RIM Do or Die
Mohamed is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
If you were anyone who’s anyone there is a good chance that you have used a BlackBerry in the past. A few years ago, a BlackBerry and a smartphone were pretty much synonymous. The Canadian Research In Motion (NASDAQ: BBRY) came up with a device that featured a QWERTY keyboard, that notified you immediately of when an email was received, that could connect people to their work anywhere and anytime, and that featured a special and exclusive chat network. The whole community then suddenly became hooked on the “Crackberry.” The term BBming replaced texting at least where I live.
Fast forward to today and a burial service is being organized for RIM. The stock had a staggering 95% fall from its 2008 high of $150. The headlines on RIM in the financial media spell gloom and doom. Even the mighty Samsung announced recently that it has no interest in acquiring RIM or licensing its BlackBerry 10 software. From the looks of it the once mighty BlackBerry is breathing its final breaths.
I recently bought an iPhone 4s and when I compared it to my dad’s BlackBerry Torch, I could see why RIM is suffering. In my opinion the iPhone 4s is not only a better phone, but it seems to belong to a different era. RIM might have popularized the concept of a smartphone and gave people their first taste of a connected life, but that first mover advantage isn't a vaccine for being stagnant against the competition.
The company, however, isn't going down without a fight. RIM CEO Thorsten Heins still proclaims that RIM will "empower people's lives like never before."
He is extremely skeptical of the bearish view that most people have of RIM. In a recent interview with the Telegraph commenting on his trip to London where he attended the Olympics Opening Ceremony and was invited to the Business British Embassy Summit he said, "Guess what – most of the guys were on a BlackBerry, typing, working. Surely that’s not bad for a company that one analyst recently suggested was in a death spiral?"
RIM does have 80 million subscribers, it's still somewhat strong in emerging markets, its devices are still heavily used in the government and corporate world, it has around $2 billion in cash on the balance sheet and it was able to generate $710 million in operating cash flow in the first quarter.
Why then is it trading at these anemic levels?
The answer is that investors don't care as much about the present as much as they care about the future and many believe that the "B word," and I don't mean buyout, may be written into RIM's future. To avoid this unfortunate fate RIM has but one last resort:
The New BB10 Smartphone Launch
RIM made headlines last months when it was revealed that it had asked employees to forgo their summer vacation and work six-day work weeks to get the BB10 out on the market in time. I say "time" tongue in cheek because the company had already delayed the release a couple of times before, missing the all-important holiday season in the fourth quarter of 2012. The BB10 is due to be released sometimes in Q1 2013.
The company has high hopes for the new BB10 smartphone line. According to Heins the new BlackBerry 10 will "connect users not just to each other, but to the embedded systems that run constantly in the background of everyday life - from parking meters and car computers to credit card machines and ticket counters."
While the new BB10 shown here looks like a great advancement over the current BlackBerry devices out there and might be able to compete on a technological and functional level with the ios of Apple (NASDAQ: AAPL) or the Android of Google (NASDAQ: GOOG), the question is will it make BlackBerry "cool" again in the smartphone market. Some people believe that RIM may have already jumped the shark sort of speak as this blog highlights.
So there you have it folks, by this time around in 2013 we should have a final verdict on RIM -- will it continue to be a player in the smartphone revolution or will it be another has-been of the past. The ball now rests in Waterloo's court.
At a market cap smaller than its fiscal 2010 operating income, RIM could be the ultimate contrarian play if you're into that sort of thing. Just look at Nokia last month.
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