Research In Motion shares are enduring another rough day on the stock market after the Canadian company announced it expects significant layoffs and an operating loss due to weak BlackBerry sales.
The shares were down about 10 per cent in pre-open trading about an hour before North American markets opened. When trading opened on the TSX, the shares lost more than $1 or nine per cent to change hands at $10.40.
RIM’s shares ended official trading Tuesday at $11.48 in Toronto and $11.23 US on the Nasdaq.
Wedbush Securities analyst Scott Sutherland says his firm lowered its price target for RIM shares by $2 to $11.50 US because it appears there is minimal demand for RIM products ahead of the new BlackBerry 10 devices.
“While we believe the currently strategy could cause RIM to go the way of Palm, we see value in the parts and thus see risks to being overly negative at current levels,” Sutherland says in a research note released Wednesday.
The Waterloo, Ont.-based company says it has hired two outside firms to advise on its troubled business and financial performance.
“The stock sell-off signals investors have given up hope and are running for the exits,” technology analysts Carmi Levy said. “The fact that it’s not a penny stock means there are still lot of people out there who are holding on hoping this restructuring will allow them to find some sort of value.”
There have been suggestions, including from some of RIM’s shareholders, that RIM could separate operations that make the BlackBerry handhelds and PlayBook tablets from the operations responsible for networks and intellectual property.
Another possibility would be a more focused approach on fewer product lines, with greater emphasis on the business and government sectors and less on consumer-oriented devices that compete with Apple, Samsung and others.
RIM chief executive Thorsten Heins said Tuesday that there will be an unspecified number of jobs cut as the company aims to cut $1 billion in costs.
Reports have suggested RIM will cut at least 2,000 jobs, or about 12 per cent of its global workforce. Some reports suggest the number may be closer to 5,000.
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