RIM's survival until BlackBerry 10 all about cash preservation

Posted:
in Genius Bar edited January 2014
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."
«1345

Comments

  • Reply 1 of 94
    vinney57vinney57 Posts: 1,162member


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

  • Reply 2 of 94
    flabberflabber Posts: 98member


    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.

  • Reply 4 of 94
    ryukryuk Posts: 29member
    What key features are included in crack berry 10 ... That will lure the crack berry heads back
  • Reply 5 of 94
    gazoobeegazoobee Posts: 3,754member

    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. 

  • Reply 6 of 94
    uguysrnutsuguysrnuts Posts: 459member


    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.


  • Reply 7 of 94
    uguysrnutsuguysrnuts Posts: 459member


    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

  • Reply 8 of 94
    jragostajragosta Posts: 10,473member
    quadra 610 wrote: »

    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'.
  • Reply 9 of 94
    eriamjheriamjh Posts: 1,041member
    I wonder if Rim could survive if the sold android phones?
  • Reply 10 of 94
    jollypauljollypaul Posts: 328member


    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.

  • Reply 11 of 94
    jragostajragosta Posts: 10,473member
    eriamjh wrote: »
    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.
  • Reply 12 of 94
    bullheadbullhead Posts: 493member

    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.

  • Reply 13 of 94
    cvaldes1831cvaldes1831 Posts: 1,832member


    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.

  • Reply 14 of 94
    tommcintommcin Posts: 108member
    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.
  • Reply 15 of 94
    melgrossmelgross Posts: 30,310member
    gazoobee wrote: »
    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.
  • Reply 16 of 94
    timbittimbit Posts: 331member
    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)
  • Reply 17 of 94
    sr2012sr2012 Posts: 896member
    ryuk wrote: »
    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]
  • Reply 18 of 94


    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

  • Reply 19 of 94
    atashiatashi Posts: 59member


    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.

  • Reply 20 of 94
    melgrossmelgross Posts: 30,310member
    tommcin wrote: »
    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.
Sign In or Register to comment.