Research In Motion's CEO and board of directors faced investor backlash today at the company's annual gathering in Waterloo, where they promised to use RIM's strengths to 'right the ship.'
Research In Motion's annual gathering of shareholders saw a testy lot of investors pepper RIM's management with questions about the firm's finances and future. CEO Thorsten Heins did his best to deflect the queries from the crowd, assure investors that the company in fact has a future worth investing in, and offer a peek at what RIM has planned for the next six months.
First, Heins discussed the company's cost-cutting measures. The company already announced plans to lay off 5,000 workers, or about one-third of its workforce. Heins called the decision "painful, but necessary." The company has cut a swath out of its middle-management ranks, hired new executives, and believes the new management structure will streamline decision-making and other processes.
RIM also plans to sell one of its two corporate jets as part of its bid to save $1 billion over the next year. It is exploring strategic options such as licensing models and investment schemes, but nothing has yet been decided.
RIM's financial position is actually pretty good. The Blackberry maker has about $2 billion in cash on hand, and no debt. Heins said the company has sold about 49 million BlackBerrys in the last 12 months, and about 1 million Playbook tablets during the same period. Heins predicted a tough few quarters ahead, but he believes the company's cash and debt stance will help see it through the dark months in the future. It will rely on sales of its existing BlackBerry 7 device lineup to keep it afloat until BB10 launches.
Earlier this year, RIM warned that it needed to write down nearly $1 billion in unsold inventory of BlackBerry smartphones, clearly showing a lack of demand for its devices.
Heins explained that RIM hasn't made any expense cuts that would affect its BB10 development team. He insisted that the company continues to receive excellent feedback from developers and carrier partners on BB10, and the company will capitalize on its strengths with the new platform.
The company will first launch an all-touch BB10 smartphone because, said Heins, it needs to compete in that market quickly. It will follow that "immediately" with a QWERTY-equipped BlackBerry. "We own the QWERTY market, [but] we're not as competitive as the full-touch market," said Heins. "That's why we're targeting the full-touch market first." RIM will also focus on fewer smartphone models in an effort to keep production costs down.
Speaking of production, RIM said it does not and will not manufacture devices in China. The decision is based purely on security, said Heins, as the company believes its software could be stolen and used by other manufacturers. It's possible RIM could save some money by manufacturing in China, where many of RIM's competitors have their devices assembled.
Despite RIM's woes, Heins remains upbeat and positive about the company's prospects over the long haul. In a showing of support, both Heins and former CEO Mike Lazaridis were re-elected to the board by shareholders, as were other standing board members.
Heins said that he's not satisfied with RIM's current position, but the BlackBerry maker is doing everything it can to right its listing ship.
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