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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.

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 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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Application Libraries.
By drycrust3 on 7/11/2012 4:32:26 PM , Rating: 2
Amid a stacked market to be soon filled with sixth generation iPhone, Windows Phone 8, and Android 4.1 Jelly Bean devices, BB10 slick package carries no guarantees,

One of the big changes that has happened with the iPhone and Android OSes is the presence of an application library, where users can go and obtain (free or at a price) applications that can be run on their smartphone.
The presence of an application libraries means smartphone users are more likely to migrate towards operating systems with bigger libraries than towards operating systems (or brands) with small libraries simply because a small library may not have the applications the purchaser considers essential.
This means RIM isn't just competing against every other smartphone manufacturer at the handset level, they are also competing against them at the application development level as well.
I think RIM should at least have some of their "essential" services, such as secure email, available as apps in the iPhone and Android application libraries. Sure, this could encourage some people to "jump ship", but it could also be a source of revenue.
To me, the essential thing is to keep their brand presence in the customer mind, and the long delay in waiting for BB10 means millions of phones will be sold without a Blackberry being an option to the buyer.
The easiest way around this is to get a working OS with a largish application library (e.g. Android, although Windows 7 or 8 might do), add their own "unique" applications (like Samsung have their own library) and put that in a handset.

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