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June 30, 2013

RIM posts larger-than-expected loss, shares plunge

TORONTO — Shares of BlackBerry maker Research In Motion plunged nearly 30 percent Friday after the company posted a loss and warned of future losses despite releasing its make-or-break new smartphones this year.

RIM also announced that it will stop developing new versions of its slow-selling tablet computer called the Playbook.

Analysts were looking for insight into how phones running RIM's new Blackberry 10 operating system are selling. It wasn't good.

RIM said it sold 6.8 million phones overall versus 7.8 million last year. That includes older models. In wasn't until well into a conference call with analysts that RIM announced that 2.7 million of the devices sold in the quarter were Blackberry 10 models.

RIM's Blackberry 10 operating system is critical to the company's comeback. New phones running the BlackBerry 10 software began selling around the world this year. The BlackBerry Z10, a touchscreen model and the Q10, which sports a keyboard, have received positive reviews, but there was a delay in getting them to market in the U.S.

The first quarter, however, included a substantial period of sales of the Z10 phone in the U.S. It didn't include sales numbers for the Q10 in the U.S. The Q10 just went on sale in the U.S. earlier this month.

Sales results and RIM's projections, however, signal that the new BlackBerry 10 phones are not selling well. The company said it anticipates it will generate an operating loss in the second quarter, too.

Mike Walkley, an analyst with Canaccord Genuity, said it's clear the new operating system has not turned the company around.

"With Z10, Q10, and Q5 all shipping in the August quarter and BlackBerry still guiding to a loss we believe that is strong evidence BB10 has not turned around BlackBerry in an extremely competitive smartphone market," Walkley said.

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