Shares of RIM stock have taken a beating since the company announced devastating first-quarter earnings last Thursday. The Waterloo, Ontario-based BlackBerry maker missed Wall Street’s first-quarter consensus, it lowered its full-year guidance, it announced workforce reductions, it confirmed product delays and investors went running for the door as did a top executive. Since the earnings release last week, RIM’s stock has fallen more than 25%. This is bad news for every RIM investor, but two in particular must be especially upset. RIM Co-CEOs Mike Lazaridis and Jim Balsillie collectively own more than 10% of the company, a stake that helped each man achieve billionaire status. Last year, Lazaridis was ranked the world’s 651st richest man by Forbes with a net worth of $1.9 billion, and Balsillie was No. 692 on the list with a net worth of $1.8 billion. Fast forward to today, and neither man can call himself a billionaire any longer. The cheifs’ stake in the company is still worth more than $1 billion combined, but separately, their net worths are now just roughly $800 million a piece. We doubt the employees set to be laid off in the coming weeks and months will shed any tears for the Co-CEOs’ loss, but it’s just another piece of a puzzle that continues to fall apart. Some analysts believe RIM is hardly out for the count, however, and we agree that the company has a bit of fight left in it. If Balsillie and Lazaridis hope to rejoin the billionaire club, it’s time to put those gloves on and start swinging. More →
Wedge Partners principal Brian Blair on Tuesday issued a note to clients that called RIM’s upcoming virgin tablet offering “dead on arrival.” RIM is set to debut the BlackBerry PlayBook next month and opinions of press, bloggers and analysts have been very polarized thus far. Some think the PlayBook will be well received by the enterprise market, projecting that RIM could sell as many as 6 million units in the PlayBook’s first year of availability. Others, however, are not so optimistic. “[The BlackBerry PlayBook] will be sharply inferior to other tablets on the market and consumers won’t buy it,” Blair told CNBC when asked about his note to investors. “They are targeting it at enterprise but I believe very few will actually roll it out widely.” Blair says that the PlayBook’s need to be tethered to a BlackBerry smartphone in order for users to access email, contacts and the calendar is the biggest disappointment surrounding RIM’s upcoming tablet. He goes on to suggest that the PlayBook could potentially end up costing RIM “hundreds of millions of dollars” in “product development, production and related rollout and marketing costs.” More →
Research In Motion reported its third quarter earnings Thursday evening, and it beat Wall Street’s estimates in several key areas. The BlackBerry maker’s revenue was up 40% year-over-year to $5.5 billion on record shipments of 14.2 million devices — also up 40% year-over-year. This beat the street’s consensus of $5.4 billion in revenue and shipments of 14 million. The $317 average selling price of RIM’s BlackBerry smartphones beat the street’s consensus of $310, though RIM added 5.1 million subscribers during the quarter, which fell below the street’s consensus of 5.2 million. Total subscriber count was 55 million, however, which is up 49% year-over-year. RIM expects fourth quarter revenues of $5.5 to $5.7 billion and 14.3 to 14.9 devices shipped.
“RIM delivered upside surprise on ASPs and GMs — both key metrics,” wrote Mike Abramsky, Managing Director at RBC Capital Markets, in a note to investors. “Importantly, Q4 guidance calls for Q/Q growth in both revenue and EPS on healthy margins, above street and investor expectations. We believe street estimates should come up tomorrow, given the healthy Q4 guide and likelihood that more analysts reflect PlayBook into their estimates.”
Hit the break for the full press release from RIM. More →
In the past few days, the Internet has been set ablaze by news of the iPhone’s success, AT&T’s suffering profits because of it, and all the Apple gloaters doin’ they thang. Well, in other news, a particular executive over at Microsoft is taking a cue from Steve Ballmer and is acting all unimpressed after having had a bottle full of Haterade. Robbie Bach, who runs the Entertainment & Devices division of MS, which includes all WinMo devices, says that this sort of thing was to be expected. “Apple had a big launch of a new product, and they launched at scale in a lot of new countries with a lot of new [wireless] operators. This quarter, RIMM is having its big launch, and at some point we’ll have our big launch. We’ll have to see where things normalize,” says Bach. That statement is more or less true, but way to steal Apple’s thunder and be a buzzkill, Robbie! Again, like Ballmer, Bach says that the iPhone is great and all, but WinMo is on far more devices and far more diverse and apparently people prefer having an army of mundane options over one revolutionary device (yeah, we said that, bring it on). Will Apple continue its momentum? What Bach is forgetting is this success hit not just at any time, but during major global economic problems. People are bitchin’ about gas prices but are still buying the iPhone in droves. Think about it. How many people have you seen who couldn’t afford a ham sandwich rockin’ iPhone 3Gs? Exactly.
Analysts had a field day on Friday after RIM released its less than stellar Q2 earnings on Thursday. When addressing its future prospects, RIM warned that its gross margins in the Q3 will drop another three percentage points to 47% and that a further decline is likely into 2010. Ouch! In a letter sent to clients, Charles Wolf of Needham & Co had the most scathing assessment of RIM:
In their conference call, management dismissed the notion that new competitors, most notably Apple’s iPhone 3G and new smartphones running on Google’s Android platform, would materially slow the growth in new subscriber activations. We continue to believe that the company has its head in the sand. Yes, the iPhone and Android phones will expand the market as they lure mobile phone users to smartphones. But we believe it’s delusional to think they won’t cut into BlackBerry sales as well, especially in the consumer market.
Did he just call RIM delusional and say they had their head in the sand? Yes, indeed he did. The not-so-rosy forecast for RIM had an effect as its stock fell 28% by days end. Yikes, looks like RIM is suffering the consequences of venturing out of their comfortable enterprise market and entering the highly competitive consumer market. Congratulations, RIM, you just got your first royal smackdown!
Disclosure: I’m eagerly awaiting the Storm on Verizon.
It looks like RIM is one of the first to announce not-so-great news about its second quarter performance, but will it be a continuing trend in the mobile industry in general? We discussed this before and all you readers chimed in, but no one expected it to come so soon. Research In Motion (RIMM) has missed its forecasted earnings by $20 million and Earnings Per Share by a penny. It’s currently down over 20% in after hours trading at the time of this post. With the delay of launching the Bold in the U.S., the Pearl 8220 somewhere on the horizon, and the Storm arriving before Thanksgiving, will it be possible to gain a little boost in the number of net subscribers?