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RIM is convinced it is the market leader and that customers love it

Apple, Inc. (AAPL) CEO Steve Jobs was famous for his "reality distortion field" (RDF) -- an all encompassing term referring to his proclivity for taking negatives and spinning them as positives.  But these days the new bastion of reality distortion appears to be RIM.

RIM, a company founded on business users, has lost its way.  From bizarre Saturday morning cartoon marketing pitches to screaming publicity stunts outside Apple stores, RIM's cries for attention have looked more and more desperate.  But it is the raw financials that are the most alarming.  RIM only has around $2.2B USD in the bank, and it's losing $518M USD per quarter.  And those losses are fast accelerating -- a year ago it made $695M USD in Q2 2011.

I. Investors Troubled by RIM's Perhaps Unrealistic Optimism

Amid layoffs of a third of its workforce and a half-year delay of BlackBerry 10, RIM's executive management are offering an overflowing cup of optimism.  

Vic Alboini, chief executive of Jaguar Financial, an investment firm that has sunk some money into RIM shares has been lobbying for a sale to save value for shareholders before a potential bankruptcy hits.  He was appalled by new CEO Thorsten Heins' apparent denial of the grim fiscal reality facing the firm.

BlackBerry sales
Some investors want RIM to sell its IP, business services, and manufacturing, gracefully bowing out of the handset business.  [Image Source: Christian Science Monitor]

Responding to Mr. Heins' presentation at an annual shareholder meeting this week, Mr. Alboini told Reuters, "There was no mention of a sale of the company, no mention of a breakup of the company, and again, our big, big concern is if the BB10s are a dud.  Where are we then?"

II. CEO Heins -- RIM is "lean, mean machine"

His message stands in stark contrast to Mr. Heins who at the meeting played evangelist for the much-delayed BlackBerry 10 platform and a reinvigorated management ranks.  

Preaches Mr. Heins, "I am not satisfied with the performance of the company over the past year.  Many of you are frustrated with the time it has taken us to make our way through the transition.  [But] I have assembled a leadership team for RIM that's truly capable of taking us into future."

Some wonder if there's really as much talent as Mr. Heins believes, though.  RIM's new chief marketing officer Frank Boulben comes from now-bankrupt satellite LTE firm LightSquared -- hardly a shining star.  In recent interviews he expressed reticence at doing his job -- marketing -- claiming that customers love BlackBerries so much, that they will do his job (which he is paid millions of dollars a year to do) for him.

RIMdenberg
RIM Execs: Fire? What fire?  [Image Source: Jason Mick/DailyTech LLC]

Meanwhile, talented, hard-working executives have jumped ship to companies who aren't posting half-billion dollar quarterly losses.

III. Patience is Running Out Among Investors

Mr. Heins insists BlackBerry 10 isn't vaporware.  He comments, "We're working day and night to bring it out and prove the point that it is what we say it is."

But confidence is waning in RIM, after over a year in delays that bring RIM's total time taken to productize QNX -- the OS it acquired in April 2010 -- to almost three years time.  Amid a stacked market to be soon filled with sixth generation iPhoneWindows Phone 8, and Android 4.1 Jelly Bean devices, BB10 slick package carries no guarantees, even if it does manage to complete its lackadaisical stroll onto the market place.

RIM CEO Thorsten Heins claims laying off a third of his company's workforce has transformed it into a "lean, mean machine".  But there's no guarantees cutting jobs will boost profitability, given that sales are plunging at potentially a fast enough pace to offset those gains.

If there was one shred of reality in the presentation, it was CEO Heins' acknowledgement that "other options" (aka a sale) were on the table, pending a review by the Royal Bank of Canada (TSE:RY) and JPMorgan Chase & Comp. (JPM).  Mr. Heins remarked, "There is a lot of action going on, looking at very different options for what the company could do.  When it's time to go public with it, we'll go public with it."

RIM CEO
RIM CEO Thorsten Heins admits a sale remains possible. [Image Source: RIM]

It would be tempting to dismiss this.  After all, don't all companies want to be flexible?  

That is true, but when it comes to sales there are only two types of companies that generally openly acknowledge considering sales -- rising star startups looking to be scooped up by a top corporate firm, or dying corporate firms looking to offer up their carcass to the scavengers.  You don't discuss selling, after all, if you are a large successful firm.

That sale can't come soon enough for shareholders, who are afraid that RIM's refusal to gracefully bow out will cost them dearly.  Stock fell -7.5 percent yesterday, before stabilizing this morning on a 3 percent rise.  Stocks remain at a level lower than before the shareholder meeting.

A share of RIM stock is today worth about 1/20th of what it was traded for back when the company was popular and profitable in 2008.

Source: Reuters



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By 91TTZ on 7/11/2012 2:18:45 PM , Rating: 2
There's a lot of talk about RIM doing poorly, and how they claim that they're in good shape. The usual online commentators mock them and say that they're dillusional.

However this isn't what's going on here. What's really going on is that there's a classic struggle between two sides- on one side you have the company who probably wants to steer towards bankruptcy. On the other side you have the investors who do not want them to declare bankruptcy, and they don't care who controls the company. They just want to maintain their stock price.

If the company is allowed to maneuver itself into bankruptcy, this would allow them to erase debt and maintain control of the company. The company can free themselves of the debt held by their shareholders and there's nothing the shareholders can do about it. The shareholders will now own a lot of nothing, causing them to lose their money.

If the investors are able to steer the company into a sale, the company will get bought out by someone and the shareholders have bargaining power. They'll be able to strike an agreement with the purchasing company to get as much for their shares as they can.

Remember the General Motors bankruptcy? On Friday they're claiming that they have no intention of declaring bankruptcy. They said that there's no cause for alarm, it's business as usual. By the opening of the market the following Monday they'd already declared bankruptcy and that big pile of GM stock you owned was now worthless. This is what's going on here.




By JasonMick (blog) on 7/11/2012 2:45:55 PM , Rating: 2
quote:
If the company is allowed to maneuver itself into bankruptcy, this would allow them to erase debt and maintain control of the company. The company can free themselves of the debt held by their shareholders and there's nothing the shareholders can do about it. The shareholders will now own a lot of nothing, causing them to lose their money.
Bankruptcy is not exactly a free ticket to ride, unless you happen to be GM or Chrysler.

Often the end result of bankruptcy is liquidation of some or all of your assets/units. Just look at recently bankrupt Eastman Kodak, which is selling its IP.

When a company goes bankrupt, it must attempt to repay its debts. If it has assets (say a large IP portfolio), it can often be ordered to sell them by a bankruptcy court.

And to boot, bankruptcy is ruinous to corporate image. BlackBerries already are looking pretty miserable compared to competitors like Windows Phone, the iPhone, and Android -- even BlackBerry supports like Pirks seemingly acknowledge this by choosing Windows Phones. RIM hardly needs any further loss of consumer confidence.

If RIM was being rational it would look to sell to the highest bidder. At this point is non-viable and headed on a fast track towards bankruptcy.

It will be sold sooner or later. The only difference is that if it waits to long to sell, it will be worth far less and shareholders will lose their shirt.

(Disclaimer: I own no RIM stock or stock in Microsoft/Apple/Google.)


By Belard on 7/11/2012 6:47:41 PM , Rating: 2
Sigh... When your market share is tiny, people don't buy... Odyssey2 was in some ways better than the Atari2600, never reached the high market share and died quickly.

Amiga, started dying as consumer PC prices fell and the company sat on its ass (Commodore).

RIM's BB10 is a slick looking MobileOS... it is doing things a bit differently. But they screwed up royally by being 3 years late. Understandable making QNX into a new MobileOS is going to take a while, but they should have hired more people and had BB10 come out LAST fall at the latest.

Losing $500M a qtr?! Holy smokes! Hiring an extra 50 techs to work on BB10 would have been worth it. The Playbook didn't do anything for RIM... it was half-ass. Perhaps they are trying to make BB10 perfect?! Android and iOS are not perfect either.

So lets say BB10 is finally GOOD enough in 9 months... RIM will be almost 1Billion poorer... they will need $200~300m in marketing alone.

With current BB owners running away from their phones and our 2-year phone plans... I'm not sure how RIM can pull this off.

In another 12 months, their tech will be almost worthless unless BB10 is a home-run and people actually buy it... but as we know... The lack of app developers and other factors are in play here. This isn't the days of feature-phones.

I wish RIM the best... but their arrogance and stupidity doesn't give me confidence. Even Microsoft is doing so many stupid things, I have NO confidence in them. Apple sometimes pisses me off, but I know they aren't going away.

I still think that Android can possibly save RIM if they keep with their quality of hardware with and without keyboards. Sell their products as HIGH-END Android phones.

I'd say that RIM has a 5% chance making it to 2014 with BB10. And that if they went Android, a 50% chance.


By Omega215D on 7/11/2012 7:53:13 PM , Rating: 3
Bombardier Aerospace...

They also provide us with some oil as well...


By Ringold on 7/11/2012 10:49:07 PM , Rating: 1
Bombardier (which doesn't hold a candle to Boeing or Airbus/EADS), a robotic arm that any of a hundred different US institutions could've done with an arm tied behind their back, and two game developers. One of which, EA, is hated by many.

Wow. China better watch out!

In fairness, Canada's population is pretty tiny, so I personally don't expect many world-leading firms there, just as I don't expect South Dakota to bristle with unique, world-leading firms.


By 91TTZ on 7/12/2012 11:31:14 AM , Rating: 2
Why would you call him an idiot after you posted EA.com as a Canadian company?

Electronic Arts, Inc. (EA) (NASDAQ: EA)[3] is an American developer, marketer, publisher and distributor of video games.

They're from CA (California), not CA (Canada)

And Ubisoft is from France.


By retrospooty on 7/12/2012 11:36:04 AM , Rating: 2
ROFLMAO!!!


By Reclaimer77 on 7/12/2012 1:56:34 PM , Rating: 2
AHAHAHA

Google FAIL!


By Pirks on 7/12/2012 3:15:23 PM , Rating: 2
Most of EA and Ubisoft's coolest games are done in Montreal and Vancouver studios, that's why.


By ritualm on 7/11/2012 8:09:26 PM , Rating: 4
You know why this is going on? Because USA basically controlled everything north of the 49th Parallel since its own War of Independence of 1776.

Territorial disputes? USA bullied then-newly formed Dominion of Canada, with tacit British support, because the refusal of Great Britain to agree with Americans would give the latter an excuse to start War of 1812 2.0.

An ocean freighter loaded with portable generators was strong-armed into US ports when it wasn't just USA suffering from the effects of an ice storm.

Both the original Free Trade Agreement in the early 1980's and later the North American Free Trade Agreement were designed to do one thing: leave Canada with no choice but to do business solely with USA. If the US economy dives, so does Canada's, but the reverse will never happen. If the US economy does well, Canada might not necessarily do as well. It created what was basically a win-win for USA, get a free ride on everything, but drag down your neighbor whenever you screw up.

During the Dubya presidency, Bush treated Canada as its own backyard, with grand plans of tapping into its sovereign resources for its own abuse, under the disguise of 'energy security'.

Worked splendidly well until China started flexing its economic and industrial strengths while USA rested on its laurels.

Canada did have car companies, aircraft firms, etc. The former was bought out by General Motors. The latter is still alive, but it doesn't play the large jet market already monopolized by Boeing and Airbus.

We have plenty of narcotics manufacturing, thank you very much. We are also the main reason why Big Pharma in your country wants longer-than-forever patent protection under the public guise of 'innovation'.

Not to mention that a huge majority of your own population are dumber than a brick when it comes to basic geography and international politics.

You're an idiot.


By Ringold on 7/11/2012 11:04:23 PM , Rating: 1
Wow. Thank you, good sir, you did something I didn't think possible: exhibit more denial and shifting blame for ones own failures to other parties then an American liberal could ever dream of.

Some of your historical whining is nonsense. If America wanted Canada, we'd of taken it. We sent some drunk soldiers up there, Canada managed to repel them, we said 'to hell with it, it's cold as shit up here', and never bothered again. Canada wasn't at all interesting, asides from timber and fish, until it got oil. As for the generators, not sure what you're referring to, but thats called cold, calculated, great-power international politics. If Canada had a pair of balls and displayed them on occasion, it could get its way more often. Instead, it goes around the world with a big dumb diplomatic smile on its face and money flowing from its pockets and wonders why it carries so little weight in the world.

Speaking of oil, you sound like we wanted to come in and take it directly, like liberals think we did with Iraq. No, you poor fool, oil firms, probably Canadian, extract your own resources. We simply wanted to buy them, after the miners/drillers/etc paid whatever taxes you duly expected of them. And then no, we did not rest on our laurels, we became retarded and decided Canada should ship its oil to China instead of our own refineries. Either way, Canada wins.

NAFTA in no way locks you in, you don't know what you're talking about. It's a regional FTA, so it's most beneficial, due to the benefits of the agreement and physical proximity (re: the proximity theory of international trade I think its called) to do business with the US, but you've got deals with other countries. Not America's fault you don't have more FTA's; Stephen Harper is working hard on signing more, though!

As for the relationship between the US economy and Canadas.. Canada's economy in total is less than that of California, only slightly larger then Texas, and therefore of course it'd take something close to a zombie apocalypse in Canada to effect the American economy, which is almost TEN TIMES THE SIZE. Meanwhile, since the vast majority of Canada's population lives within mere miles of the US border, and so much business depends on cross-border trade logically due to that proximity, yes, if America gets a cold, Canada can catch the flu. Tough shit, better than living next to Mexico, we can tell you that!

quote:
Not to mention that a huge majority of your own population are dumber than a brick when it comes to basic geography and international politics.


You fail completely at history and economics, and want to point fingers? Go club some seals. :P


By gamerk2 on 7/12/2012 8:51:48 AM , Rating: 1
quote:
Some of your historical whining is nonsense. If America wanted Canada, we'd of taken it. We sent some drunk soldiers up there, Canada managed to repel them, we said 'to hell with it, it's cold as shit up here', and never bothered again. Canada wasn't at all interesting, asides from timber and fish, until it got oil. As for the generators, not sure what you're referring to, but thats called cold, calculated, great-power international politics. If Canada had a pair of balls and displayed them on occasion, it could get its way more often. Instead, it goes around the world with a big dumb diplomatic smile on its face and money flowing from its pockets and wonders why it carries so little weight in the world.


The US DID want Canada; it attempted, on two separate occasions, and failed both times.

Secondly, why does it matter whether or not Canada has a major voice on teh world stage? How does that benefit Canadian interests again?

quote:
Speaking of oil, you sound like we wanted to come in and take it directly, like liberals think we did with Iraq. No, you poor fool, oil firms, probably Canadian, extract your own resources. We simply wanted to buy them, after the miners/drillers/etc paid whatever taxes you duly expected of them. And then no, we did not rest on our laurels, we became retarded and decided Canada should ship its oil to China instead of our own refineries. Either way, Canada wins.


Umm...no.

quote:
NAFTA in no way locks you in, you don't know what you're talking about. It's a regional FTA, so it's most beneficial, due to the benefits of the agreement and physical proximity (re: the proximity theory of international trade I think its called) to do business with the US, but you've got deals with other countries. Not America's fault you don't have more FTA's; Stephen Harper is working hard on signing more, though!


FTA's have always been disasters for the wealthier economies that participate in them, as cheaper produced goods will have the net result of running local firms out of business and reducing worker wages.

quote:
As for the relationship between the US economy and Canadas.. Canada's economy in total is less than that of California, only slightly larger then Texas, and therefore of course it'd take something close to a zombie apocalypse in Canada to effect the American economy, which is almost TEN TIMES THE SIZE. Meanwhile, since the vast majority of Canada's population lives within mere miles of the US border, and so much business depends on cross-border trade logically due to that proximity, yes, if America gets a cold, Canada can catch the flu. Tough shit, better than living next to Mexico, we can tell you that!


Considering how many more people the US has, Canada's GDP per capita actually exceeds that of the US.


By Ringold on 7/12/2012 4:11:45 PM , Rating: 2
quote:
The US DID want Canada; it attempted, on two separate occasions, and failed both times.


After the Civil War, with an effective army strength well over a million strong and with not much left to do, if the US wanted Canada it'd of steam rolled it. The British very seriously expected a US invasion, but again, it's cold up there. Domestic matters were far more interesting.

quote:
Secondly, why does it matter whether or not Canada has a major voice on teh world stage? How does that benefit Canadian interests again?


Ever take a history class, or ponder foreign affairs, ever? No? Okay, it's so that Canadian interests (business, both security and access to other markets, mostly) and Canadian influence can be protected, enhanced, and projected. Canadian's care to pretend about various global social causes. It takes strength, the ability to bang diplomats heads together in intransigent places, to get things done. Every great power in history has understood that.

A good example of the business side is Argentina and Spain. Argentina's crony leadership saw weakness and, if you've been keeping up on the news, is basically stealing Spanish corporate assets left and right. Repsol comes to mind, but there's others. They know they can get away with it because Spain, like Canada, won't do, and can't do, a damn thing.

Falklands is another one. One day, the British won't be able to project the power to protect the island, and the will of its inhabitants wont matter; Argentina's coming for them. I'm picking on Argentina but it happens across South America, Africa and Asia. Even Europe needs the occasional sharp elbow.

quote:
Umm...no.


I like the well-cited facts there. Are you denying oil firms pay royalties, taxes and fees for the right to access land and oil? Denying that oil is a fungible resource that can be traded with China as equitably as with the US?

quote:
FTA's have always been disasters for the wealthier economies that participate in them, as cheaper produced goods will have the net result of running local firms out of business and reducing worker wages.


Go to school, kid, and learn economics from valid unbiased sources, not Huffington Post. The weight of economic research suggests, at the very worst, a mixed outcome with small net benefits, and at best, a huge boost thanks to decreased inflation and access to new expanding markets. Countries that fail to benefit are those, like France, with people too lazy to compete. Germans understand very well the benefits of access to foreign markets.

quote:
Canada's GDP per capita actually exceeds that of the US.


Again, study up on some economics, or get better at googling your data. GDP PPP, the relevant measures for comparing differing levels of national income since locals spend money locally, places Canada significantly behind. Various authoritative sources, but roughly its the high 40s versus low 40s per capita.


By Belard on 7/12/2012 11:17:34 PM , Rating: 2
Not everyone in the USA is an idiot. But we do have a lot of them.

Funny, how Canada requires a process to keep Americans from becoming "Citizens" - just for their health-care. I know this process personally (not me thou)... funny.


By wordsworm on 7/11/2012 9:33:01 PM , Rating: 2
We do too make drugs. I happen to have lived in the Comox Valley for about a dozen years and can tell you that the valley is supplying the US with tons of weed.

I agree that the health care system here sucks. They should deregulate health care. But it's still better than what's going on in the US where too many people have to sell everything for an operation which may or may not work.

In any case, the game's not up yet. Apple rose from the ashes to dominate the field. Nokia is making a rebound, and maybe Blackberry will, too. The real problem with BB is the stupid investors. The investors should take a pill and shut up. If they can't stand the heat, get out of the kitchen.

Another thing you may be interested to know is that there are many auto manufacturing plants in Canada. We just don't have our own brand.

That said, looks like your trolling worked.


By Reclaimer77 on 7/11/2012 9:39:27 PM , Rating: 2
quote:
That said, looks like your trolling worked.


LOL I made it as obvious as possible. Still got a full net.

But is anyone surprised that Pirks is a Canuck? Might explain his rabid RIM obsession...


By mikeyD95125 on 7/12/2012 1:46:20 AM , Rating: 2
Ah Reclaimer you were being so reasonable these past few weeks!

Looks like its time for another timeout.


By senecarr on 7/12/2012 3:34:37 PM , Rating: 1
Because Finland, European countries, and Asian countries aren't at all socialist, just Canada, at least when it comes to trying to make a ludicrous example to try and create a fake talking point.
If landmass really meant anything, tell me, why doesn't Alaska have twice as much industry as Texas? Why so much less than liberal CA or liberal NY?


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