RIM reaction: Less than fatal, or resignation?

Research In Motion has escaped another shaky quarterly financial report with less than fatal news coverage.

Or was it just a sense of resignation that given the numbers, the Waterloo, Ont., company will never challenge for mobile leadership again?

After announcing last week its revenue dropped 31 per cent over the same period a year ago, giving it a $235 million loss – following a $518 million loss revealed in June – some were relieved it wasn’t as bad as predicted.

Certainly some felt RIM had been stabilized. That’s what Yankee Group industry analyst Carl Howe came away with.

“When I first met (CEO) Thorsten Heins in May I thought what I like about him is he has a plan – and if there’s one thing Germans are good at, it’s executing against plan,” Howe said late Friday.

“So I started to feel optimistic in May, and we end up here in late September and guess what? He’s executed against plan.”

“I give him high marks having put together something that’s really working on turning the company around.”

The fact is – as a number of people pointed out – things aren’t looking so red in the financials because RIM has been laying thousands of people off. As it has to.

But Howe points to other things that make him optimistic.

He was at last week’s BlackBerry Jam conference in San Jose and played with the latest release of the next-generation BlackBerry 10 operating system on a prototype handset, one which the company is betting so much on when it is released early next year. He likes it, particularly because BB 10 stands on its own: It’s not an iPhone or Android clone, he said.

He also likes RIM’s strategy of telling software developers that it wants to help them make money, which is vital for attracting their attention.

On the other hand, Howe confessed he would have liked to have seen more developers at the conference. (They may have been conferenced-out. It was the second California BlackBerry Jam in five months.)

Howe also won’t hazard a guess on how successful sales of BB 10 handsets will be. For one thing, he said, RIM has told him that certain things are beyond its control: Carriers set product release dates, pricing and volumes.

But he’s calculated that RIM only has to raise its sales by three to five per cent to take market share away from Apple and Samsung.

He also won’t answer whether RIM will survive as an independent company. At this point, he wondered, who wants to buy it? Most hardware makers don’t want to be vertically integrated, as RIM is, he said.

Meanwhile, the company continues to hold on until the release of BB 10. It has to suffer without a worthy competing device while iPhone 5 sales explode – and it’s only the end of September. A slew of Windows Phone 8 handsets will be released around Oct. 26. RIM still depends on sales in Asia and parts of Africa. And Heins has warned the next quarterly results (in December or January) will also be in the red.

For another view, here’s a forecast from Trefis, which expects RIM’s global market share to continue to drop.

Generally, almost all financial analysts believe it’s impossible for RIM to survive as an independent company, or without being broken up.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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