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RIM?s slow product development cycle drags down Q1 results

Research In Motion reported a 12 percent revenue decline for the first quarter and said layoffs were coming as the company continues to face stiff competition for its BlackBerry and Playbook devices.

In its Q1 financial results, RIM said revenue totaled $4.9 billion and that it shipped 500,000 units of its PlayBook tablet and 13.2 million Blackberry handsets. The poor numbers have reverberated throughout the industry, raising speculation that the company is in deep financial trouble.

?RIM has been late to react to the shifting sands of lightning-fast product development (HTC), the primacy of user experience (Apple, Palm) and the importance of creating an enduring OS platform that limits OS version fragmentation and facilitates app development (Apple again),? wrote Yankee Group analyst Andy Castonguay in a blog post from Friday.

Need for speed
Waterloo, Canada-based RIM blames the drop in revenue in the United States on the age of the BlackBerry portfolio. While the company is planning to introduce a set of new phones based on the same operating system that powers the PlayBook tablet, they are not likely to reach store shelves until the second half of next year.

The company?s more recent introductions rely on the BlackBerry OS 7 platform.

?RIM?s acquisition of QNX and The Astonishing Tribe were both crucial to the evolution of its OS, but the transition of its whole portfolio to QNX continues to be a slow one that has frustrated RIM developers, already in somewhat short supply,? Mr. Castonguay wrote. 

Mr. Castonguay wrote that he is optimistic that RIM?s shift to the QNX operating system will help the company rebound.

Going forward, however, the company needs to have a faster product innovation cycle, he said. 

The company faces significant competition from Apple?s iPhone and Google Android smartphones, which are both gaining share.

On the bright side, the company said international revenue grew 67 percent in the first quarter.

According to report, RIM said during a conference call with analysts that the company would start streamlining operations, which would include layoffs.

Executives also said that they had a plan to bring the company back to profitability.

Financial analysts jumped on the weaker than expected results as a sign that RIM is in trouble. 

?In the shadow of the global market?s explosive smartphone growth, RIM?s inability to match initial quarterly guidance and even its revised guidance led to a another significant drop in share prices yesterday, bringing the stock to its lowest point in over five years in after-hours trading,? Mr. Castonguay wrote.