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RIM says it is pulling out of the consumer market

Going back to its roots
Fri Mar 30 2012, 09:58

AFTER THE CHIEF EXECUTIVES STEPPED DOWN at Research in Motion (RIM), the Canadian smartphone maker has announced a fourth quarter loss of $125m and said it is pulling out of the consumer mobile market.

The troubled Blackberry maker, which over recent years has seen its market share eaten away by Apple's Iphones and Android devices, also said that a sweeping management reorganisation will see company veterans jumping ship, including Jim Balsillie, a former co-CEO, who will resign as a board director after 20 years with the firm.

In addition, David Yach will be retiring from his role as CTO after 13 years with the company. Also, after four years with the company and following an "open dialogue on the future of global operations", Jim Rowan, COO of global operations has decided to pursue other interests. RIM said it is undertaking a search to hire another COO, and so it looks like the old guard is leaving the building.

Looking ahead the Blackberry maker did not sound cheerful, admitting that it expects "continued pressure on revenue and earnings" throughout fiscal 2013. In a move that might raise some eyebrows, RIM added it will no longer provide specific quantitative guidance on smartphone shipments.

Some of the factors contributing to this decision include "ongoing weakness in the company's US smartphone business, an increased focus on selling BlackBerry 7 smartphones to grow the subscriber base in advance of the BlackBerry 10 launch, increasing competitive pressure in the company's international markets and the introduction of certain new lower tier service pricing initiatives and a higher mix of sales coming from entry level products".

Reporting its latest financial figures for the three months and fiscal year ended 3 March, RIM posted sales of $4.2bn, down 19 per cent from the third quarter. Smartphone shipments plummeted to 11.1 million in the fourth quarter, down 21 per cent from the third quarter.

Commenting on RIM's figures, Victor Basta, director of Magister Advisors asked bluntly, "Why should RIM exist when all other smartphone makers are developing better products faster?"

Basta said, "RIM has already lost the consumer battle and its main asset is its enterprise customer base, so retrenching to a corporate-only focus makes sense."

He added that RIM should sell the company while that corporate customer base remains intact. "There would no shortage of logical potential buyers, from those focused on enterprise mobility (e.g., SAP/Sybase) to those with a strong interest in the device marketplace (e.g., HP, Huawei). Valuations in the mobile space are currently strong, which favour a transaction for RIM."

Along these lines Thorsten Heins, RIM president and CEO said that the company is undertaking a comprehensive review of options including partnerships, joint ventures and licensing. µ


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