Research In Motion Pins Hopes On BlackBerry 10
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It has been a rocky road of late for Canadian-based tech company Research In Motion (NASDAQ: BBRY). Best known as the developer of the BlackBerry smartphone, Research In Motion finds itself on a slippery slope, unable to keep up with competitors Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG).
In fact, from June 2008 to July 2011, shareholders lost a staggering $70 billion, or 82%, of their investments in the company. To put things into perspective, the BlackBerry is running a tight race with Nokia (NYSE: NOK) phones, which are operating on a Microsoft system. Considering Nokia’s recent track record, it’s not really a great place to be. The stock that once sold for $140 a share is now selling for under $10. As of Oct. 3 Research In Motion was selling for $8.03.
Like Nokia with its Lumia, Research In Motion is hoping that a new smartphone, the BlackBerry 10, will turn the ailing company around. But there are valid reasons why it may not. RIMM has a track record of producing good products, but it is unlikely that anything it creates will rival the technology of the Apple iPhone or Google’s Android-operating system.
Add to this the projected release date of the new BlackBerry is the first day of 2013. Coming on the heels of the holidays, when millions of consumers will be strapped for cash, investors have to wonder about the less than perfect timing. Although CEO Thorsten Heins says that the Blackberry 10 will “advance the operating system environment to a whole new level,” the proof of that claim remains to be seen. In short, Research In Motion will have to deliver an outstanding product in order to come close to recouping losses and rebuilding cash flow.
Not all the news is bad for the beleaguered company, even though it posted a large quarterly loss of $235 million last week. I’m surprised and somewhat encouraged, as this is less of a loss than was expected. The stock is trading higher this week, due partly to the less than expected loss and anticipation of the BlackBerry 10. The Canadian company is struggling in the U.S. market, but it has increased sales in developing markets. Some analysts are saying that Research In Motion performed well considering the challenges it has faced. There is hope that the company may be getting its fiscal house in order before the release of the much vaunted Blackberry 10.
Thorsten Heins took the reins as CEO of Research In Motion in January 2012, replacing Co-CEOs Jim Balsillie and Mike Lazaridis. This was after the company had lost tens of billions in market value. Prior to coming to Research In Motion, Heins was Chief Technology Officer of Siemens’ Communications Division. He has been at Research In Motion since 2007, working his way through the ranks, starting in the BlackBerry Handheld Division. Investors are looking to him to make a difference in the company, and all indications are that he may be the catalyst needed to turn Research In Motion around. Of course, only time will tell.
The bottom line is that Research In Motion needs more than a new smartphone to nudge the company in a lucrative direction. Investors may be enticed by the price of the stock now, but if the company does not begin to post gains in the near future the outlook for the Canadian company is bleak. The timing of the release of the Blackberry 10 may turn out to be a marketing fiasco, leading to disappointing sales in the first quarter of next year. There are many problems facing the company, and it is difficult to know how to plug the dam and stop the leak. Here’s hoping that BlackBerry 10 can accomplish this feat.
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