News: Tough Times Ahead for RIM
The Internet and TV are abuzz with commentary about Reasearch in Motion’s stock hitting a new four-year low and mass panic about the future of the Canadian smartphone manufacturer. There’s quite a bit to take from this and we don’t want to jump on the RIM-will-die bandwagon.
The big news is that the company said quarterly revenue may drop for the first time in nine years and also shared plans to cut jobs. Revenue will be $4.2 billion to $4.8 billion in the fiscal second quarter. That was less than the average analyst estimate for sales of $5.47 billion, according to a Bloomberg survey. Of course, the explanation is pretty obvious:
RIM is losing market share in the U.S. to Apple Inc.’s iPhone and handsets running Google Inc.’s Android software, in part because it hasn’t introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads in Latin America, Asia and Europe, threatening the popularity of less expensive BlackBerry models like the Curve.
“They are resting on their laurels,” Stephen Jarislowsky, chairman of Montreal-based Jarislowsky Fraser Ltd., said in an interview today. The firm was RIM’s sixth-biggest investor at the end of March with 10.2 million shares, and has reduced its holding by at least half since, he said. “Steve Jobs is a much better marketer than RIM,” he said, referring to Apple’s chief executive officer.
Mixing a bland, outdated product line, poor leadership, and increased competition has led to people jumping ship and lower sales and marketshare. Some may say this parallels Apple in 1997, but it seems that RIM is still not coming to terms with its own problems. Perhaps they ought to throw out the entire lineup, like Palm did? Switch to Android? Sell the company? It should be an interesting next couple of months.