Neil Hughes
Wall Street analysts were quick to pan RIM on Friday after the company surprised with a pre-announcement of sales in its May quarter. RIM opted to disclose its sales early as the company expects its first quarter of fiscal 2012 to come in below guidance.
RIM also warned investors of impending delays for new BlackBerry product launches. That means, in the near term, RIM will have to depend on its aging BlackBerry portfolio, a situation that Brian White with Ticonderoga Securities believes is an opportunity for Apple to continue gaining market share.
"While RIMM continues to harbor high expectations for the second-half of (fiscal year 2012) as the new PlayBook begins to ramp and new smartphones are released, we believe the tide is clearly turning," White said in a note to investors Friday. "During the fall of 2010, Apple surpassed RIMM in market share and we expect this momentum to continue."
Earlier this month, Apple reported sales of 18.65 million iPhones in the second quarter of its fiscal year 2011. For comparison, that's 38 percent more than the 13.5 million units that RIM expects to ship in its May quarter.
White's pessimistic outlook on RIM's future was shared by many of his colleagues, who also issued notes on Friday. Robert Cihra of Caris & Company questioned how excited users and carriers are for this year's "evolutionary" BlackBerry OS 6.1 upgrade, as many people are waiting for a complete QNX-scaled rewrite of the mobile operating system.
Mike Abramsky of RBC Capital Markets previously had a "Top Pick" rating for RIMM stock, but downgraded to "Sector Perform" following the company's pre-announcement. "We were wrong, as mis-execution has undermined sentiment recovery," he wrote.
Charlie Wolf with Needham & Company said it's the "Android onslaught" that has finally caught up with RIM. With the company not planning to introduce phones running BlackBerry OS 6.1 until the second quarter, the company has "little ammunition (other than price) to repel this invasion," Wolf wrote.
Finally, Shaw Wu with Sterne Agee called the timing of RIM's pre-announcement "somewhat bizarre," as there is still more than a month left in the company's May quarter. He also noted that RIM revealed it has high inventory levels and lower than anticipated sell-through of its products, particularly in the U.S. and Latin America.
-m.jpg)
Charles Martin
Wesley Hilliard
Oliver Haslam
Marko Zivkovic
Amber Neely
36 Comments
I see a great many mistaken assumptions in company reports about furure sales. The assumption is that their products are going to do as well as they state. It seems to be a random thing for most companies.
Now RIM is discontinuing their old OS for this new one, and their assumption is that because of it, their sales will increase. Why? Does the consumer, business or otherwise, really care that they're going to a new OS? I doubt it. What they care about is the result. Will it be stable? Will it do what they want? Will there be enough GOOD apps, etc?
There is no real answer to any of those questions yet. We see that the Playbook, using the new OS, is none of the above right now. We don't know Playbook sales, just shipments to distributers.
RIM had to get a new OS, as their old one was upgraded from their pager OS, and not suited to what these devices must do today. Whether it will make a change in RIM's fading fortunes, is an open question.
The writing's been on the wall for a while. RIM's numbers are finally taking enough of a battering to kill the last vestiges of denial; now it's entirely about how fast they can execute their QNX strategy.
I trust we won't hear any more talk about how RIM's massive corporate installed base or corporate good will or anomalous performance in Britain are all proof against decline. They simply don't have the product to compete in the modern smartphone market, and the turnover rates are brutal. It doesn't look like the Playbook is going to do them any good (probably should have waited until it was done before shipping) and RIM themselves don't seem to think they can get QNX on a smartphone till next year (something about dual cores, although like most of what they say it doesn't real make any sense). And, as Mel says, there's no strong reason to believe that even that will significantly grow sales.
I don't think their management was equipped to operate outside their safe haven of corporate email. They had one really good idea and executed very well on that idea. But it's not an idea that does them much good, any more.
RIMM down over 14% this morning... ouch!
take over play?
would MS get involved as it had with nokia?
who would benefit from absorbing RIM? Nokia, Moto, HTC
wow, amazing how this whole smartphone market has been changed by iPhone and app-store
RIMM really serves no purpose anymore in the 21st Century. This isn't necessarily a bad thing for them... they just need to accept it, close their doors, and move on. Companies open and close all the time. Just take a look at all the restaurants in your neighborhood... how many of them have been there for more than 10 years? RIMM just needs to accept that they served a great purpose at one point, but now that purpose isn't needed anymore. Sort of like typewriters.