RIM’s New CEO Acknowledges It Is Time for Change
However, unlike in past calls, RIM says it won’t be giving any specific guidance for the current quarter.
The call is just getting under way. AllThingsD will provide live coverage.
2:04 pm: Call just getting started. We’re still hearing about forward-looking statements and risk factors.
2:05 pm: CEO Thorsten Heins takes over the call.
“I’ve been the CEO of RIM for just over 10 weeks now,” Heins said, noting that he has spent most of that time meeting with various stakeholders and reviewing the company.
“I did my own reality check.”
“It is now very clear to me that substantial change is what RIM needs,” Heins said, striking a different tone than when he initially took the helm.
Plans to refocus on enterprise market, noting that RIM has been late to the “bring your own device” trend, but says RIM is committed to regaining lost share.
BlackBerry won’t try to be all things to all people, Heins said, saying it won’t be focusing on all areas of the consumer market, including media services.
2:09 pm: Heins says RIM will pull back on various consumer services that it had tried to build over the last couple of years. “As a result, we will be looking at ways to scale back these activities,” he said.
2:10 pm: Heins notes that competitive pressure continues to increase as the company lacks products at the high end, including support for next-generation LTE networks.
Most of the company’s strength right now is internationally. Even there, though — particularly on price — is heating up, Heins said.
2:11 pm: Heins notes that some of the things that used to set RIM apart — things like security and BBM — are no longer as highly valued by customers as they once were.
To avoid losing more customers, Heins said the company will heavily subsidize a new line of low-end BlackBerry 7 phones.
However, as RIM said in its earnings release, the company said it won’t try to project how many devices it will sell.
“I recognize these are difficult times for our shareholders, and it is likely the next few quarters will continue to be (challenging),” Heins said.
2:14 pm: Update on BlackBerry 10.
Heins said he has seen the software running on what will be the hardware that launches toward the end of the year.
“I have to say I am very pleased with the progress they are making,” Heins said.
The company plans to offer some developers prototype hardware and software at a May developer conference.
The company also now has one million PlayBook tablets in the market, Heins said. (Thanks, of course, to steep price cuts.)
Heins said RIM expects BlackBerry 10 devices to enter carrier testing in the summer, in order to hit the market later in the year.
2:17 pm: Heins said he believes that the company’s best shot remains turning its core business around.
“This is not without risk and challenges, and there are no guarantees of success,” he said.
However, RIM is also looking at other areas, such as licensing its technology.
It is difficult to say what kinds of opportunities might arise, Heins said.
2:20 pm: Heins said, in looking at RIM’s organizational structure, it was too complex and there was a lack of accountability.
“We will implement plans to enable our employees to be more effective and grow inside RIM.”
Two employees that won’t be growing inside the company are David Yach and Jim Rowan, who are leaving RIM, as announced earlier in the day.
RIM is looking to hire a new chief operating officer, Heins said.
RIM is also looking for a new chief marketing officer, and is in the process of trying to hire one.
“I expect to have some news for you pretty soon on that important role,” Heins said.
Heins said he plans to unveil a new organizational structure on Friday.
2:23 pm: “We are making the necessary changes at the company,” Heins said, summarizing his comments.
RIM’s financial performance will continue be challenging for the next few quarters, Heins said, promising an update in the near future. He then hands things off to RIM’s chief financial officer to talk about the company’s numbers.
CFO Brian Bidulka: BlackBerry Bold selling reasonably well, as well as some entry-level products for the prepaid and low-end market. Other models of BlackBerry 7 not selling so well, he added, resulting in a charge to earnings.
U.S. sales were 17 percent of quarterly revenue, down from 20 percent.
The company has shipped a total of 1.3 million PlayBook tablets through the end of its fiscal year.
2:27 pm: Bidulka going through the other numbers now. Inventory was down on an absolute basis, but is higher than ideal when you consider current sales rates.
2:30 pm: After the end of the quarter, the company recorded a noncash goodwill charge of $346 million, after tax.
2:32 pm: RIM plans to reduce the number of production facilities as part of a wide-ranging effort to cut costs, Bidulka said.
2:33 pm: While it isn’t giving specific guidance, Bidulka did offer a few expectations.
He said RIM expects smartphones to continue to face margin pressure.
The company sees subscriber levels to be under pressure in the U.S., with any gains coming from international markets. Overall subscriber growth also won’t match last year’s levels, he said.
2:37 pm: On to Q&A.
First question on whether RIM plans to continue making phones at all segments of the market. Also, has the company considered shutting down hardware entirely.
Heins: The world is not in one state, Heins said. Asia Pacific still needs entry-level products, for example.
Too early to say what it will do with BlackBerry 10, he said, though the goal is to make it a high-end aspirational device.
Could mean RIM continues to make hardware itself or, potentially, partners. That, Heins said, is something RIM plans to evaluate.
“We need to look at this. We will leave no stone unturned,” Heins said, promising all avenues will be explored.
2:40 pm: After-hours, by the way, RIM shares are off 23 cents, or 1.7 percent, to $13.50.
As for consumer services, Heins said RIM will look to work with established companies to make BlackBerry 10 competitive.
“We will partner,” Heins said. “We will have to have table stakes” services, he said, but RIM doesn’t need to do those itself.
2:45 pm: Heins reiterates that RIM will look at whether it needs to license BlackBerry 10 operating system or partner with a hardware maker.
“I want to be in the mass-market, I want to participate,” Heins said, but the business model has to make sense.
A sale of the company “is not the main direction we are pursuing right now,” Heins said.
2:50 pm: Heins acknowledged that his tone has shifted, saying, the impression he had of RIM at Day 2 as CEO is different than the facts he sees 10 weeks into the job.
“There’s a lot of learning,” he said.
2:51 pm: “This company needs to learn to partner,” Heins said. “We can’t do everything ourselves, but we can do what we are good at.”
2:56 pm: On to last question — asking for more details on the guidance the company isn’t giving.
Not surprisingly, RIM isn’t giving a lot more details.
And with that, the call wraps up.