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. this is so reminescent of Palm’s collapse. a once-popular legacy product and a promising new OS weren’t enough to overcome incompetent leadership. the co-idiot CEO’s will finally get dumped early next year and some rescure wizard hired, but like Palm it will be too late. the remains of RIM will be sold to [who?] in 2013.

    who? how about Facebook?

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