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November 9, 2012
By Alex Oscar
The recent quarterly-earnings report of RIM for the period ended September 1, 2012, though a surprise, was not very remarkable as its revenue generated was $2.9 billion.
::::::::"Research in Motion Limited,' also referred to as RIM, is a wireless-product company that brought BlackBerry into the mobile market in 1999 and created waves in the industry.
The recent quarterly earnings report of RIM for the period ended September 1, 2012, though a surprise, was not very remarkable as its revenue generated was $2.9 billion (up 2% from $2.8 billion in the first quarter) with a net loss of $235 million. While this exceeded expectations, at the same time it was also not quite noteworthy. Shipments of BlackBerry smart phones were 7.4 million and those of Blackberry Playbook tablets were approximately 130,000.
Does the market view about RIM continue to be that of a management that has no inkling about the way the company ought to be handled? Let us do a flash-back to the time when this was the general sentiment; about five months ago.
When the launch of a product of any technology stock is delayed by a considerable period of time, its market view starts lowering, with the result that investors start looking the other way. The same was the case with Research in Motion Limited. There had been talks many months ago that it would launch a new BlackBerry phone and a new operating system. With the dismal sales numbers of the first quarter in 2012, there were reports that the said launch of the new operating system along with the BlackBerry phone would hit the market only in the first quarter of 2013--an immense delay--thus weakening the market view further and strengthening the investor's view of the need to look for other technology stocks.
RIM had been way behind other technology stocks since quite some time and that was when analysts felt that the company ought to have cut down on costs. But this realization seemed to have struck the company quite late and it tried to make amends by axing the jobs of five thousand employees. This was about five months ago, as mentioned earlier. Also, its products were not exactly wooing the people who wanted something new and different. In this aspect too, market view was not quite encouraging. Compared to 13.2 million BlackBerries that were shipped in the quarter of 2011, only a pathetic 7.8 million were shipped in the first quarter of this year. This enormous drop of 40% did not bode well for the very existence of this technology stock.
Competition had been tough for RIM as it was trying very hard to salvage the grim situation; but recovery seemed a far cry ahead for this "once- upon- a- time' robust company. It was so bad that analysts had even predicted that it could be a matter of two years or even less before it would have to shut down.
There were suggestions that dismissing such a large number of employees was going to cost a fortune; it would have been better if the company had sold itself on an urgent basis. The postponement of the launch of the new phones had led people to be prejudiced against the company and they had started looking for other technology stocks. It was even thought that if the new phones would be launched at a later date, it looked quite unlikely that people would return as buyers as other technology stocks had been offering superior products to entice them. Not only that, many technology stocks like Apple Inc and Samsung Electronics Co had exhibited good performances last year, an actuality that the struggling RIM could not really contend with. There was also the burden of its weak market view. So it was thought that nothing short of a miracle would reinstate the confidence of RIM in the people's minds and change the negative market view.
Nothing had worked well for RIM. The ever-losing market share, the product-launch delay, the employee-cut-down--all had contributed to the sad plight of this technology stock leading to a disheartening market view. If the trend was to be believed, RIM had to hurry and consider carefully and sell off fast. Otherwise the view that the company could be compelled to face bankruptcy had been a foregone conclusion.
Time has elapsed.
Now as per RIM press release dated November 8, 2012, Research in Motion has got U.S. security clearance for BlackBerry - 10 platform. As per this FIPS 140-2 certification, government agencies can deploy BlackBerry - 10 smart phones and BlackBerry - Enterprise Service 10, Rim's new mobile enterprise-management solution, from the day of launch. This is the first time BlackBerry products have been FIPS-certified ahead of launch, which is expected to take place sometime in the first quarter of next year.
Now it remains to be seen whether the fortunes of RIM will change for the better.