Beleaguered RIM weighed down by tablet ‘albatross’ in Apple iPad-ruled world

“Research In Motion Ltd.’s commitment to keep battling Apple Inc.’s iPad even as demand for its BlackBerry PlayBook slumps means the company will likely have to sell the tablet at a loss. Its strategy depends on it,” Hugo Miller reports for Bloomberg.

“The company said on Dec. 2 that it would book $485 million in pretax charges to write down the value of its PlayBook inventory and that it doesn’t expect to meet its full-year earnings target,” Miller reports. “Shipments have fallen for two consecutive quarters and are now about 1 percent of those of the iPad, forcing RIM to cut the price by $300, or more than half, making it unprofitable.”

Miller reports, “RIM will need to keep suffering the losses because the PlayBook is its sole product to run on software called BBX, an operating system the company is betting its future on, said Matt Thornton, an analyst at Avian Securities LLC. Abandoning the PlayBook may signal a lack of confidence in the system, alienating developers and leaving Apple’s iOS and Google Inc.’s Android mobile ecosystems with little competition, he said… RIM said more promotions are needed to drive demand for the seven-inch PlayBook, shipments of which slumped to 150,000 units last quarter, down from 500,000 units in the quarter of their April debut. That may mean further price reductions for a product that costs $250 to $300 to make, according to Thornton.”

“‘Whether you call the PlayBook an albatross or a yoke around the neck, management has not done a good job in bringing good products to the forefront and that’s why the share price is suffering,’ said Bahl & Gaynor Investment Counsel’s Matt McCormick, whose firm oversees $4.1 billion and doesn’t own RIM shares. ‘I don’t see the prospects brightening anytime soon.’ RIM shares have dropped 71 percent this year, while Apple has climbed 22 percent,” Miller reports. “‘The BlackBerry is a bad product’ and ‘the market is saying this is a broken company,’ said Malcolm Polley, chairman of Stewart Capital Mutual Funds, who oversees $1 billion and is based in Indiana, Pennsylvania.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Opportun” for the heads up.]

14 Comments

  1. They took an inventory write down, meaning they wrote down the inventory value of the device not the retail value. So, my guess is that they wrote down the whole value of the device from its cost of $242.50 to zero. That would mean the $485M write down is on 2M Playbooks, which sounds about right if you remember they shipped 500k in their first quarter when they thought they were going to do well. They probably pre-ordered 4x that amount in order to lock in their price, thus the 2M devices. It’s not what they sold or shipped, but what they had contracted for, that they now have to dispose of.

  2. I can see another drunken brawl coming on. Maybe even an alcohol-driven civil war among the remenants of the RIM empire.

    They will be hurling playbooks at each other with trebuchets and catapults trying to destroy each others massive forts built from pallets of unsold playbooks.

  3. R.I.M need a fresh start with their hugely successful BBX OS. Apple dropped the Computer from their company title a few years ago, R.I.M should drop the M and replace it with P.

    Research In Motion is now officially Research In Poop (R.I.P)

  4. “RIM said more promotions are needed to drive demand for the seven-inch PlayBook”

    That would like an NFL team saying they needed better advertisting in order to fill the seats in the stadium…instead of simply winning more games.

    Frankly, RIM’s statement is an insult to every person with brain.

  5. The whole company is an albatross. A diseased, disoriented albatross. I feel bad for the many sane employees that are going to lose their jobs, but I feel the stories are going to get nuttier and nuttier as they go faster and faster down the drain.

  6. But…but… I was assured that the fact that this tablet has FLASH would insure that it would dominate the “amateur hour” iPad! For the same price even!

    Here’s a business insider piece about all the things RIM’s co-ceo’s have said about how awesome the playbook is, etc.

    http://www.businessinsider.com/rim-ceo-quotes-2011-9?op=1

    Especially good one from Ballsillie:

    “For those of us who live outside of Apple’s distortion field, we know that 7″ tablets will actually be a big portion of the market and we know that Adobe Flash support actually matters to customers who want a real web experience. We also know that while Apple’s attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of web sites that use Flash. We think many customers are getting tired of being told what to think by Apple. And by the way, RIM has achieved record shipments for five consecutive quarters and recently shared guidance of 13.8 – 14.4 million BlackBerry smartphones for the current quarter. Apple’s preference to compare its September-ending quarter with RIM’s August-ending quarter doesn’t tell the whole story because it doesn’t take into account that industry demand in September is typically stronger than summer months, nor does it explain why Apple only shipped 8.4 million devices in its prior quarter and whether Apple’s Q4 results were padded by unfulfilled Q3 customer demand and channel orders. As usual, whether the subject is antennas, Flash or shipments, there is more to the story and sooner or later, even people inside the distortion field will begin to resent being told half a story.”

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