OT: RIM Is Not Doing Well

[Adz]

If people hadn't boycotted Balsillie for trying to move a warm-weather hockey team, none of this would have happened.

Quite possible. It's the reason I didn't get a Blackberry (back when they were cool).

 

[Fugu]

Can we get a better board. This layout sucks.

You have other options, MM. Just sayin'.....


@Fourier. Not good news. The efforts to force providers to buy units maybe isn't working so well.

Quite possible. It's the reason I didn't get a Blackberry (back when they were cool).

You weren't part of their target market. They sell to corporate clients and service providers.

 

[Fish on The Sand]

I think what he's saying though is that very few companies have actually abandoned or switched over from BB. Almost everyone I know in several industries still use Blackberries. There's no talk yet of a massive changeover.

that's the biggest issue though. RIM has totally failed at recognizing a consumer market exists for smart phones. Yes, they are far more prominent in a business setting, however, that is but a small part of the smart phone market now.

 

[EatSleepJeep]

It's funny to listen to everybody doom & gloom RIM. You forget they're vertically integrated. Despite the success of the Android platform, there are tons of manufacturers of android devices. RIM build their own stuff. In addition, Android is open source. There are tons of products and apps they don't make a dime on. BB on the other hand owns their marketplace and pipeline. On top of all that their earnings per share are strong, just not as strong as analysts projected. Their market share has taken a hit, but BB isn't going under.

 

[mouser]

that's the biggest issue though. RIM has totally failed at recognizing a consumer market exists for smart phones. Yes, they are far more prominent in a business setting, however, that is but a small part of the smart phone market now.

The business market is a huge portion of the overall smart phone market. One which RIM has enjoyed huge success and profits in. Their challenge is they're losing that dominance, and many of the business customers they've lost are not coming back even if the next generation OS 7 products are successful. The lost customers are dropping their BES systems and not going to return to that support model unless there's some incredibly compelling reason to do so. From RIM's perspective I would argue OS 7 is more critical for retaining the accounts they already have before those also jump ship, rather than acquiring new business accounts. At least that's the case in the U.S. where BB has such a large business market penetration. There may be some business % growth room in other countries where BB doesn't have as large of a % share of the market.

RIM doesn't seem to have a strategy to deal with the situation they find themselves in. The most logical approach would be to start appealing to the consumer segment more heavily where they have lots of room to grow share. And/or find some compelling alternate way to engage their business clients with a lower TCO [i.e. non-BES] solution. That approach does entail risk of cannibalizing higher revenue streams from the existing business account base though.

I also believe we're seeing a shift towards greater "consumerization" of mobile devices. As more people have superior home consumer devices than their commonly issued business devices you'll see a shift where fewer companies will issue their own company-owned mobile devices. I know of one Fortune 500 company that recently dispensed with essentially all company-owned mobile devices, giving subsidies to employees to buy their own devices and service plans from multiple national wireless carriers. I see that model taking over many industries that don't have the tightest of data security requirements.

 

[triggrman]

You weren't part of their target market. They sell to corporate clients and service providers.

She owns a graphics company, I'd say she's a small part...

 

[Mwd711]

It's funny to listen to everybody doom & gloom RIM. You forget they're vertically integrated. Despite the success of the Android platform, there are tons of manufacturers of android devices. RIM build their own stuff. In addition, Android is open source. There are tons of products and apps they don't make a dime on. BB on the other hand owns their marketplace and pipeline. On top of all that their earnings per share are strong, just not as strong as analysts projected. Their market share has taken a hit, but BB isn't going under.

And so did Palm and we see how well that worked for them. For that matter, you just described one of their competitors in Apple although Apple does make money off of everything in the App Store. And those apps that Google and Apple "don't make a dime on" are much of the appeal of those smart phones. The biggest complaint that people have about BB are those lack of apps and their dated technology.

I've seen it in the medical field. People fled BB and Palm like they were running from zombies since they didn't have the applications that the iPhone has. Anyone who thinks people are only using their iPhones and Androids for games and silly apps is out to lunch. There's plenty of professional business apps available on both.

I wouldn't say BB is dead, but you're in denial if you don't think they are struggling or opening themselves up for a takeover. Apple is sitting on $70 billion. That's enough for them to buy out RIM, Nokia, HTC and Motorola. We know that Google has billions. How much does RIM have in the bank? Obviously, neither Google nor Apple would make a bid for RIM for anti-trust reasons, but I can see one of their other competitors doing it as RIM's shares continue to fall. Wall Street won't put up with seeing their investments becoming worthless.

 

[Jeffrey93]

Companies that are doing quite well generally don't see their stock drop almost sixty-percent in three months...

Actually they do. It is caused by the company not doing as well as expected. They didn't meet their targets....they still did well. By not meeting those targets their stock drops. That doesn't mean the company is in rough shape...it means they aren't doing as well as they figured (and their shareholders believed) they would be.

I have seen many companies report solid revenues and profits...and their stock plummets. Because the revenues and profits weren't what the company said they would be.

 

[Jeffrey93]

I'm curious how this has anything to do with Hockey...even to be an 'OT' thread.

Can somebody tie it together for me? Is the angle that Balsillie is now broke and no longer a potential NHL Owner because......he can't afford to be???

 

[Melrose Munch]

I'm curious how this has anything to do with Hockey...even to be an 'OT' thread.

Can somebody tie it together for me? Is the angle that Balsillie is now broke and no longer a potential NHL Owner because......he can't afford to be???

Yes.

 

[Jeffrey93]

Yes.

Well then....I need to say how absolutely and incredibly ridiculous that is.

 

[MayDay]

I'm curious how this has anything to do with Hockey...even to be an 'OT' thread.

Can somebody tie it together for me? Is the angle that Balsillie is now broke and no longer a potential NHL Owner because......he can't afford to be???

Again, RIM is a major, prominent sponsor of the NHL. RIM's financial future could be directly relevant to the business of the NHL. Sponsorships and marketing are often the first on the chopping block when a company hits hard times.

This is relevant to the business of the league, even apart from Balsillie's personal ownership ambitions.

 

[Jeffrey93]

Again, RIM is a major, prominent sponsor of the NHL. RIM's financial future could be directly relevant to the business of the NHL. Sponsorships and marketing are often the first on the chopping block when a company hits hard times.

This is relevant to the business of the league, even apart from Balsillie's personal ownership ambitions.

I guess. So how much is this sponsorship worth anyway? I heard it's big..but haven't noticed much talk of it in this thread (admittedly only skimmed it).

I doubt the NHL is worried this sponsorship deal will abruptly be terminated or that RIM will stop being a sponsor of the NHL.

 

[Gobias Industries]

Actually they do. It is caused by the company not doing as well as expected. They didn't meet their targets....they still did well. By not meeting those targets their stock drops. That doesn't mean the company is in rough shape...it means they aren't doing as well as they figured (and their shareholders believed) they would be.

I have seen many companies report solid revenues and profits...and their stock plummets. Because the revenues and profits weren't what the company said they would be.

Example of this with a company as large as RIM please?..

This isn't plummeting, this is disaster...stocks as owned as RIM don't fall that hard, I can see up to 10% because of slightly missed targets, but 60% is a different beast...

 

[Gobias Industries]

Well then....I need to say how absolutely and incredibly ridiculous that is.

To be fair, the guy has lost hundreds of millions in the last few months...

As much as he's not broke, there aren't too many examples of such a public fall from glory for a prospective owner...

 

[kdb209]

Actually they do. It is caused by the company not doing as well as expected. They didn't meet their targets....they still did well. By not meeting those targets their stock drops. That doesn't mean the company is in rough shape...it means they aren't doing as well as they figured (and their shareholders believed) they would be.

I have seen many companies report solid revenues and profits...and their stock plummets. Because the revenues and profits weren't what the company said they would be.

It goes well beyond that. They fell well short of even their own lowered expectations.

They fell short of their guidance that they had already set significantly lower just 6 weeks ago (4/29) - which caused a 15% drop back then.

It is a very bad sign when a company doesn't have the visibility to project earnings even a half a quarter out.

When a company's market share in sales drops 2/3s in 9 months and it loses 15% of its subscriber base in just 3 months and analysts still have it as a "Sell" despite a P/E of 4.3 - indicating the expectation of significant revenue (and earnings) decline - it has more fundamental problems than one blown quarter.

 

[Gobias Industries]

It goes well beyond that. They fell well short of even their own lowered expectations.

They fell short of their guidance that they had already set significantly lower just 6 weeks ago (4/29) - which caused a 15% drop back then.

It is a very bad sign when a company doesn't have the visibility to project earnings even a half a quarter out.

When a company's market share in sales drops 2/3s in 9 months and it loses 15% of its subscriber base in just 3 months and analysts still have it as a "Sell" despite a P/E of 4.3 - indicating the expectation of significant revenue (and earnings) decline - it has more fundamental problems than one blown quarter.

This...

Who cares about P/E when your earnings are about to fall through the floor...earnings can only be trusted so much...

It reminds me of that Gretzky quote, "Don't go where the puck is, go where the puck is going to be."...

 

[kdb209]

Since I still had the browser tabs open - I'll repost one of my magic vanishing posts from yesterday, RE Blackberry quality.

http://www.minyanville.com/dailyfeed/2011/06/20/rim-hangs-itself-with-latest-1/

And today, as shares took an additional hit of 5%, Boy Genius Report received information that the rest of the year will be even rougher than expected.

According to a source familiar with the matter, RIM has been "strong-arming several carriers" to approve half-baked BlackBerry devices to fill the embarrassing void until the next-generation platform debuts. (This, of course, won't occur until 2012.) The company has been forcing smartphones like the BlackBerry Bold 9900 down the throats of carriers, ensuring that the devices are approved "no matter what -- with bugs and problems."

Geller adds that this isn't anything new for BlackBerry releases. The BlackBerry Torch and BlackBerry Storm notwithstanding, several RIM devices have been plagued with glitches, unpolished software, and random reboots. Geller writes:

"There have been multiple devices, we have been told, that have been forced through the Technical Acceptance process with multiple carriers, and it's one of the reasons some carriers launch devices sooner than others (barring any exclusivity arrangements) -- some play ball but others won't. Remember how Rogers was one of the first carriers to launch the BlackBerry Bold 9000 while AT&T didn't launch the device until November? The device constantly failed Technical Acceptance on AT&T, but Rogers pushed the device out anyway as a result of pressure from RIM. And Rogers is most certainly not the only carrier that has found itself in that position."

So what does this mean?

Well, rather than having a 2011 lineup completely bare of new products, RIM is peppering the next few months with buggy, glitchy, subpar devices. The company is no longer allowing customers to flock over to Apple, Google, and -- hell, why not? -- Microsoft because of a lack of devices and limited app development. It's forcing customers to flock over to Apple, Google, and Microsoft because the released devices are so unpolished and bug-addled -- thus ensuring that nobody will ever return.

http://www.bgr.com/2011/06/20/rim-is-black-burying-carriers-with-half-baked-blackberrys/

Launching new products is always difficult. Launching new products with hundreds of different carriers is exponentially more difficult. Apparently there is an easy way and a hard way to do things, however, and RIM has been making carriers offers they can’t refuse. BGR has learned from a trusted source that RIM has been strong-arming several carriers, essentially forcing them to approve devices they normally would not move through the Technical Acceptance phase.

Here is how it works: once an OS software build (bundle) has been tested internally at RIM, and the OS performs well, it moves up to be a Technical Acceptance candidate. The OS is then sent to the carrier to test and approve, or test and reject. If a carrier rejects a build, it can take weeks to get a new build tested and approved, and it can slow down a device’s release by months — as evidenced many times with different BlackBerry products in the past.

What’s the problem, then? We have been informed by a very reliable source at a major carrier that RIM has been putting an enormous amount of pressure on carriers to approve the upcoming BlackBerry smartphones like the BlackBerry Bold 9900 — phones that have to hold RIM over until its next-generation platform launch in 2012 — and that certain carriers will be approving the devices, “no matter what — with bugs and problems.†Additionally, RIM is putting huge pressure on its internal engineers to deliver Technical Acceptance bundles even when there are serious problems with the OS. In short, RIM is pushing unfinished OS builds from its engineers to the carriers, and demanding that the carriers approve them.

The thing is, this isn’t something new, and it’s part of the reason your BlackBerry is so buggy, reboots randomly, and there are possible signal and connection issues. There have been multiple devices, we have been told, that have been forced through the Technical Acceptance process with multiple carriers, and it’s one of the reasons some carriers launch devices sooner than others (barring any exclusivity arrangements) — some play ball but others won’t. Remember how Rogers was one of the first carriers to launch the BlackBerry Bold 9000 while AT&T didn’t launch the device until November? The device constantly failed Technical Acceptance on AT&T, but Rogers pushed the device out anyway as a result of pressure from RIM. And Rogers is most certainly not the only carrier that has found itself in that position.

 

[Adz]

She owns a graphics company, I'd say she's a small part...

You betcha.

I keep hoping BB comes to us to develop an app. That would be fun.

 

[blokeyhighlander]

It's funny to listen to everybody doom & gloom RIM. You forget they're vertically integrated. Despite the success of the Android platform, there are tons of manufacturers of android devices. RIM build their own stuff. In addition, Android is open source. There are tons of products and apps they don't make a dime on. BB on the other hand owns their marketplace and pipeline. On top of all that their earnings per share are strong, just not as strong as analysts projected. Their market share has taken a hit, but BB isn't going under.

Google is an advertising company. They want to get all of their products and services out to as many people as possible to use their proprietary advertising algorithms/services to generate revenue.

RIM needs to stop the bleeding in the corporate world in America but yeah, they're not going anywhere.

 

[LaLaLaprise]

Example of this with a company as large as RIM please?..

This isn't plummeting, this is disaster...stocks as owned as RIM don't fall that hard, I can see up to 10% because of slightly missed targets, but 60% is a different beast...

RBC....reported 1.5 billion revenue last quarter and their stock fell 5% the next day.

Obviously nothing as dramatic as RIM...but the street is over-reactionary for the most part.

 

[LaLaLaprise]

To be fair, the guy has lost hundreds of millions in the last few months...

As much as he's not broke, there aren't too many examples of such a public fall from glory for a prospective owner...

Yet he could still buy like 6 NHL franchises...

Sure he has lost a pile of dough but thats like saying you have $100,000 ... you lost $30,000 in 2 days and you are worried about not being able to afford to buy a new pair of shoes.

 

[Adz]

A good business person watches the trends, regardless of the overall amounts. In your scenario, if you've lost another $30K 2 days later, unless it's a desperation purchase you hold off on buying shoes even if you do have $40K. You sit on every penny that doesn't have to be spent on the necessities. The trends are not in your favor til it stops falling.

Jim Balsillie made a fortune because he had the right kind of business at the right time. If he has failed to look ahead and hasn't planned for change, then his business could go the way of Circuit City, Media Play or Blockbuster.

 

[DeathToAllButMetal]

You can't be serious.

I work in downtown Toronto and every second person I see has a BB, and they're not all government employees and politicians. BB's are huge in the financial sector - it's my company's preferred device (due to security) and we have around 100,000 employees worldwide. The same scenario plays out for other companies where my friends work. I'm actually surprised at how many kids I see with BB's.

Just noting what I've observed in and around Ottawa the past year or so. There has been a big, noticeable move away from BB. I still see politicians with them for the most part, although it's changing. Last year, for example, I could go into a room with, say, a dozen regional mayors and councillors and see a full dozen BBs. Now, I'd say that's down to maybe six-eight, with others now with iPhones and Droids. In friends and associates in private business, virtually everyone has dumped BB for iPhones and Droids. Mostly Droids, when it comes to people in or around IT.

That said, I have no contact with the financial sector in Toronto. I do see BBs with institutional employees with colleges, unis, etc. still, too. I'm not saying BBs are totally gone, but they are not anywhere near as predominant as they were even last year in the business community. Market share and the numbers tell that story without getting into anecdotal tales, too.

 

[OneSharpMarble]

Karma doesn't get you during high growth. Karma pays you back when there are alternatives. MSFT is getting payback as we speak.

Ya they are really hurting right now.