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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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This article is over a month old, voting and posting comments is disabled

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.


"Death Is Very Likely The Single Best Invention Of Life" -- Steve Jobs














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