“Shares of BlackBerry maker Research In Motion Ltd dropped 20 percent on Friday on fears that a new fee structure for its high-margin services segment could put pressure on the business that has set the company apart from its competitors,” Allison Martell and Chandni Doulatramani report for Reuters. “The services segment has long been RIM’s most profitable and accounts for about a third of total revenue. Some analysts said there was a risk that the fee changes could endanger its service ecosystem and leave the Canadian company as just another handset maker.”
MacDailyNews Take: In the interest of truth, replace “just another handset maker” with “yet another piece of iPhone roadkill.”
Martell and Doulatramani report, “The company said the new pricing structure would be introduced with the BlackBerry 10 launch, expected on January 30. RIM said some subscribers would continue to pay for enhanced services such as advanced security. But under the new structure, some other services would account for less revenue, or even none at all.”
“The news of the new services pricing strategy came as a shock to markets, and some analysts cut their price targets on RIM stock. RIM will not be able to sustain profitability by relying on its hardware business alone, said National Bank Financial analyst Kris Thompson, whom Thomson Reuters StarMine has rated the top RIM analyst based on the accuracy of his estimates of the company’s earnings,” Martell and Doulatramani report. “Thompson downgraded RIM’s stock to ‘underperform’ from ‘sector perform’ and cut his price target to $10 from $15. Forrester Research analyst Charles Golvin said the move was likely about stabilizing market share: ‘At the moment, they need to stem the bleeding.'”
Read more in the full article here.
MacDailyNews Take: Fsck the ambulance, call a hearse.
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