Research In Motion in danger of irrelevance

Updated at 7:44 p.m. ET

 

Almost three years ago to the day, Research In Motion (RIMM) was a $140 stock. Now it's a $30 stock, and its future looks increasingly murky.

Yes, the maker of BlackBerry devices beat Street estimates for fiscal-first-quarter​ earnings. Earnings came in at $1.33 a share when Wall Street was looking for $1.32. But revenue was below Street estimates -- $4.91 billion, compared with the consensus outlook for $5.14 billion. That's a miss of $230 million, although it was up 15.9% from a year ago.

It gets worse. The Street was expecting second-quarter revenue of $5.442 billion, up nearly 18% from a year ago. Research In Motion late Thursday projected revenue at $4.2 billion to $4.8 billion. That basically says the company expects no revenue growth. It cut its earnings projection for the fiscal year from $7.50 a share to $4.25 to $6 a share.

So, no one should be surprised the shares were off 14.3% to $30.27 after hours after rising 0.5% to $35.33 in regular trading. "The company is going into the abyss of a transition, and even if they get a new model, it's a new model on the old platform," Colin Gillis, a frequent critic, told Reuters.

Research In Motion's problem -- and why it's no longer a $140 stock -- is that it's not Apple (AAPL) or Google (GOOG), which has done nicely licensing its Android mobile device operating system.

While it has been long beloved by corporate America because it offers secure wireless communications, it has underestimated the threat posed by Apple's iPhone, and it underestimated how fast the market for devices using Android would grow.

Research In Motion launched a tablet device, the BlackBerry PlayBook, and shipped 500,000 units in the fiscal first quarter. Sounds good until you realize that Apple shipped 4.69 million iPads in its fiscal second quarter, which ended May 28.

It sold 13.2 million BlackBerry devices. Again, it sounds good. But in April, the company had projected sales of 13.5 million to 14.5 million units.  Apple, meanwhile,  shipped 18.6 million iPhones.

Because of development and production delays, due in part to the March 11 Japanese earthquake, Research In Motion will miss the back-to-school season for a projected new generation of phones. These would include the BlackBerry Bold Touch, which has touchscreen controls, like what you find on iPhones and devices using the Android platform.

So, it expects to sell 11 million to 11.2 million units in the fiscal second quarter. Analysts had expected sales of 14 million units.

"This is a quarter they really needed new devices to get them in there, and they won’t," analyst Tero Kuittinen told Bloomberg News.

So, is there any hope for Research In Motion? The company said today it plans to eliminate an unspecified number of jobs and make organizational changes to accelerate product introduction. It plans to buy back 5% of its stock. It sees profits rising later this year.

But analysts were clearly skeptical that the company had the management skills to identify the problems and get them solved quickly.