Amid news of 200 layoffs and a 20 per cent stock plunge at Research In Motion Ltd., one Canadian analyst thinks that if industry buzz of a potential takeover for the Waterloo, Ont.-based BlackBerry maker were to come true, the outcome would be “horrible.”
The layoffs, which happened Monday after RIM announced the previous Friday it would make cuts to its 17,500 staff, is “overblown,” said Warren Shiau, director of research with Toronto-based Leger Market Research.
“On balance, RIM is hiring far more people than it’s laying off,” said Shiau. “What’s much more worrying is the fall in market capitalization.”
That drop in market value is concerning to Shiau, who thinks there may come a time when a company will decide RIM is actually worth pursuing. And, that company, he continued, would not have RIM’s long-term interests in mind. BLOG: RIM can blame its struggles on apps
“They’ll only be interested in acquiring the user base and doing the minimum they need to maintain the customer base before migrating them in however many years,” said Shiau. “A RIM takeover can, in no way, be good for Canada.”
RIM reported lower revenue for the first quarter and, adding to that, has forecast second quarter results will be lower than expected. The reason, said RIM, is a delayed availability of handsets set to feature its newest operating system, BlackBerry 7. The new line of devices will become available second quarter of this year.
RIM’s tablet, the PlayBook, which went on sale earlier in 2011, was met with mixed criticism. Moreover, the 4G version of the tablet has been delayed to this fall, instead of the summer, when it was previously slated to be released.
Despite those setbacks, Shiau said RIM has a “fantastic brand equity” in the small-to-medium business and enterprise markets.
Unfortunately for RIM, which has dominated the corporate device space, it failed to take into account how important the consumer market would become, said Shiau. Nor, were they prepared for how quickly that would come about.
Michael Battista, research analyst with London, Ont.-based Info-Tech Research Group Inc., said RIM’s mistake was to not pay attention to the “personal-liable device trend,” which had implications for both the consumer and enterprise sides RIM’s business.