What Happens to Your BlackBerry Now?
NEW YORK (CNNMoney) — Is this the end of the road for Research in Motion and the once-loved “CrackBerry”?
RIM reported three pieces of awful news Thursday: 5,000 layoffs, a giant quarterly loss and — worst of all — another delay to its next BlackBerry system. Shares plunged 18% Friday on the news.
The company’s BlackBerry 10 operating system — meant to be the linchpin of RIM’s turnaround — won’t hit the market until the first quarter of 2013.
The news is so concerning that some critics don’t think the company will even survive long enough to launch the OS.
BlackBerry 10 (which RIM first announced in October as “BBX” before a lawsuit over the system’s name) had previously been slated for release later this year.
CEO Thorsten Heins was somber on a post-earnings conference call Thursday, saying that developers have been making progress on BlackBerry 10 but implementation is “more challenging than anticipated.”
Critics think that delay may be fatal. Brian White, an IT hardware analyst at Topeka Capital Markets, wrote in a report that it “may leave the company so vulnerable that the new platform may never see the light of day.”
Amid the delays, RIM’s device shipments are declining rapidly. Smartphone shipments fell 41% over the year to 7.8 million last quarter. And the company shipped a paltry 260,000 PlayBook tablets.
On the smartphone front, National Bank Financial analyst Kris Thompson wrote in a report that “investors should expect shipments to spiral downward unless the handsets are donations.”
RIM’s uncertain future was crystallized in late March, when Heins, who took over the CEO role in January, said he was exploring all options for the company, including a sale. The company officially hired bankers a few weeks later.
Thompson praised management for “taking meaningful restructuring actions” — namely, the 5,000 job cuts and its consideration of other “strategic” moves like putting the company on the block.
A total overhaul will certainly be a difficult task for Heins, a RIM insider who succeeded co-CEOs Mike Lazaridis and Jim Balsillie. He inherited a laundry list of problems, which seems only to be growing.
RIM’s chief problem is the loss of its stronghold in the corporate market, a market it once dominated. Rather than issuing company BlackBerries, many employers now have workers bring their own devices into work. And they are often Apple’s iPhone and Google’s Android devices.
As a result, RIM now trails Samsung, Apple and Nokia in the smartphone market, according to a report from IDC last month.
Investors and other industry watchers are wondering whether RIM or Nokia will have the dishonor of being the next Palm, the smartphone maker that officially met its demise last fall after Hewlett-Packard bought it and then shut it down.
But despite RIM’s many issues, the company still has 78 million subscribers and $2.2 billion in cash on hand. So you won’t wake up in the next few months and suddenly find that your BlackBerry has become merely a fancy paperweight.
However, RIM certainly can’t continue on this path. The writing may now be on the wall unless the company does find a buyer.
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