First off, there’s no way to try and spin earnings results from
yesterday’s Research In Motion Limited (USA) (NYSE:RIMM) positively. Revenue is tanking and was down by 25% compared to the prior year. Inventories remain nearly double last year’s level. These products are stale and depreciating daily, another impairment charge wouldn’t surprise me. The new BBX phones aren’t due until the second half of 2012. Financial results are going to get worse before/if they get better.
RIM’s Chief Executive Officer, Thorsten Heins’ opening sentence in both the press release and conference call stressed that he had only been on the job for 10 weeks. Initially I thought this was the set up for another delusional conference call where management stressed the company’s plans were working in the face of brutal financial results. However, I saw a CEO that talked honestly about his company’s problems and seemed open to the drastic changes that are needed to ensure what’s best for shareholders.
Here are some of his quotes:
It is now very clear to me that substantial change is what RIM needs.
We plan to refocus on the Enterprise business and capitalize on our leading position in this segment.
We were delayed to the bring-your-own-device movement and we saw a significant slowing down in our enterprise subscriber growth rate as a result.
We believe that BlackBerry cannot succeed if we try to be everybody’s darling and all things to all people.
(in reference to international markets): However, this success did not go unnoticed by our competitors, and there are now a number of handset vendors targeting this segment using price as their primary competitive tool.
The question is what is the right business model for RIM to participate…? Is it our own hardware? Do we have to do everything ourselves? Do we license BlackBerry 10? … Do we partner? Do we ODM? That is currently under investigation, and I will report back to you in due course in what the decision is that we’re going for.
There’s no question RIM has a very tough future
ahead of it. The ecosystem is lacking, execution has been terrible and the company is betting heavily on the BBX operating system which is still
probably half a year away (an eternity in the smartphone world). However, I’m impressed with Thorsten Heins’ candor, focus on the enterprise market and putting all strategic options on the table. This is a step in the right direction, however it’s a shame it took the company this long to wake up and smell the coffee.