Established in 1984 and headquartered in Waterloo, Ontario, Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) has developed from a small Canadian-based company to become the leading designer, manufacturer, and marketer of innovative wireless solutions in the international mobile communications field. But due to lack of innovation in almost every field such as Design, features and applications the company failed to continue its supremacy, and has lost the customer base to competitors like Apple Inc. (NASDAQ:AAPL), Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Google Inc (NASDAQ:GOOG).
Research in Motion has been on a spectacular run this quarter. With transformed positivity on Blackberry 10, a reasonable upgrade from Goldman and high short interest, it seems that all the fresh encouraging news has been priced in at current levels. However, for RIM to efficaciously hold some ground in the smartphone market, the Blackberry 10 will need to take market share away from the likes of Apple’s iPhone and Google’s Android devices — which will not be released before January. Therefore, RIM is defenseless to a sell-off unless earnings expressively exceed traders’ expectations.
Financials
Research In Motion reported a 97% slide in the third quarter profit on revenue that was down 47%, compared with the same period a year ago. The BlackBerry maker lost 1 million subscribers, down to 79 million in the quarter. The Ontario-based company announced a quarterly profit of $9 million, or 3 cents a share, on revenue of $2.73 billion. In the same quarter a year ago, it reported a $265 million profit, or 51 cents, on $5.17 billion in revenue. RIM’s cash reserve grew $600 million in the quarter to $2.9 billion.
Lagging Behind Competitors
Companies such as Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and others, have ushered in a new generation of the mobile market. And in the course, they’ve made RIM look like the also-ran, and a company that simply has no idea what to do to appeal to customers. RIM launched QWERTY keyboards and believed it to be the best, but Apple’s touch screens had become the necessity for the customers now. RIM now offers touchscreen, but it is a latecomer.
Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) is the only company trying hard to take on Android, iOS, and Windows, but the strategy of RIM has so far been unimpressive and a massive failure. Designs matter a lot to customers, and it’s high time that RIM understands the importance of new looks as given by Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), Apple Inc. (NASDAQ:AAPL) and HTC Corp (TPE:2498) phones. These phone makers capitalize on the design of their phones and its time that RIM realized this.
The enterprise service of RIM and messaging service has been top notch. The competitors rather than competing with RIM on its services are concentrating on the devices. The strategy of RIM has been to target IT enterprises rather than customers to be successful, competitors, on the other hand, have focused on the customers to break into the enterprise and the strategy of the latter has been more successful.
The operating software of Blackberry has not changed much over time and lacks innovativeness. On the contrary, the competitor’s iOS and Android have made tremendous changes deliver better and new functions much admired by customers.
In 2008, when Apple and Google launched their App store, it became quite clear and loud that software would become the key to their success. RIM also realizing the importance of Apps launched its own app store, but it heavily lacked the applications compared to around 7,00,000 apps of Apple and android. The developers are not concerned as well, which seems to be the real issue.
Consumers inclined towards latest device
Wireless consumer survey highlighted that 43% of consumers would go for a windows phone such as the Lumia, and only 16% said that they will prefer the iPhone or Android. This exhibits the interest of consumers to try a platform other than Android and iOS. The BB10 phones will unveil with about 100,000 apps. While this doesn’t match with the over 700,000 apps each for Android and iPhone, and 150,000 for Windows Phone. Windows Phone 7 launched with 1,600 apps in 2010 and the iPhone launched with 500 in 2007.
BB10 Devices a savior?
Details of BB10 are being trickled by carriers and developers alike. True multi-tasking with messaging and apps, one thumb navigation, swipe to type keyboard, improved speedy browser, competitive hardware, and 100,000 BB10 applications available on launch day are all encouraging to the “Productivity” and “Flow” vision RIM is looking to endorse itself as, this should re-launch Blackberry fan support. Initial feedback has been mostly affirmative. The early assessments of BB10 devices are durable enough to keep and grow the current subscriber base. The first two phones on BB10 are expected to be the touch screen L-Series and the QWERTY N-Series. Based on initial speculations, with these devices RIM gives the impression to finally be focusing on the foremost superiority hardware performance that was absent from its prior generations.
BB10- Moderate shot in the Arm
For RIM, industry experts and customers similarly have grieved that the company is worth more dead than alive. Despite, upcoming arrival of the company’s BlackBerry 10 operating system and a little encouragement that it could give to RIM, there’s something that can’t be overlooked: the point that most customers don’t look upon a BlackBerry device with any form of enthusiasm.
Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) is only floating on its enterprise server right now. Customers and analysts are keen to know whether next release of RIM will bring something new and exciting or will as usual go with the image “just plain reliable and necessary”.
BB10 has a minimal opportunity of success in the longer-term, and has fallen behind competitors, who carry on to excite the users with the new offerings. The stock rating continues to be underweight, despite the short term excitement around Blackberry 10. Research In Motion Limited (NASDAQ:RIMM) (TSE:RIM) may have raised hope by announcing to launch Blackberry 10, but that does not mean the dark clouds have fully broken just yet. The Company believes that there will be unrelenting stress on operating results for the rest of the fiscal year based on the growing competitive environment, lower handset volumes, enhanced marketing outflow related to the launch of BlackBerry 10, and some influence from the pressure of customers to reduce RIM’s monthly infrastructure access fees.
It seems that the worst could be behind the company as the stock is trading considerably off its September 24th lows. The company just secured a win in an important security certification, which enables it market the Blackberry 10 to government agencies in the U.S. This is the first time ever that a device has been certified before its launch. According to Michael K. Brown, the vice president of security product management and research, no other mobile platform has achieved the level of security offered by the new Blackberry 10 platform. If the Blackberry 10 is able to create a niche for itself on the launch, then those who got in early could be rewarded well. Even IDC is expecting the mobile enterprise security market to perform better from 2012-2016, and as RIM is the overriding player in this field it could recuperate a significant portion of the corporate customers it has lost with the launch of Blackberry 10. Considering all the aspects, Investors should follow a wait and watch approach, up till the launch and initial feedback for BB10.
