BlackBerry CEO: 'Substantial change needed'

@CNNMoneyTech March 30, 2012: 11:34 AM ET
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NEW YORK (CNNMoney) -- It's "new CEO, same old problems" for BlackBerry maker Research In Motion, sparking promises of big changes at the struggling smartphone maker.

RIM reported a large loss and disappointing sales on Thursday, marking a difficult first quarter for new CEO Thorsten Heins.

He offered a sobering assessment of the company and what must be done to remain relevant in a market that is quickly passing RIM by.

"The impression I had after two days as CEO is very different from the facts I discovered after being here for 10 weeks as CEO," Heins said on a conference call with analysts. "I am convinced that substantial change is what we need."

BlackBerry's best advantages -- excellent security on its phones and the popular BlackBerry Messenger service -- are no longer enough, he said. Rivals have developed competitive tools.

As a result, RIM will scale back development on those services where it no longer sees a major competitive advantage. The company will look for third parties to power services like streaming music, a field RIM belatedly dove into last year.

"BlackBerry cannot succeed if we try to be everyone's darling and all things to all people," Heins said.

The new CEO said the next several quarters will be difficult ones as the company transitions to a new, bet-the-house platform called BlackBerry 10. That is still on track to become available at the end of the year -- far later than RIM initally planned.

Meanwhile, Heins said the company is exploring partnerships with other companies that could build its hardware or software. RIM is also considering selling off some of its assets, including its infrastructure and software businesses.

Heins said he is exploring all options -- even a sale of the company.

"We will leave no stone unturned," he said. "The best path for RIM is to manage the turnaround. We'd consider it, but a sale is not the main direction that we're pursuing right now."

Shares of RIM (RIMM) initially dropped 9% after hours, hitting their lowest point since January 2004. The stock rebounded almost completely after Heins hinted that he would consider selling the company.

Meanwhile, RIM also announced an exodus of its top leadership, including director and former co-CEO Jim Balsillie. The company's chief technology officer and chief operating officer also left.

By the numbers

The company sold a measly 11 million BlackBerry smartphones and just 500,000 PlayBook tablets in its fiscal fourth quarter, which ended March 3. BlackBerry sales fell 23% compared to the previous quarter, and were down more than 25% from the same point last year.

As a result, RIM posted a $125 million net loss, compared to a $934 million profit a year earlier.

The results included one-time charges of more than $600 million, including write-downs for excess inventory of BlackBerry 7 devices. Without the charges, RIM said it earned 80 cents per share.

Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, had forecast earnings of 81 cents per share.

Overall sales at the Waterloo, Ontario-based company fell 19% to $4.2 billion, missing analysts' forecasts of $4.5 billion.

Results just barely met and in some cases came in below the company's own already reduced forecasts.

Following quarter after quarter of slashed financial outlooks and missed targets, the company made the ominous choice to discontinue making future predictions about its BlackBerry sales or profit.  To top of page

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