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RIM's survival until BlackBerry 10 all about cash preservation

post #1 of 94
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While Research in Motion reported dismal quarterly earnings this week, the company did manage to improve its cash balance, suggesting the its demise isn't imminent — if it can survive until the launch of BlackBerry 10.

Though RIM reported an operating loss of $308 million for its first quarter of fiscal 2013 on Thursday, the BlackBerry maker did manage to improve its cash balance from $2.1 billion last quarter to $2.2 billion this quarter. The growth in cash came from RIM collecting on its receivables, as its balance declined from $3.6 billion last quarter to $2.8 billion in the most recent three-month frame.

RIM's improved cash position is seen by analyst Shaw Wu with Sterne Agee as a key factor in the company surviving its current struggles. If RIM isn't careful with its cash balance, he said, the company risks facing bankruptcy.

"While it is painful for us to see layoffs, it is necssary for the company's survival," he said. "We believe a key risk is how much cash the company uses with its 5,000 in headcount reductions by the end of (fiscal year 2013)."

RIM announced in May that it will slash its workforce by 40 percent in the coming months to cut costs and try to turn the company around. Once a dominant player in the smartphone market, RIM has failed to respond to handsets like Apple's iPhone and devices running Google Android.

RIM


Challenges faced by RIM, as well as Nokia and HTC, are seen by analyst Brian White with Topeka Capital Markets as opportunities for Apple to continue to gain market share. With RIM's new BlackBerry 10 operating system delayed until the first quarter of calendar 2013, White wondered on Friday if the platform will ever be released.

"With the expected ramp of Apple's iPhone 5 and the Samsung Galaxy S III in the second half of the year, we believe RIM's delay of BlackBerry 10 may leave the company so vulnerable that the new platform may never see the light of day," White wrote in a note to investors. "Essentially, we would not be surprised if RIM is in a different form than today by the time (the first quarter of calendar 2013) rolls around."

If and when BlackBerry 10 does launch, analyst Charlie Wolf with Needham & Company said it needs to be "perceptibly superior" to Apple's iPhone and Google's Android platform if RIM hopes to turn its fortunes around.

"The existentialistic question is whether RIM indeed has a chance of reversing its downward spiral even with a superior platform," Wolf said. "With few exceptions, once started, downward spirals have often proved very difficult to reverse."
post #2 of 94

Toast. There's no coming back from this. Next up - Nokia.

post #3 of 94

RIM (Research In Motion = RSM (Research Stop Motion)

 

Too bad they were incredibly slow with the new smartphone standards and kept clinging to their old designs and models (for the most part at least). Even mobile internet in Holland is more expensive for Blackberry phones compared to any other smartphone out here.

post #4 of 94
post #5 of 94
What key features are included in crack berry 10 ... That will lure the crack berry heads back
post #6 of 94
Quote:
Originally Posted by AppleInsider View Post

While Research in Motion reported dismal quarterly earnings this week, the company did manage to improve its cash balance, suggesting the its demise isn't imminent — if it can survive until the launch of BlackBerry 10....

 

The conclusion of this article (bolded above) is complete BS and not even supported by the analysts and other related information quoted within the body of the article.  Shaw Wu (arguably one of the worst and least likely to be right analysts), obliquely, implies that (maybe) one metric of their survival is how much cash they spend on the layoffs. The author then boldly interprets this as "if they hold on to enough cash they can make it to Blackberry 10"????

 

All other analysts disagree with Wu (and with the author) and these are even quoted within the body of the authors own article! 

 

They will never make it to Blackberry 10 and even if they could, it's not enough to make the launch day.  They have to survive until their new platform picks up speed and replaces all the lost sales of the old.  They will have to make it for a couple of years, not just to the launch date. 

 

The only reason Nokia has been able to pull of a similar magic trick to what the author implies here is that they had an outside injection of cash from Microsoft who is slowly taking them over. Balmer has already asked RIM for the same deal they gave Nokia and this morning RIM is all like, "well, maybe?"  But if something like that happens then Blackberry's new platform is out with the mornings garbage anyway and RIM becomes another Windows phone maker. 

post #7 of 94

At this rate, it will be more like RIP.

 

Quote:
Originally Posted by flabber View Post

RIM (Research In Motion = RSM (Research Stop Motion)

 

Too bad they were incredibly slow with the new smartphone standards and kept clinging to their old designs and models (for the most part at least). Even mobile internet in Holland is more expensive for Blackberry phones compared to any other smartphone out here.

Originally Posted by Granmastak: Labor unions managed to kill manufacturing a long time ago with their unreasonable demands. Now the people they were trying to protect, are out of a job.
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Originally Posted by Granmastak: Labor unions managed to kill manufacturing a long time ago with their unreasonable demands. Now the people they were trying to protect, are out of a job.
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post #8 of 94

Features ain't gonna cut it this time. Perhaps they just need more of that "wake up" campaign they were so proud of just a couple of months ago.

 

Quote:
Originally Posted by Ryuk View Post

What key features are included in crack berry 10 ... That will lure the crack berry heads back
Originally Posted by Granmastak: Labor unions managed to kill manufacturing a long time ago with their unreasonable demands. Now the people they were trying to protect, are out of a job.
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Originally Posted by Granmastak: Labor unions managed to kill manufacturing a long time ago with their unreasonable demands. Now the people they were trying to protect, are out of a job.
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post #9 of 94

That's really their only hope. Even if they can hold on until Blackberry 10, there's no guarantee that the product will turn them around. In fact, it's unlikely that it will. They need a deep pockets partner who has synergistic goals. Microsoft needs Windows 8 Mobile to be a success, so they would be willing to invest heavily. I'd say 'go for it'.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #10 of 94
I wonder if Rim could survive if the sold android phones?
post #11 of 94

Nobody makes a significant investment in new hardware from a company where there are questions of cash flow and bankruptcy. The BB10 might be a great product, but purchase decisions include the long term prospects of the vendor and the ecosystem it provides.

post #12 of 94
Quote:
Originally Posted by Eriamjh View Post

I wonder if Rim could survive if the sold android phones?

Possible, but unlikely. Too many competitors selling phones that all work the same way and little differentiation. The only hope would be that businesses would pay a premium for the Blackberry name, but I doubt if that's sustainable.

It's slightly more possible with Windows Mobile because of less competition, but it's still a long shot.
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post #13 of 94
Quote:
Originally Posted by Eriamjh View Post

I wonder if Rim could survive if the sold android phones?

 

that is really their only possibility right now.  Getting in bed with Microsoft only leads to one place...death, just ask Nokia.  Even if RIM went with Android, they will still die...the company is run by complete idiots who have no clue what they are doing.

post #14 of 94

When a company starts floundering this badly, it is ominous.

 

The biggest problem is retaining engineering talent. The best and brightest employees are typically the first to leave, as they are the ones who are smart enough to see the writing on the wall, plus they have the largest number of opportunities elsewhere.

 

For the remaining employees, those departures become a bitter reminder at how poorly the place is faring and employee morale typically takes a tumble. This would be greatly exacerbated by a major round of layoffs. Companies with bright futures don't slash the workforce.

 

Not sure how RIM will remain a major player. They were already fumbling the ball while they were still in the game, today it looks like they are being handed their hat, and shown the door.

post #15 of 94
They had the money to give that dumb a$$ CAO a buyout after he wasted eons chasing a hockey team. He should have been watching Apple instead. Now 5000 employees are no longer available to contribute. And no indication of why anyone would wait around for a BB10.
post #16 of 94
Quote:
Originally Posted by Gazoobee View Post

The conclusion of this article (bolded above) is complete BS and not even supported by the analysts and other related information quoted within the body of the article.  Shaw Wu (arguably one of the worst and least likely to be right analysts), obliquely, implies that (maybe) one metric of their survival is how much cash they spend on the layoffs. The author then boldly interprets this as "if they hold on to enough cash they can make it to Blackberry 10"????

All other analysts disagree with Wu (and with the author) and these are even quoted within the body of the authors own article! 

They will never make it to Blackberry 10 and even if they could, it's not enough to make the launch day.  They have to survive until their new platform picks up speed and replaces all the lost sales of the old.  They will have to make it for a couple of years, not just to the launch date. 

The only reason Nokia has been able to pull of a similar magic trick to what the author implies here is that they had an outside injection of cash from Microsoft who is slowly taking them over. Balmer has already asked RIM for the same deal they gave Nokia and this morning RIM is all like, "well, maybe?"  But if something like that happens then Blackberry's new platform is out with the mornings garbage anyway and RIM becomes another Windows phone maker. 

You're wrong. There are analysts who question whether RIM has enough cash to last until the now even later BB10 release. Their cash will start to drop rapidly shortly. They estimated that it would cost them $330 million for the layoffs. But they've been running equal in cash reserves for some time now. But this quarter, they lost $518 million on $2.83 billion in sales. If they can't stem that this quarter somehow, their reserves will drop from that as well.

Their longtime Canadian manufacturer has recently washed their hands of RIM. They really are in a precarious position here.

I'm also concerned at their lying during their financial calls. This is illegal, and I'm very surprised that they haven't been called on it last time, and well as last night.cthe first major lie was when they stated that BB10 was delayed to October from the early 2012 date promised because of a "chip" for the phones. That was such an obvious lie, I was flabbergasted at hearing it. They had said that BB10 was ready, but the hardware wasn't. Amazing!

Then at their BB World conference, they showed prototype phones that had canned features working, but not the OS itself. I knew right then that they couldn't meet the October release. People also said that the hardware looked very primitive.

Last might they blamed the delay on their partners, who, they said, told them that a holiday release wasn't the best time, so they are delaying until January. Unbelievable!

I'm wondering if even the January release can be met. If not, then there's no hope at all. Even if it is, there's pretty much no hope.

They really do seem to be positioning themselves for a sale of some kind. They hired two more ban OS for a "strategic" look at their options. We all know what that means, especially on top of the three banks they hired previously.

And as for your Ballmer asking them for this deal, where did you get that from? I don't remember that.
post #17 of 94
Isn't cutting your workforce counter-productive? (in the sense of completing BB10 on time) push your employees to get moving.
Oh well, so long BB. The only unfortunate thing is that it was a great Canadian company that was doing well for a while. But it's a harsh market and they didn't adapt fast enough (or at all)
post #18 of 94
Quote:
Originally Posted by Ryuk View Post

What key features are included in crack berry 10 ... That will lure the crack berry heads back

I saw a guy in a suit on the train with a BB. My ^sstard elitism aside, I did feel sadness for him. Like I do for Bill Gates now. At least in the tech world, it is sad to see a giant like that now be so, so very lost.

In the case of RIM, it is game over. Steve came on a conference call, a very rare thing, I think in 2009/2010 or something, and said that they just "passed BlackBerry", and that "they would never catch up". I remember exactly where I was when listening to the audio stream.

I honestly at that point thought it was trash talk by Steve. But, well... Vindication is a dish best served with soufflé. [Yes I'm pushing my vindication theme here]
post #19 of 94

Isn't this the third time that the 'new blackberries' have been delayed? I seem to recall the QNX / BBX / BB10 phones were originally expected for the end of 2011. Then it was the first half of 2012. Then it was the second halff of 2012. Now they're talking 2013.

 

I get the feeling that we'll never actually see a BB10 device at all.

post #20 of 94
Quote:
Originally Posted by TomMcIn View Post

They had the money to give that dumb a$$ CAO a buyout after he wasted eons chasing a hockey team. He should have been watching Apple instead. Now 5000 employees are no longer available to contribute. And no indication of why anyone would wait around for a BB10.

In all honesty, if it wasn't for Balls in the first place coming into the firm in 1992, RIM would be a company none of us would have ever heard of. He was the one that put RIM on the map. And even though, like Lazy, he took his eye off the ball in 2009, we shouldn't forget that it was his work that made them into the large company they became. While the technical work that Lazy was responsible for gave them the technology, that's just not enough. It takes marketing, and Balls worked very hard doing that, and he did it well.

No other company saw that Apple's iPhone would have the impact it did, other than perhaps Schmitt at Google. It's tough to blame RIM alone when every other cell manufacturer fell into the same trap.
post #21 of 94
Quote:
Originally Posted by GadgetCanada View Post

They're dead in the water. Even when BB10 comes out, why would app developers want to support an OS that is most likely going to disappear.
I wonder if they will pay out each of those 5000 employees with severance packages similar to the millions they gave their idiot CEOs who ran it into the ground

It will cost them $330 million. Much, if not most of that, is for severance.
post #22 of 94

They should partner with LinkedIn in order to build a BB community. They should bring services tied to the owenership of a BB so that employees must use the BB in the companies. 

 

No more BYOD. Business status to have a BB.

post #23 of 94
I think they are missing the reason that RIM is screwed: They survived the past five years by going after the consumer market, and the BES "value proposition" kept eroding their high margin enterprise software business. So, all they can do now is really make handsets. There is no margin in that.

About all they could do is sell off the BES business to a Google or Apple so they can fix their mess of a calendaring and synchronization system. There really isn't much benefit any more in any RIM OS, so they can just switch to Android with the same benefits as migrating to BB10 at a much lower cost.
post #24 of 94

$2.2B in the bank, and a rumoured $1B in devices sitting in storage while burning cash waiting for BB10 and next-gen devices to be completed. I have $50 ready for the Playbook fire-sale, you know you'll have to do it eventually RIM.

post #25 of 94
Quote:
Originally Posted by OriginalG View Post

$2.2B in the bank, and a rumoured $1B in devices sitting in storage while burning cash waiting for BB10 and next-gen devices to be completed. I have $50 ready for the Playbook fire-sale, you know you'll have to do it eventually RIM.

At this stage RIM would have to pay me $500 to even touch a Playbook.
Quote:
Originally Posted by aaarrrgggh View Post

I think they are missing the reason that RIM is screwed: They survived the past five years by going after the consumer market, and the BES "value proposition" kept eroding their high margin enterprise software business. So, all they can do now is really make handsets. There is no margin in that.
About all they could do is sell off the BES business to a Google or Apple so they can fix their mess of a calendaring and synchronization system. There really isn't much benefit any more in any RIM OS, so they can just switch to Android with the same benefits as migrating to BB10 at a much lower cost.

What nobody seems to talk about is how the BES value proposition eroded. At first everybody was like, oh, can't use iPhone, corporate email security is lousy. Then, a few years ago, the wheels totally came off the BES stuff, suddenly iPhone was everywhere in corporate.

Why has RIM not addressed this fundamental issue?
post #26 of 94
Quote:
Originally Posted by uguysrnuts View Post

At this rate, it will be more like RIP.

 

Research in Peace?

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post #27 of 94
Quote:
Originally Posted by sr2012 View Post


....My ^sstard elitism aside, I did feel sadness for him. Like I do for Bill Gates now.

I actually feel worse for BG's kids. I wonder if they still use a Zune. (I recall an interview with his wife a while ago, where she said that no Apple products are allowed in her household.)

 

Can you imagine how uncool they must feel.

post #28 of 94

I know business friends that have been "forced" to use BB's for their company phones because of - well they seem to suggest it's because of their email server.  One person in particular was blown away when I showed her the first iPhone.  How email messages looked like they were supposed to - how you could zoom if you couldn't read or see something properly, how web pages were the real thing, not some botched up micro mess on a tiny BB screen.

 

The company I used to work for, a creative retail chain with lots of 20 something staff who are clearly iPhone (and Mac) users, is filled with senior management (from the private equity world) who for the most part are anything but creative, are also still using BB's - because it's what people in private equity (and to a bigger extent Wall Street) do.  To me, companies that have policies that have continued to support RIM are almost as dumb as RIM itself.

post #29 of 94
post #30 of 94

Whenever a company like this has so many problems, there are stories like that. It's all wishful thinking, and of no use.

So of course someone from Google would like to see a RIM Android phone. What else is new? Will it happen? No.

Windows phone? No.
post #31 of 94

I hope RIM finds its way back up. It would be a remarkable story and also good for the industry.
 

post #32 of 94
Quote:
Originally Posted by sr2012 View Post


I saw a guy in a suit on the train with a BB. My ^sstard elitism aside, I did feel sadness for him. Like I do for Bill Gates now. At least in the tech world, it is sad to see a giant like that now be so, so very lost.
 

Feel sadness for Bill Gates?  The work he is doing well may be the greatest humanitarian work ever done. We should feel proud of him, not sad for him. And I don't think Gates is lost in any sense of the word.

post #33 of 94

RIP RIM 

 

rim_0.jpeg

post #34 of 94
Quote:
Originally Posted by melgross View Post


Whenever a company like this has so many problems, there are stories like that. It's all wishful thinking, and of no use.
So of course someone from Google would like to see a RIM Android phone. What else is new? Will it happen? No.
Windows phone? No.

 

Good point. We've heard the same stories thrown around about WebOS. 

post #35 of 94

RIM is in that endangered species mode now... And unlike American Auto Industry, no one in Canada or in the Tech world thinks it's worth saving.

 

Self-inflicted.  Yes.   Very much so... There is that transition from being a market leader, to being unaware the market had fundamentally changed around them.

 

- It's an Apps (don't force a requirement into the existing limitations, drive the limitations out by putting intelligence into both ends of the com structure) based world now.  

- 140 characters is not the avg piece of 'information' produced on a mobile device.

- Color is communications dimension.

- Making an keyboard that small was a feat of magic, but once people wanted to watch youtube in their hand, permanently dedicating that real estate was an anchor.

 

These were apparent in 1997 (Palm), and the technology caught up in 2007.   

 

There are lots of 'lucky' people in business, and there are even more 'one trick ponies.'  It's well documented that there were few smart decisions since 2006, so we have to assume their 'business intelligence' was poor.  So, they were lucky to develop a technology to migrate two-way pagers into email at a time when deals required instant communications between CxOs, driving their technology top down into an organization (PCs were bottom up).  They rode that pony hard.  But they felt they were competing against phones with buttons, or phones trying to run versions of MSoffice, and a crufty browser at 2G broadband speeds was their competition.

 

iPhone appears and they don't know what happens.

Their momentum seems to validate their business plan... but in fact, their horse was dying underneath them.

When it's apparent the winds are shifting, they try to do a Microsoft, and promise everything to everybody (Java, Flash, Web, Apps, Android compatibility, ponies and unicorns), and ship crap, while marketing it as 'new and improved, and bound to get better next year' in a world when 2 year cycles are now the norm.

 

Now they basically are a old fat animal... living off their fat, to survive the winter, loping off vital organs in the hope that their immature offspring will grow and pull them to the fertile pasture.   I've seen enough Nat Geo's to know that that doesn't happen.  The vultures will swirl, and eat both the old horse and the young foal, or the foal will pulled into another herd, and the old nag left to die.

 

I'm not sad... I'm all for gene cleansing;-)

post #36 of 94
Quote:
Originally Posted by ankleskater View Post

Feel sadness for Bill Gates?  The work he is doing well may be the greatest humanitarian work ever done. We should feel proud of him, not sad for him. And I don't think Gates is lost in any sense of the word.

Ballmer on the other hand....

post #37 of 94
Quote:
Originally Posted by GadgetCanada View Post

I wonder if they will pay out each of those 5000 employees with severance packages similar to the millions they gave their idiot CEOs who ran it into the ground

 

$330 million / 5000 layoffs = $66,000 per layoff.  Given what their employees likely make, that's an average of less than one year's salary per employee.  That sounds pretty typical for severance...

post #38 of 94
Quote:
Originally Posted by ankleskater View Post

I hope RIM finds its way back up. It would be a remarkable story and also good for the industry.
 

Apple wrote that story already...   

 

And given where RIM is at... There is no 'insanely great' savior in the wings.   

 

When I look at RIM, their story more parallels AOL, but with worse management.

 

Nokia... now... they could/should make a comeback worthy of a story and be great for the mobile industry.

post #39 of 94
Quote:
Originally Posted by ankleskater View Post

I hope RIM finds its way back up. It would be a remarkable story and also good for the industry.

 
I hope so for all the employees at RIM.
But they would have to be imaginative and try to think outside the box.
But all I see when I think about RIM in conservativism and sticking to old scemes.

So, no I don't expect them to realize the turnaround.

Sad.
post #40 of 94

 

Mmmm... Maybe MS has another VP that they want to outsource ala Elop.   

 

I suspect that Sinofsky might be a prime candidate!

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