May 30 (Bloomberg) -- Research In Motion Ltd., the struggling maker of the BlackBerry smartphone, fell 11 percent after forecasting an operating loss for the first quarter and hiring banks to advise on strategic options.
JPMorgan Chase & Co. and RBC Capital Markets have been hired to help RIM evaluate options, including forging partnerships, licensing its software and looking at “strategic business model alternatives,” the Waterloo, Ontario-based company said yesterday in a statement. RIM also is attempting to streamline operations by reducing spending and headcount.
An exodus of customers to Apple Inc.’s iPhone and Google Inc.’s Android devices has taken a toll on RIM’s sales and profit over the past year, putting pressure on management to make changes. An operating loss would be the company’s first since 2004, according to data compiled by Bloomberg. Analysts had estimated an operating profit of $261 million for the period, which ends June 2.
“They’re trying to telegraph that expectations are too high and that the next few quarters are going to be very challenging,” said Matt Thornton, an analyst at Avian Securities in Boston.
RIM shares fell to $10.04 at 9:43 a.m. New York time. The stock had already lost 74 percent of its value in the past 12 months before today.
Chief Executive Officer Thorsten Heins, who took over from co-founders Mike Lazaridis and Jim Balsillie in January, said he’s considering strategy changes after customer and market- share losses led to five straight quarters of sales shortfalls. Bloomberg News reported April 19 that RIM was close to picking an adviser, with JPMorgan as the frontrunner.
“Bringing in a blue-chip bank at least gives you the seal of approval that you’re doing the correct due diligence and taking shareholder interest into account here,” said Thornton, who has a neutral rating on RIM’s stock.
RIM is putting the final touches on its new BlackBerry 10 operating system and will release the first smartphone built on the software later this year. If it pursues a strategic change, the company would prefer to license its BlackBerry software, a person with knowledge of the matter said last month. Barring that, RIM would like to find a strategic investor, the person said. RIM doesn’t plan to sell itself, according to the person.