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.

By Charley Blaine Jun 16, 2011 7:31PM

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.Research In Motion

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.
19Comments
Jun 17, 2011 9:36AM
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I had a Blackberry Storm for two of the longest years of my life.  Couldn't sync it to my work email without buying a $500 support package.  Then I couldn't download anything without going through the IT dept at work.  Frustrations galore.  Just got my new Droid and it's like a breath of fresh air.  So not too surprised to hear that BB is tanking. 
Jun 17, 2011 12:04PM
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Had good luck with my 8330 Curve also.  Not flashy, but it's a tank.
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.

Jun 17, 2011 10:18AM
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I have no complaints with my BB Curve. Would I like for T-Mobile to carry a touch screen version? Of course I would but it does what I need it to do.
Jun 17, 2011 12:26PM
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The problem with RIM is the total lack of innovation. They all but conceded the consumer market to Apple and Android. Their web browser is atrocious and even their newest hand-held devices are woefully under-powered compared to even entry-level android devices. With businesses beginning to realize there are secure email solutions using non-RIM based solutions, the demise of RIM is a foregone conclusion. They are so far behind, it is hard to see  them coming back. RIM will suffer a slow demise into obscurity. 
Jun 17, 2011 12:05PM
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I also had a  Blackberry Storm.  The quality was horrible and I had 4 of them in the last 2 years because the phone would break down. This phone gave me a bad taste about Blackberry and will probably never buy another one again.  I now have an android HTC and I love it.
Jun 17, 2011 12:52PM
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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?

Jun 17, 2011 2:05PM
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The only thing that is saving blackberry is the PHYSICAL KEYBOARD. Many people including myself must have a physical keyboard to better handle all of the texting and emails. I have had everything under the sun when it comes to smartphones - android, windows, iphone and palms. I would definitely agree with most people that the android's are by far a more superior and powerful device, however the lack of a front faced keyboard (not one you have to slide out and type with two hands) is what keeps blackberry in the game. There are still a lot of people like myself (power users) who are just not sold on a virtual keyboard. Also, blackberry has the best battery life of all smartphones in my opinion.
Jun 17, 2011 1:52PM
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Appears that RIM's performance is much like my BlackBerry Storm II, functional but much lower than one would expect especially given the price.
Jun 17, 2011 12:35PM
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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.

Jun 17, 2011 10:06AM
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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

Jun 17, 2011 1:50PM
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I had the BB Curve.  Loved it.  Now I have the Bold.  Still love it!   It works with Outlook BCM with a $39.00 add-in.  It's easy and holds up nicely.  I have tried to switch to a Droid phone (which my husband uses) as well as the Windows HTC model.  Could never use any of them.  I love my BB and if they come out with a touch/keyboard version for T-mobile, I'm staying with them.  I have never had any problem. 
Jun 17, 2011 11:16AM
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I loved my 8330 Curve.  Then our company was forced to switch from Alltel to ATT and I went to the Torch.  Not bad but not great.  Though I hate the *Droid system I am afraid the phones are all turning that way...
Jun 17, 2011 1:45PM
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don't know how the company is performing but i know i will never get another blackberry my daughter and i both have a blackberry torch she has had to replace hers already due to freezing up now her new one is doing it again and so is mine
Jun 17, 2011 2:11PM
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They should go away- lousy customer service..  RIm when I first got mine a couple of years ago was so difficult to use and refused to help without a large fee.
Jun 17, 2011 2:28PM
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i had a lousy blackberry, then the so called iphone4, well its SONY ERICSSON ARC , pleased me .beatiful product. keep it up!!!!
Jun 17, 2011 12:39PM
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Gotta Love The CURVE, strong and reliable.
Jun 17, 2011 3:01PM
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I think part of the problem is marketing. RIM painted themselves into a corner by so strongly targeting businesses, and not the general public. Personally I think they should run a campaign targeting how flimsy touchscreens are vs. the solid front facing keyboard. Some of us need a phone that will work with a cracked screen, or worse. Seriously, If I had to use a touch screen phone, I'd have to replace it monthly. Now, I call that junk, I guess iPhone people can call it dainty. I think that a touchscreen phone is fine to keep in your purse, and works great if you can see your finger prints, but for those of us that don't wear periwinkle to work, having a sensitive touch panel to grind the dirt and grease into is just not a good idea.
Jun 17, 2011 2:05PM
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I had a Curve for 3 years and the Storm for 2, I will say that I liked my Curve much more. Unfortunately for RIM, as soon as I was able to play with my friend's iPhone Blackberry became completely obsolete to me, I've had my Iphone for about 3 months now and I don't think I'll ever buy anything but Apple from now on, I love it!!
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