Is Research in Motion’s flickering flame fading even more?
A dismal earnings report Thursday afternoon shows the Canada-based Smartphone giant’s net income was down 59 percent in its fiscal third quarter. when compared to numbers just one year ago. Revenue was off 10 percent. The company failed to meet Wall Street projections, even though most weren’t that optimistic. Specifically, shipments of the BlackBerry PlayBook – the company’s signature tablet PC – were less than half of what was projected. RIM’s stock took a bit of a tumble after the release of their underwhelming earnings report last week, and it looks as though it won’t stop dropping anytime soon. Before the market closed for the day, RIM share prices continued to inch downward until it reached (at time of writing) $21.52: RIM’s lowest in five years.
It’s clear that consumer and shareholder confidence in RIM is slipping, thanks in large part to their company’s disappointing financials. Their recent quarterly earnings report indicated unit sales were down across the board: they sold nearly 3 million fewer BlackBerrys in this quarter than the last, and PlayBook sales dropped from 500,000 in Q1 to a comparatively scant 200,000.
BlackBerry:
Ten years ago, Research in Motion (RIM) was a leading producer of mobile phones. All who ever meant anything in this world – celebrities, investors on Wall Street and Silicon Valley entrepreneurs – were using iconic BlackBerry.
A year ago, BlackBerry was ahead of all other smart phones with more number of users.
This year the company lost significant market share, and its shares over the past five months fell by more than 50%. What happened?
RIM:
RIM was founded 20 years ago in the small town of Waterloo in Canada by Mike Lazaridis, who has received his technical training at a local university. Lazaridis soon attracted another Canadian – Jim Balsillie, who began to help him manage the affairs of the company. They are both credited with turning the company into the Giant that it was; RIM Canada, and they continue to divide the responsibilities of CEO.
Today, however, the company runs a risk with out dated soft ware and system structure, like Nokia and Palm. How things went wrong so quickly?
RIM made a few mistakes:
1. They ignored the iPhone, until it was too late. iPhone appeared in January 2007. Mike Lazaridis, reportedly told his staff and technical team that the iPhone will not a threat because no one wants to have their mobile phone as a personal computer. People simply just wants to check their mail and that's it – this confidence was due to the fact that he created BlackBerry just for e-mail application.
2. Distracted from the main activity in hockey, Jim Balsillie – a passionate fan of hockey like many Canadians. Since 2006, he made four attempts to buy a different hockey clubs for $ 200 million he gave up the idea only in late 2009. You can see how it was during this time RIM loses its competitive advantage and gave it over to Apple. Since the first attempts of Balsillie to buy the hockey team until today’s stock price fell RIM to 16%. The average Nasdaq during this period increased by 24%, and the capitalization of Apple rose by 358%.
3.They waited too long before they start to refresh the stale lineup of smartphones. When Balsillie awoke from slumber of hockey, and Lazaridis finally realized that users still want the iPhone, in April 2010 they were in despair, bought a company called QNX , which developed the operating system for next-generation phones for RIM. Unfortunately for RIM, the first phones with the new operating system will be available only at the end of 2012, as people increasingly refuse to use the current version of the BlackBerry.
4. Promotion closed ideology of corporate culture and an unwillingness to listen to the ideas of subordinates. Over the past few weeks, publicity received hate mail of employees, where they complain about the closed culture, closed mindedness, which has a value of only “what they think Mike and Jim.” Steve Jobs – a perfectionist, but at least it allows good ideas to rise from the bottom.
5. The problem of “big fish in small pond.” Waterloo – a small town, there are only 200 000 inhabitants. When Balsillie and Lazaridis stroll through the city, they are local gods. Anyone who met them, or if he worked at RIM, or his friend worked there, or his business depends on money brought by RIM in the local economy. This allows Balsillie and Lazaridis in the last four and a half years to console themselves with the fact that RIM – is still a great company, and Apple and Google are nothing special. Who would vote differently in a small town? If RIM was located in an area with more competition – for example, in Silicon Valley, where they would be “small fish in a big pond” – Balsillie and Lazaridis, probably would not be so complacent.
6. The strategy of “Without China.” During trips to mainland China, you will never see a BlackBerry – except that investors from Hong Kong. Compare this with Apple, which has sales in China, 10% of its revenues last year and this year we expect a lot more. His success owes partly Apple investment in China. RIM on the market did not appear.
Can RIM be saved?
I think not. The proposals that I have heard from shareholders, including, in particular, the separation of the company, the appointment of a new independent chairman of the board of directors, non-bi-capital management structure or even the displacement of both CEO's. It’s doubtful all medications for a patient with end-stage cancer.
Motorola in 2007, was in a similar situation. They had a terrible product line. Charles came and demanded Aikan separation into two companies and to attract new “professional” leadership in the field of mobile phones. They have conducted numerous layoffs and agreed to cooperate fully with the Android operating-system from Google. Nevertheless, after four and a half years shares are traded much lower than they were at one time, and it is still unclear whether the new phones and tablets to raise a company to its previous level.
Forget about this, once great company. the Days of Research in Motion as an independent producer are numbered.
BlackBerry headquarters
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