Research In Motion in danger of irrelevance
The BlackBerry maker has missed opportunities to take back share from the iPhone and Android. Rather than innovate, it's talking job cuts and stock buybacks.
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.
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.
Tried to replace it with an HTC Incredible and the new phone fell 12 inches off the car console onto carpet and shattered the screen on my third day of use.
My BB has lead an active life and has been dropped and put under tough conditions numerous times without a hiccup. I much prefer a real keyboard to the touchscreen model which is cumbersome...But I'm stuck with the HTC until the next contract..A touchscreen with a real keyboard and some protection on the edges would do the trick...If BB has a suitable model when my contracts up they'll get my business again.
Let's see, Profits ahead of expectations and revenues up almost 16% year to year and that is poor performance?
Anybody else wonder why a growth in profits and revenue is bad news for a company. Could we all be just a little too greedy?
Blackberry/RIM lost my business when they simply refused to roll out a version of their operating system with a useful web browser interface, seemed to never want to deal with the problems of slow bootup of a powered off Blackberry device and many other simple things that annoyed me. They just did not seem to care about what other manufacturers had on the market. I kept getting the response from them that it would be in the next release. Never was though.
I switched to an iPhone. No regrets.
I too suffered with the Storm.. It had rich color but the keyboard was a nightmare. Worst touchscreen ever built. I could only type one key at a time and you had to keep looking at display because it was slways typing something else. They had to be hit just right with a lot of force..Found that it's best function in life is as a alarm clock on my dresser..Still use it.
Email was exceptionally easy though..Went to Droid X -better but still not what I expect
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