After a considerably showing some considerably positive spikes in stock value over the last few months, Research In Motion (RIM) has returned to its previous status quo of declining numbers and shrinking share value. The BlackBerry makers, despite having topped investors’ estimations of the company’s fiscal third-quarter results, showed a 14% drop in stock prices value and fell $2 to $12.08 within the last couple of weeks. While RIM had been showing signs of a healthy recovery, its stock backpedalled and there are a lot of reasonable factors to explain its persistent decline.
RIM has had a consistently loyal customer base for years now but, in an unexpected twist of events, this strong subscriber base suddenly faltered this year. Roughly 1 million of its previously 80 million subscribers withdrew from RIM last quarter and, even though the decrement may seem insignificant, it signals that the company’s overseas growth may not be enough to curb its losses in its central market base. This also signals that RIM is losing customers at a much faster rate than expected and, according to analyst Ittai Kidron from Oppenheimer & Co., the BlackBerry 10 might not be able to turn RIM’s tides.
To curb this decline of its customer base, RIM has expressed that it may have to compromise their service fees. The company once had the privilege of charging high service fees due to its reputation in the market. But now, with its standing in the market having seen a considerable drop, the company has expressed possible intentions of buckling down and reforming their terms to preserve their customer base and to encourage a more positive response for the upcoming BlackBerry 10. This could severely dent RIM’s chances of a more financially successful comeback since service fees typically fetch greater profits than the actual hardware.
As for BlackBerry 10, another complication may arise as the sales for the first BlackBerry 10 smartphone won’t start until the end of the next quarter, meaning a much weaker financial impact than could be hoped for by RIM. The delayed launch also jeopardizes BlackBerry 7 sales since customers are more likely to wait until the new generation smartphone OS releases. While this spells a daunting hit on the company’s cash flow, RIM will also be investing a great deal of money promoting the new device which further piles on to its financial concerns.
CEO Thorsten Heins has backed the company’s latest release and expects the company to end the fiscal year with more money than it started with. However, if things continue the way they are and BlackBerry 10 devices fail to garner as positive a response as the company would like to see, Research in Motion could be in some serious trouble.
January 5, 2013 at 3:05 pm
I love how so many people claim to be experts but CLEARLY HAVE NO CLUE.
First off, it was expected that Rim was to decline in subscribers the previous quarter but did not, you can’t continuously grow subscribers with an old o/s forever so it was impressive that it was only slightly down.
The fee change is a positive note because it will draw in more small businesses instead of charging them fees for services they will never use.
The drop in price was due to the stock being massively overbought, any news was going to cause a sell off no matter how good it was, they just blamed it on the change in fees which they mentioned earlier in the year they might change.
January 5, 2013 at 11:09 pm
This is silly. Rarely do stocks go straight up with no corrections. It is still probably higher than it was a month and a half ago.
This correction is completely due to investors who don’t fully pay attention to what is said and then panic when they hear it during the quarterly report.
January 6, 2013 at 12:48 pm
For a quarter that I thought was going to be devestating, I thought the results were mind-blowingly good. There phones on the market and the OS right now are over 1.5 years old and were considered to be a year late then. THe new OS clearly is up to 2013 standards.
If they can sell so many BB7 units, why wouldn’t they sell three times as many BB10. I mean it is night and day.
BB10 looks like the ferrari of phones. However I wouldn’t be caught dead with an iPhone – it’s the whole cult / follower thing that makes me eek.
January 6, 2013 at 1:36 pm
One global Android virus attack and BlackBerry stock would be over $100. They’d sell a hundred million units over night.
The likeliness of this event is possible to probable (20-50%) at some point in the future. That event is certainly not priced into the stock.
Everyone will flock to the most secure system then. It’s a wild card for investors and I think it is a free one when the stock is just 12 bucks.
January 6, 2013 at 1:58 pm
This analysis says a lot about nothing.
Point 1:
The net subscribers declined by approximately 1 million. However, if we used shipments as an approximation of gross purchasers there were 6.9 million units shipped in Q3, 2013.
Point 2:
While subscriber fees currently represent a greater proportion of the top line growth of RIM for the past couple of fiscals, this is not normalized revenue classification breakdown. Subscriber fees are disproportionately representative of overall top line. In a normalized environment with a mediocre / best selling product on the market, hardware sales represent the better part of 77% – 80% of top line growth.
Point 3:
Subscriber numbers is not a financial metric. It is an overall gauge to monitor trending. The manner that subscribers are estimated is based on reports returned to RIM by carriers. This is an approximation that formulates subscriber fees.
In the recent conference call to the Investment community, RIM has made it clear that the method currently being used to report active subscribers will be changing. The new method will be provisioned devices NOT what carriers are saying are active subscribers. In some sense, this is closing a loop hole that can facilitate any chance of cheating by carriers to reduce subscriber fees passed on to RIM.
This is a plus for RIM.
Point 4:
BlackBerry 10 operating system and the new Z10 & N10 devices are not simply a “me too” device. It was clearly thought out that provides a superior overall infrastructure on the market. It blows the competition away with the fluidity and elegance of the user experience. Things like HTML 5 and Facebook ring tests have shown how far RIM has gone to produce the best device that others will need to follow.
In independent tests of the Dev Alpha B devices, BB10 reports a 484 on HTML 5. Perfect score is 500. The iOS Safari returns a number in 385 range. Desktop PC’s – Chrome 448, Firefox 385.
In the Facebook ring test, iOS and other devices only passes ring 0. It fails at ring 1. BB10 passes ring 0, ring 1 and parts of ring 2.
Point 5:
BlackBerry 10 shares the same DNA as QNX. QNX is at the heart of BB10 kernel. The system was developed as an open source system that makes it easier for developers to create programs and apps that can easily run of these devices.
QNX is so strong it operates many devices and will operate many other devices in the future whether a consumer knows it or not.
The integration of QNX in auto manufacturing as an example can monitor and customize user experience operating their vehicles. The integration of BB10 with a QNX enabled device is seamless. Take a look at the prototype car 2, Porche demo, UK police services as examples.
QNX and BB10 is a perfect marriage that defines the future of where technology is going.
Please do some research on QNX, BB10, Certicom and read the MD&A of RIM’s quarterly reports before passing judgement as a side chair analyst.
January 6, 2013 at 2:30 pm
We all know that analysts and the media have been bashing RIM for the last couple of years. There are way too many misleading reports out there. This helps drive the stock down. Billions are made by doing this.
So BB10 is almost here? But how can this be?
One top analyst said that BB10 will not be available till July 2013. Another top analyst said that RIM will burn all their cash and will never see 2013. A third one said that they will be obsolete before there new OS is ready. Rocco from seeking alphabet said that buying Rim shares is like catching a falling knife. Another writer said that RIM shares will trade for under $1.00 per share comes 2013. A top analyst gave RIM a 10% chance of surviving. Recently he changed it to 20%. Will he say 30% when Rim shows the BB10 phones on January 30th, then up it to 40% when stores receive the product. He will be up to 50% when the phones go on sale, then 60% if they sell well, and finally 70% if they are a hit. By this time, the share price will be up to $80.00 and the shorts will be chasing the share price all the way up to $120.00.
How could all these people be so wrong? So very wrong.
Do you get my point on how the Billions are made? They buy when the stock price is low, and sell it when it is high.
January 7, 2013 at 7:21 am
I agree with the above comments. Very thoughtful.
let see
January 7, 2013 at 12:44 pm
well what i see is, samsung (android) is now getting into the enterprise market and the flow of applications feature. also what i liked about Rim is the little led that lit up when their was a message, now samsungs new smartphone tablet “the one with the pen” also now has the led alert gesture pertaining to notifications. it seems to me when Rim presents a new feature every other provider has it already, or also working on it, such as samsung, and probably apple (ios). but yet (by invitation only) i could provide technologies, or at least the innovation and creativity that could put Rim in the lead by decades pertaining to the advanced technologies and features in smartphone design and OS (operating systems) but Rim still only seems interested in either copying others or others copying them even before they get their product released. i require no compensation intil proven successful, and guarantee that all other providers will then follow Rims lead, like it was in the beginning of Rims reign in the smartphone industry. regards, David Hargraves.
January 7, 2013 at 6:00 pm
Dave.
Really?
You think that RIM copies others.
You think you can provide the edge they need. Outdo their BB10 OS and the QNX kernel that powers it.
Wow.
Delusions much?
I agree with all the other people that wrote intelligently. I have been preaching this for years.
Those that feel that security is going to become more important in the future, buy from RIM. Those that don’t know from one day to the next whether they will be hacked, overwritten, or copied, take your chances with Android, and in some cases iPhone.
There is only one way for Rim to go. Up. The pulse on the net of the people I have talked to is that this phone sets the bar. Far above anything we have seen to date.
Plus safety and security that Blackberry has always defined.
January 7, 2013 at 9:44 pm
Same old rhetoric from this columnist. I must have read almost the same wording and language from at least 6 other “experts”. RIM is doing the right thing and I really think they will turn it around with the BB10. Apple sure hasn’t done anything of note in the last few years. Just re-releasing the same old I phone that they started with.
I sure would like to see un-biased reporting on RIM for once.
January 8, 2013 at 12:25 pm
“As for BlackBerry 10, another complication may arise as the sales for the first BlackBerry 10 smartphone won’t start until the end of the next quarter”
Sorry, what? It’s being announced on January 30th and expected to go on sale shortly after.
January 8, 2013 at 5:28 pm
Great responses (except Dave’s above.. there’s a lot more to it than the public is led to believe). I agree with all other wholeheartedly.. RIM has been unjustly judged by a long shot. I can’t wait for them to shine at the end of this month!
January 9, 2013 at 11:42 am
Let me get this straight. Your all hoping that the market is still willing to buy a brand new phone just after iphone5, Samsung gs3, and nexus 4 have been out for a couple of months now. After Christmas and boxing day even! After other phones have been reduced and are now on sale? good luck with that! the stock will go up but like Dave said they are behind. They have no apps and most of the market doesn’t care about security they want latest technology. the new bb10 wasn’t even going to have WiFi if they hadn’t paid Nokia. But yeah the stocks will go up so buy now when its cheap get some money and sell.
January 9, 2013 at 1:13 pm
Rim stocks are currently around 11.50 to 11.80 on average this week. It has still maintained a good price during all the bad publicity that all the analysts have been feeding to the stock holders.
Once that has died down and the real excitement starts to build a few days before the release plus Thorsten Hiens releases the information he has been holding back for so long….then watch the stock prices go up by the minute. it will be an exciting moment to watch. Then watch the stock prices go up after a few months when people start buying these new Blackberry’s. The phone will become a house hold name once again.