few the quarters before BlackBerry 10 were going to be absolutely horrible — this sort of confirmed that," he said in an interview.
Still, the company's stock was down more than seven per cent in after-hours trading on the Nasdaq, after a brief halt. RIM shares were off 80 cents to $10.43 at 6 p.m. ET. Earlier the stock had fallen to below $10 shortly following the announcement that came after market close.
RIM ended Tuesday nine cents higher to $11.48 on the Toronto Stock Exchange.
Tse noted that RIM said its subscribers continued to grow in the quarter, rising to 78 million, with international markets making up for a weaker performance in the United States.
The company also increased the amount of cash in its coffers to about $2.1 billion at the end of fiscal 2012.
Those minor positives come as the company undergoes major changes to its executive team in recent weeks as various key players exited their roles.
On Monday, RIM announced that its chief legal officer, Karima Bawa, is retiring. That news followed the departure last week of Patrick Spence, the BlackBerry maker's head of global sales.
Earlier this month, the company said it was bringing in two veterans from the mobile computing industry.
Kristian Tear, who joined RIM from Sony Mobile Communications where he was executive vice-president, is the new chief operating officer, while Frank Boulben, the former executive vice-president of strategy, marketing and sales for LightSquared, joined as chief marketing officer.
Changes in the senior leadership at RIM follow the appointment of Heins as RIM's president and chief executive earlier this year. Heins replaced co-chief executives Jim Balsillie and Mike Lazaridis after months of pressure from shareholders.
RIM has been working to turn around its operations after watching its market share be taken away by Apple's iPhone and other smartphones running Google's Android operating system.
In the previous quarter, the company reported a loss of US$125 million as it repriced the value of its assets lower and took a $355-million charge.
The BlackBerry 10 platform is seen as an important part of RIM's attempt to compete when it is released in the coming months, and it is widely believed that the company's future is hinged on the success of its next line of smartphones, due sometime later this year.