Blackberry - 03 July 2012
Author: Allen Kim

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Research in Motion CEO Thorsten Heins mistakenly staked the company’s future in BlackBerry 10, and the consequences of this oversight is reflected in RIM’s waning stock price and declining sales. It seems as if everyone except RIM’s own executives can see the end of the line for the company looming, yet they continue to dig themselves deeper into a hole by failing to do what’s necessary to survive or to walk away while they still have some value left.

Screen-Shot-2012-06-28-at-6-28-11.46.34-PMRIM announced yet again – surprise, surprise — another delay of BlackBerry 10 late last week. The new BlackBerry OS has seen a number of delays since its’ announcement, and the release date has been pushed back until early 2013 – and even then there are no guarantees that the BlackBerry 10 is released as the tech world is accustomed to delays by RIM at this point.

With the company cutting 5,000 jobs – 30-percent of their workforce – it will only make it even more difficult for the company to get the launch of BlackBerry 10 off the ground and running. As they work to try and finish what they started, the losses will only continue to pile up as they continue to tread into more treacherous waters. The layoffs are estimated to cost RIM $350 million, but they are committed to cutting $1 billion in operating costs to stop some of the bleeding.

It’s clear that RIM has an underwhelming and underdeveloped product on their hands with the BlackBerry 10 OS. The first unveiling failed to generate enough positive buzz to renew faith in investors and consumers alike, and the delays are only making things worse. If they hit their initial release date with a polished product, perhaps there would be some sliver of hope for RIM’s future. However, with major updates rolling out to iOS, Android and Windows Phone in the coming months, BlackBerry 10 is way too far behind. To compound things, RIM will be missing the crucial holiday shopping window, which should lead to an even greater slump in sales.

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ComScore showed a 2-percent drop in market share between February and May for the BlackBerry platform, and RIM posted their first quarterly loss in eight years. Everything from revenue, shipments, operating margins, market share, and growth are in a continuous downward spiral — these aren’t subtle hints foreshadowing a potential downfall, they’re glaring signs screaming about the inevitable doom heading their way.

Steve Ballmer approached RIM earlier this year about the company striking a similar deal with Microsoft to adopt their Windows Phone OS, but his overtures were rejected. While far from assuring success – as Nokia can currently tell you – it would have given them some hope with a more mature OS to stand behind. RIM was and still is adamant about sticking with BlackBerry 10, and its eventual failure – which it will be with the delays and general lack of interest — will be the final blow.

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The longer that RIM postpones a sale of the company, the lower their value will be once that eventuality rears its ugly head. There is increasing pressure on RIM to sell its network business – the only real attractive asset that RIM has left – and they should be actively exploring that option right now.

RIM’s once abundant cash reserves are dwindling, and their value is nearing rock bottom. As things stand right now, the slow and gradual death of RIM is all but certain, and it’s painful to watch. The signs are all there in plain sight, but RIM is either too stubborn to admit defeat or too blind to notice. The opportunity for any sort of turnaround is gone, and RIM need to stop stalling the inevitable and put an end to their misery.

[Charts via asymco]









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