Friday, June 15, 2012

Once Known as CrackBerry


Hopefully, no one gets to tell sad tales about the company that once made the BlackBerry, as a company that once dominated the smartphone business but met its demise because it failed to explore the full breadth of its possible strategic options. There continues to be constant rumble of bad news about Research In Motion Ltd's prospect of survival in the fast-evolving market that they once dominated. In a Wall Street Journal article that appeared May 30, 2012, Chip Cummins noted that Research In Motion Hired two advisers to evaluate its options as the company warned of continues losses as sales of its once very popular cellular phone models waned. At the time of this posting, RIM's shares remained around $10.89, down from a 52-week high of $35.94.

The bottom line is that the continued drop in its stock price is indicative of RIM's future earnings brought to present and this perspective is validated by the company as the company has openly admitted that its business is deteriorating and will likely lose money for the second consecutive quarter in 2012. The two outside advisers were brought on board to assist the company's board to determine a  way forward, particularly with regard to which parts of its business it needs to salvage and which parts to terminate. This comes after the news that RIM also hired bankers at J.P. Morgan Securities and RBC Capital to assist in a previously announced review of strategic options.

It was reported that J.P. Morgan and RBC were hired to assist the executives at evaluating "the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives." So, in light of this subsequent hirings of the two advisers, what appears to be happening is that RIM has already reached some determinations. The company also said there would be significant job losses in some parts of its business but did not provide the details of which of its businesses will be losing employees, and which parts will be getting more resources to shore up the marketing success of its upcoming BlackBerry 10 Dev Alpha device.

Interestingly, the BlackBerry 10 Dev Alpha device sports a modified version of the BlackBerry PlayBook OS, 4.2-inch touch screen, huge internal storage, non-removable battery, and two cameras; one front-facing without a flash, and a rear camera with a flash. The phone sports many aesthetic and functionality features as the Samsung Galaxy Nexus or the Apple iPhone 4S, but with its own modified version of the BlackBerry PlayBook OS. In a way, broadening its product line may be a good strategy in that RIM may be able to lure back customers that are used to the BlackBerry layout while providing the look, feel, and features of the modern form of smartphones.

Frankly, RIM, in its efforts to deliver the BlackBerry 10 Dev Alpha device, tacitly acknowledges, like a lot aficionados have long known, that their once loved CrackBerry line of phones did not evolve with the times by providing to customers, what customers ought to have as phones, even before the customers knew what they ought to have as phones.  The upshot is that revenues and profits may improve, and its declining market share could be reversed. Ever since Mr Heins took the reins from long time co-chief executives Mike Lazaridis and Jim Balsillie, both of who stepped down from management, RIM has been able to fully embrace the view that it needed to change course by undergoing a review of its strategic options. It should have done so long before this year. The Android and IOS phones have been rolling out for many years, so it's not like they didn't see some of this coming.

Question: Should RIM have jumped on the bandwagon of large-screen, touch-screen phones or diversified its line of products to include phones similar the Android or IOS platforms long before 2012?

References:
[1] Chip Cummins. Prospects Dim for BlackBerry Maker. <http://online.wsj.com/article/SB10001424052702303674004577434682955555236.html>. May 30, 2012.

[2] Kevin Michaluk. BlackBerry 10 Dev Alpha Hands On!<http://crackberry.com/blackberry-10-dev-alpha-hands>. 1 May 2012.

Oh My Goodness, I think it's going to happen…an article title "RIM: Is it RIP?" <http://business.blogs.cnn.com/2012/06/29/rim-is-it-rip/?hpt=hp_c3>.

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