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RIM is closely following the path of bankrupt 1980s computer manufacturer Osborne Computer

A $485M USD write-down on unsold Playbook inventory in calendar Q4 2011 and a calendar Q1 2012 $267M USD write-down on BlackBerry inventory helped to drive long-profitable Canadian phonemaker Research in Motion, Ltd. (TSE:RIMinto the red cash flow-wise early this year.

I. Customers Shun BlackBerry 7

According to a new report by Bloomberg Businessweek, RIM is expected to shed another 26 percent of its revenue this quarter, falling to $3.64B USD.  At the same time, it's facing growing losses from its stockpile of unsold BlackBerry 7 devices that are piling up.

The IDC Group reports that in Q1 2012 RIM accounted for a mere 6.4 percent of handset sales, compared to 59 percent by Google Inc.'s (GOOG) Android platform and 23 percent by Apple, Inc.'s (AAPL) iOS.  In the U.S., RIM's market share is believed to have dipped beneath 4 percent.

Based on current trends, we estimate RIM's sales will drop to around 4-5 percent globally and 2-3 percent in the U.S. in June.  This plunge is being reflected by surging levels of unsold inventory.  Last quarter RIM's inventory was estimated to grow in value by 18 percent (a bad thing, reflecting unsold product) -- the most of any phonemaker.  To put this in perspective, a somewhat financially unhealthy phonemaker Nokia Oyj. (OMX:NOK1V) only suffered 1 percent value growth, while Apple -- a healthy entrant -- saw an 11 percent inventory decline (on high demand).

RIM's market share continues to burn away. [Image Source: Jason Mick/DailyTech LLC]

Neeraj Monga, an analyst at Veritas Investment Research in Toronto, comments, "Clearly this stuff isn’t selling.  Despite all the write-downs they’re taking on the inventory, these inventory levels are not dropping."

RIM's write-off for Q2 2012 is expected to be in the hundreds of millions of dollars, a number that could drive another earnings miss.  RIM reports its results on June 28.  Analysts are expecting earnings $0.489 USD per share and negative cash flow after inventory write-offs.  That earnings estimate is only a bit over a third of RIM's reported $1.33 USD per share in Q1 2011.

I. RIM -- Things Are Going Great, Don't Panic

RIM has stopped giving estimates given "ongoing weakness" in U.S. sales, but periodically gives financial updates.

The latest update from new CEO Thorsten Heins tried to cast a cheerful spin on the dire financial situation.  He describes his company as making "significant progress on a number of fronts."

RIM CEO Thorsten Heins insists everything is going great. [Image Source: RIM]

He comments:

Our global subscriber base continued to grow this quarter to approximately 78 million, driven primarily by growth in international markets, which is partially offset by high churn in the United States, and our BBM user base has grown to approximately 59 million users globally.

The CEO neglects to mention this represents only 1 million new users -- an anemic growth of 1.3 percent.  In terms of market share that estimates a large loss.

RIM has hired two banks -- the Royal Bank of Canada (TSE:RY) and JPMorgan Chase & Comp. (JPM) -- to "assist the Company and our Board of Directors in reviewing RIM's business and financial performance."

The banks will advise RIM to sellseek a partnership, license its operating system, or maintain its current course.  The current course is to head towards a late 2012 BlackBerry 10 product launch.  While the new operating system is expected to pack a host of improvements and a more modern smartphone interface, it is also expected to land half a year behind schedule.

III. RIM Follows in Osborne Computer Corp.'s Path to Bankruptcy

With respect to BB10 Mr. Heins remarks:

Our annual BlackBerry World conference and BlackBerry 10 Jam took place earlier this month and both were tremendously successful. More than 5,000 developers, partners, carriers and enterprise customers from 115 different countries saw the first glimpses of our next-generation BlackBerry 10 platform and their response was encouraging.

But those "glimpses" coupled with the long gap between the product announcement and product launch may be damaging to RIM.  Analysts are warning that RIM's sales deterioration will worsen based on the phenomena known as the "Osborne Effect", a problem that occurs when companies announce products too early, leading customers to skip upgrades and wait for the new product.  The effect was named after Osborne Computer Corp. -- a company that went bankrupt in 1983 after previewing its next model half a year early.  That early preview window is almost identical to RIM's tease at BlackBerry 10.

The other problem facing RIM besides handset sales is dwindling enterprise support.  RIM long flourished on "ugly duckling" handsets, given the fact that its products were expensive but highly manageable from an enterprise perspective.  But with Google and Apple increasingly providing cheaper, easier to use solutions, enterprises are ditching their BlackBerry infrastructure and RIM's big service fees.  

Most businesses tend to gravitate towards iOS for simple deployments and Android for deployments that require increased security.  While RIM has a strong security track record, Android's open source allows large corporations to compile custom builds of Android with advanced features -- something not possible with RIM or Apple who do not open their sources.  For that reason, many of RIM's key government customers are fleeing to Android.

In its survival bid RIM is expected to announce between 2,000 to 3,000 layoffs.  The company has lost a great deal of executive talent, as top performers have fled to more successful firms.  Meanwhile the company continues to take on dead weight -- executives from failed firms.  A prime example is RIM's new marketing chief Frank Boulben who was a top executive at now-bankrupt LightSquared.

RIM Superheroes
It is unclear what RIM can do to save itself. [Image Source: RIM]

With dwindling sales, enterprise customers, employees, and executive talent, it is unclear what exactly RIM can do to save itself as it continues towards a financial precipice.

Sources: RIM, Bloomberg BusinessWeek

Comments     Threshold

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BB10 looks awesome
By tayb on 5/30/2012 8:26:29 PM , Rating: 2
It legitimately does. The hardware is still a big question mark because RIM is stubbornly refusing to release a touch screen phone that people actually want to buy. It's cool that your user base likes physical keyboards the market is moving away because they are a gigantic waste of space. You can cater to both...

The software looks really cool with features that neither iOS, Android, nor Microsoft have so far. Blackberry has plenty of developer support and a large existing user base. I'm definitely holding off my next phone purchase to see what Microsoft, Apple, and RIM have in store this fall.

Check this out and tell me this doesn't look pretty great:

RE: BB10 looks awesome
By Pirks on 5/30/2012 9:19:55 PM , Rating: 3
There's Thorsten Heins among us, under the cleverly disguised nick retrospooty, and he says he's selling RIM like tomorrow.

So no man, all hope is lost now. Thorsten/retrospooty means business.

Right Thorsten?

RE: BB10 looks awesome
By Mitch101 on 5/31/2012 9:05:36 PM , Rating: 2
Call me crazy but
By siberus on 5/30/2012 9:13:50 PM , Rating: 2
I still think they can turn this around. rim just needs one solid phone launch literally that's all they need. They have got to win back the mind share. I understand that's not an easy task but i think there's a few things that they need to do to get back in fighting shape. BBX needs to be stellar. It needs to be different enough from other os's to distinquish itself from the pack but intuitive enough where it feels natural. Also android app compatibility needs to just work if customers have to deal with some apps working other apps failing then the feature will be considered a failure by many. Lastly hardware needs to be competitive with other manufacturers flagship products.

Ive only owned 2 phones in my life, my old blackberry 8830 and my current moto droid 3. I don't know what other people want in a phone but i do know what i want in a phone. Despite being a geek with all things PC related I've found myself to be quite conservative over the tasks I use my phone to accomplish. I can break it down to 4 things Music while i work, Browsing the net (when i should be working), watching streaming videos from my browser and the very very odd game. I think looking subjectively at my short list of tasks we can all agree that all the major phone os's can accomplish these things. So going forward my next handset will probably be more based on build quality then feature set.

RE: Call me crazy but
By Pirks on 5/30/2012 9:23:24 PM , Rating: 2
I still think they can turn this around
Thorsten Heins AKA retrospooty says "no" to that.

By AMDftw on 5/30/2012 4:22:11 PM , Rating: 3
Then maybe my company would stop giving me these Sh*tty a$$ phones!

By Cheesew1z69 on 5/30/2012 10:52:25 AM , Rating: 2
According to a special someone on this site, they are selling like wildfire! Come on, they can't possibly have stock they aren't selling! It's not possible!

Is there any evidence
By F00L1SH on 6/4/2012 1:31:27 AM , Rating: 2
that the former CMO of Light Squared did a poor job marketing a company who's failure was 100% engineering based and had nothing at all to do with poor marketing?

In fact, Light Squared was pretty successful at selling it's ultimately doomed product to a major telecom company. If the marketing department had anything to do with that, I'd say they did their job well.

I don't know the guy or anything he's done, but plenty of good people work for companies that fail. Categorizing all of them as dead weight (which is exactly what this piece does) is amateurish and in no way helpful to the reader.

RIM the sinking ship
By zlandar on 5/30/2012 3:41:15 PM , Rating: 1
It's not like Dailytech is providing news contrary to everyone else on RIM. Read the WSJ and the consensus is: RIM sucks.

By hero_of_zero on 5/31/2012 12:11:50 AM , Rating: 1
I can't wait for rim to go bankrupt or sell and ship everything to Asia .Be so awesome for us in Canada to lose 10's of thousands of decent paying tech jobs up here.But hey all the better for for the greater good i guess.After all who needs decent paying tech jobs in Canada or heck even the usa.Just sell and ship overseas.

With all due respect to Mick's customary RIM trolling
By Pirks on 5/30/12, Rating: -1
By Pirks on 5/30/2012 1:28:19 PM , Rating: 2
No, I meant blame yourself for not being a good clown. You're a boring clown these days.

By Cheesew1z69 on 5/30/2012 1:42:56 PM , Rating: 2
Boring clown, wow, great come back! Are you 12? Seriously?

By Cheesew1z69 on 5/30/2012 1:54:01 PM , Rating: 2
Confirmed, you are a loser. Period.

By Pirks on 5/30/2012 2:03:37 PM , Rating: 2
Confirmed, you are a clown who lost his ability to entertain. Period.

By Cheesew1z69 on 5/30/2012 2:57:07 PM , Rating: 1
Can you really not think of anything else to say except the same bullshit every time? I don't think you have that mental capacity and it's very much obvious.

By Pirks on 5/30/2012 3:01:01 PM , Rating: 2
How about you? Can you post various funny BS instead of the same boring one?

By FITCamaro on 5/30/2012 1:16:18 PM , Rating: 1
I'd rather have nothing than shit.

By Pirks on 5/30/2012 1:09:54 PM , Rating: 1
yeah tell that to cheesy

By DarkUltra on 5/30/2012 2:41:29 PM , Rating: 2
Or a farmer! I'm sure he would go "hell, at least I can fertilize my crops with this."

By retrospooty on 5/30/2012 12:59:44 PM , Rating: 2
"I have to note that MS is also years late to the game and Android was late too, the fact that iOS was the first did not kill off its competition. Keep that in mind while reading Mick's trolling."

"but... but... but..."

There, I fixed that for ya.

By matty123 on 5/30/2012 1:33:48 PM , Rating: 2
However microsoft has other very lucrative revenue streams so does google, RIM has none.

Also to say android was to late is disingenuous at best, android came at the perfect time, just after apple had tested the waters with a new kind of smartphone. Blackberries failure to adapt is their ultimate downfall.

By retrospooty on 5/30/2012 1:31:50 PM , Rating: 4
"However microsoft has other very lucrative revenue streams so does google, RIM has none."

You haven't met Pirks yet have you?

If you post facts he doesnt like, you are just a troll.

By retrospooty on 5/30/2012 2:01:41 PM , Rating: 2
"I have to note that MS is also years late to the game and Android was late too"

Kind of just like you did there right? Ignoring that Winmobile and Android are not even close to MS and Google's core business. Phones are RIM's core business and the only other revenue (the email service) is based on the sale of those phones and therefore will decline as well.

Thanks Pirks, you have helped to prove that you are in fact a troll, even by your own definition.


By Pirks on 5/30/2012 2:25:03 PM , Rating: 2
When you stop ignoring that RIM is smaller and doesn't have huge expenses of monster firms like MS - then we'll see if you are not the trolls anymore.

By DarkUltra on 5/30/2012 2:47:33 PM , Rating: 2
Stop calling each other trolls and bring more explanation and insight to your arguments.

RIM ain't dead yet, it will be interesting to see how they fare in the near future.

By retrospooty on 5/30/2012 2:54:41 PM , Rating: 2
"RIM ain't dead yet, it will be interesting to see how they fare in the near future"

RIM isnt dead, and if they were a small company they could survive. As it is now they could survive. Eventually, they will have QNX phones out and QNX is a good OS. After the initial release and buggy ROM's I believe they will have a very nice product line of phones by late 2013.

Here is the issue. RIM's stock had dropped in the past 5 years from 150 to 11 points. Damn near 1 1/5th its previous value. Investors will not simply allow it to dwindle further. They need to sell it off to get some amount of $$$ out of it as opposed to zero. RIM will have to sell.

That being said, the product will live on. The email service has alot of companies that like it and once the phones are up to par, it can make money, but it wont be as RIM. It will be by whatever company/investment firm buys RIM's product lines.

By retrospooty on 5/30/2012 2:55:45 PM , Rating: 2
doh... 1/15th its previous value

By nikon133 on 5/30/2012 7:33:40 PM , Rating: 2
1/15 is fine if healthy.

Like Nokia had to cut off loosing parts - Symbian, European factories with expensive labour force - so does RIM. Their best chance is to keep healthy part and try rebuilding from there. If they do well, in 5 - 10 years they can regrow themselves from healthy core, rather than trying to keep alive sick giant they are at present.

By retrospooty on 5/31/2012 11:01:03 AM , Rating: 2
"1/15 is fine if healthy."

I agree, if you are looking at a company that has re-structured and is doing everything right... Firing on all pistons so to speak. RIM is not doing anything right and hasnt for the past 5 years. They have been in bed with QNX (a great OS) for 2 1/2 years and they STILL don't have a phone on the market.

They got started with QNX years too late, but if you cant take a great OS and get a phone on the market 2 1/2 years later your in trouble.

By Pirks on 5/31/2012 1:47:23 PM , Rating: 2
if you cant take a great OS and get a phone on the market 2 1/2 years later your in trouble
Apple spent like 5 years developing iPhone, so they must be in double trouble now

By retrospooty on 5/31/2012 3:48:59 PM , Rating: 2
OMG, your such a doofus.

By Cheesew1z69 on 5/30/2012 3:18:42 PM , Rating: 2
RIM announced this week that it had engaged JPMorgan (JPM) and RBC Capital to "review" its strategic options, all but confirming that the end of RIM as we know it is finally at hand. The behemoth appears to be wasting away at time-lapse speed. What happened?

By retrospooty on 5/30/2012 3:16:16 PM , Rating: 2
What this means is they are looking for a buyer. Plain and simple. They need to pay the investors before it is worth even less.

My hope is that someone buys it and develops QNX further. It really does look like a good OS, and to have another option keeps prices low and the competition on their toes.

By Cheesew1z69 on 5/30/2012 3:28:06 PM , Rating: 2

By Pirks on 5/30/2012 3:14:50 PM , Rating: 2
RIM will have to sell
First, those investors have to prove that finishing BB 10 and releasing it will bring less money than selling RIM right now and it hasn't happened yet and may never happen.

By retrospooty on 5/30/2012 3:17:34 PM , Rating: 2
"First, those investors have to prove that finishing BB 10 and releasing it will bring less money"

No, they don't have to prove anything. RIM is already looking for a buyer. Just a matter of time now.

By Pirks on 5/30/2012 3:24:11 PM , Rating: 2
RIM is already looking for a buyer
Thorsten, is that you?

By retrospooty on 5/30/2012 4:44:50 PM , Rating: 2
After all this time and all the things that have happened to RIM, there is still no logical conversation with you. I cant wait until RIM sell's, just to see how you will spin it to make it sound like you weren't 100% wrong all along. .

By Reclaimer77 on 5/30/2012 7:29:28 PM , Rating: 2
Retro, Pirks is insane. I don't know how you can keep it up with him so long, honestly it's not worth it to me anymore lol.

When it comes to RIM, Pirks is like a guy standing in the smoking burned out ruins of what used to be his house going "Well it's not so bad, a timber here, some paint there...."

By Pirks on 5/30/2012 9:08:23 PM , Rating: 2
to make it sound like you weren't 100% wrong all along
Hehe, in this case I'll ask you to find the post where I said something like "I know RIM will never sell, this is physically impossible". Can you find one? Good luck searching. There's another troll Reclaimer willing to help ya with this task. Use him, I'm ok with that LOL :))))

By retrospooty on 5/30/2012 10:26:12 PM , Rating: 2
Way to move the goal posts... Nice job. Reclaimer is right, your just off your nut.

By Pirks on 5/30/2012 10:21:57 PM , Rating: 2
You can't find the post where I say what _you think_ I say and I'm nuts because of that? Way to think logically LOL :)))

By retrospooty on 5/31/2012 8:30:07 AM , Rating: 2
Pirks, see every conversation we have had over the past year you freegin nutcase.

By Cheesew1z69 on 5/31/2012 8:38:27 AM , Rating: 1
I have been saying that for a while. Everyone just needs to ignore "it" at this point. He will try to drag you down to his level with his ridiculous bullshit.

By retrospooty on 5/31/2012 10:46:48 AM , Rating: 2
You are right. I have been down this road before. Only Pirks can spend the better part of a year going on and on how RIM is doing fine and all the negative press means nothing then claim he wasnt wrong when the sale happens. LOL.

BTW, stock hit a new low today

and more insight on RIM looking for a buyer.

By Pirks on 5/31/2012 8:49:36 PM , Rating: 1
more insight on RIM looking for a buyer from some trashy site asking your email all the time to send you come trashy spam like that RIM trolling shit etc
right on

By Pirks on 5/30/2012 1:35:25 PM , Rating: 1
RIM does not have huge expenses that MS and Google have, anti-RIM trolls always "forget" about that. RIM grows its paying customer base, up to 78 mil now and it also grows its BBM service, up to 59 mil now. RIM still generates positive cash flow and increases its cash pile. Trolls "forget" about all of these facts too. Don't be dumb, learn all the facts and don't believe biased trolling they post around.

By retrospooty on 5/30/2012 1:40:01 PM , Rating: 2
Uh... the "fact" is they lost money last quarter and are projecting to lose more this quarter and even more the one after that. RIM is in deep sheep dip and everyone sees it but you.

You post that JM is trolling with his article yet you cant point out a single thing in it that isnt true. Excess unsold inventory how many quarters in a row now? Even you bought a Windows phone, and dont mention the playbook, it lost money and isnt going to sustain them no matter how great the OS is.

By Pirks on 5/30/2012 1:59:20 PM , Rating: 1
JM is trolling with his article yet you cant point out a single thing in it that isnt true
JM is trolling because he carefully avoids positive news about BB10 and presents it all in negative light. That's called "glass half empty", not "half full".

By Cheesew1z69 on 5/30/2012 2:13:26 PM , Rating: 2
That's called "glass half empty", not "half full".
Kind of like your brain.

By Pirks on 5/30/2012 2:31:06 PM , Rating: 1
Still better than having empty skull like yours

By retrospooty on 5/30/2012 2:57:47 PM , Rating: 2
There is no half full with RIM. There is the truth that JM wrote, and there is no other positive news. BES cant sustain them when Blackberries arent selling.

By Pirks on 5/30/2012 10:01:12 PM , Rating: 2
BES cant sustain them when Blackberries arent selling
That's not true is BB 10 appears fast enough and is embraced by the consumers. How do you know when it appears and whether consumers will love it, Thorsten? :)))

By Pirks on 5/30/2012 10:09:59 PM , Rating: 2
is BB 10 == if BB 10

By ritualm on 5/31/2012 12:41:27 AM , Rating: 2
Too little, too late. All that you need to know about BB 10.

RIM is trying to repair a structural breach while its own critical life support systems are failing left and right. Just a matter of time another company snaps up what little is left of the Blackberry.

Pirks, you are still wrong.

By johnsmith9875 on 5/31/2012 10:09:25 AM , Rating: 2
Maybe Rupert Murdoch will buy RIM. He did so well buying up MySpace.

"The whole principle [of censorship] is wrong. It's like demanding that grown men live on skim milk because the baby can't have steak." -- Robert Heinlein

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