The IT Nerd

RIM didn’t need any more negative news, but they got some today. Pacific Crest Securities analyst James Faucette said the company’s new BlackBerry 10 operating system may be “dead on arrival” via a research note obtained by Bloomberg:

“We believe BB10 is likely to be DOA,” James Faucette, a Pacific Crest analyst in Portland, Oregon, said in a report. He has the equivalent of a sell rating on the shares. “We expect the new OS to be met with a lukewarm response at best and ultimately likely to fail.”

The bad news doesn’t end there:

Pacific Crest’s Faucette remains bearish. Phones with the software, due in the first quarter of 2013, will struggle to attract buyers because of an unfamiliar user interface, a lack of compatible technology and few software applications, he said. Any opportunity for a sale of all or part of the company may have passed, he said.

You can guess what happened next. Share of RIM went into free fall shortly thereafter. As I type this, the stock is down 9%.

Perhaps I’m wrong, but seeing how Apple and Google have such a lead in the smartphone market, I do not see a scenario where RIM can recover from this sort of bad news.

I guess that RIM was stung by the New York Times story that I told you about yesterday. That was made clear by this posting that claims that BlackBerry users are “Black Sheep By Choice.” Posted by RIM’s Donny Halliwell,  the post plays on the New York Times article by playing up the underdog role. It uses social media to generate support which is clever. It ends with this:

“We remain steadfastly devoted to each of you, appreciative of your support and honored to share what’s to come,”

One wonders how many of us are left seeing that people who I know that have had BlackBerry smartphones now have iPhones and Android phones. I have to admit that I’m thinking of joining them.

I have to admit that I look at my wife’s iPhone 5 and I feel jealous. It’s fast, it has a better camera, it has apps that I wish were available for my BlackBerry. In short, I feel that my BlackBerry is absolutely “ghetto.” Apparently other BlackBerry users have similar feelings if this article from the New York Times is any indication. Titled “The BlackBerry as Black Sheep” it details how the BlackBerry has fallen from the must have to the least wanted gadget:

The BlackBerry was once proudly carried by the high-powered and the elite, but those who still hold one today say the device has become a magnet for mockery and derision from those with iPhones and the latest Android phones. Research in Motion may still be successful selling BlackBerrys in countries like India and Indonesia, but in the United States the company is clinging to less than 5 percent of the smartphone market — down from a dominating 50 percent just three years ago.

And it’s not just individuals that feel this way. Take Yahoo:

Among the latest signs of the loss of cachet: One of the first steps Marissa Mayer took as Yahoo’s newly appointed chief executive to remake the company’s stodgy image was to trade in employees’ BlackBerrys for iPhones and Androids. BlackBerrys may still linger in Washington, Wall Street and the legal profession, but in Silicon Valley they are as rare as a necktie.

I have to admit that I am getting an increasing amount of requests to either help companies migrate away from BlackBerry products in whole or in part. So one has to think that this is a trend that isn’t going to reverse itself.

Sucks to be RIM.

So, let me ask you. Are you ashamed to have a BlackBerry? Post a comment and share your thoughts.

From the “Is this the final nail in RIM’s coffin?” department comes this bombshell. In a research note to investors on Tuesday, Jefferies analyst Peter Misek said that RIM’s first BlackBerry 10 phone might not launch until March.

“We had hoped for a January launch but now see a March launch as more likely,” he writes. That would mean no sales of the next generation phones in the February quarter. “Also, our checks point to a tough November quarter, with replenishment rates decreasing as channel partners are cautious on holding RIM inventory. We think the business uncertainty means parties are unlikely to acquire or license from RIM until BB10 launches.”

The bad news doesn’t end there:

“We still believe a third ecosystem [in addition to iOS and Android] will emerge, but the probability of BB10 filling the role is wholly dependent on whether RIM can convince Samsung, Huawei, and ZTE to license,” he writes. “Baidu, Huawei, and others are pursuing their own operating systems. We also see Win 8 as somewhat of a threat but conflicting reviews, less-than-stellar developer feedback, and a desire by Microsoft to make hardware directly make Win 8.”

The net result? This analyst doesn’t think much of RIM. He set the target price at $5. That’s not good.

It really seems like it’s game over for RIM.

I have to admit that I was caught off guard by this. Apparently RIM lost less money in their most recent quarter:

Waterloo-based RIM reported a $100 million (U.S.) increase in liquid assets in the quarter ended Sept. 1 to $2.3 billion, crediting reduced inventory and improved collection of receivables. It said it generated $432 million in cash flow in the period.

“RIM continues to be a financially strong company,” said chief executive Thorsten Heins, who has pursued a cost cutting program that includes 5,000 layoffs or about a third of RIM’s staff and consolidation of manufacturing facilities.

“Despite the significant changes we are implementing across the organization, our results demonstrate that RIM is progressing on its financial and operational commitments during this major transition.”

RIM posted revenue of $2.9 billion, up 2 per cent from the prior quarter but down 31 per cent from $4.17 billion a year ago. It reported a net loss including restructuring costs of $235 million or 45 cents per share. Analysts surveyed by Bloomberg expected revenue of about $2.5 billion and 47 cents per share in red ink.

Excluding one-time costs, RIM reported an adjusted loss of $142 million or 27 cents per share, compared with a $518 million, or 99 cents per share loss, in the prior quarter.

RIM earned a profit of $329 million or 63 cents in the year ago quarter, when its share of the U.S. smartphone market was about 12 per cent compared to 4.8 per cent currently, according to IDC estimates.

Well. I guess it’s good to suck less. There’s more:

BlackBerry shipments of 7.4 million were below the 7.8 million in the preceding period but ahead of forecast, with PlayBook tablet shipments at 130,000. Analysts predicted 6.9 million smartphone and 217,000 tablet shipments. U.S. sales were 22 per cent of consolidated revenue compared to about 25 per cent in the first quarter.

The company said its carrier partners have reduced unsold BlackBerry inventory, adding that it has realized $350 million in savings so far from the streamlining program announced in March and is about half way through its head count reduction. The company also said it had negotiated a new $500 million credit facility

Again, this points to sucking less. Though I will point out that the number of Playbooks that RIM sold in a quarter, is slightly more than the number of iPads that Apple sells in a day.

Does this mean that RIM is turning a corner? No. We will wait for Blackberry 10 to see if they’re out of the woods…. Assuming it ships on time.

Straight from the floor of Blackberry Jam which is their developers conference, some news from RIM which made investors giddy enough to push the stock up. First was news that RIM gained subscribers:

The BlackBerry-maker saw its stock price jump more than 5 per cent on Tuesday after it announced its user base has jumped to 80 million users, up from 78 million at the beginning of this month.

Okay. I have to admit that I was kind of surprised at that. But seeing as they report their numbers on Thursday, we’ll find out if it helped their bottom line.

But the news didn’t end there:

Perhaps more important, the company also reassured developers, customers and investors that its new slate of BlackBerrys is still scheduled for release in the first quarter of 2013.

As part of that, they showed off some sample apps and some functionality of Blackberry 10. They even had a video to encourage developers to keep the faith:

Cute. Different. We’ll see if it works.

Before anybody says “see RIM isn’t dead yet” I will say this. We have to see a lot more of this, plus we have to see some number attached to dollar signs before this means anything.

Of all days to have an outage, RIM had to have one today. BlackBerry users in Europe, The Middle East, and Africa were without service for some part of Friday:

BlackBerry announced the issues in postings on Facebook and Twitter, and later issued a statement to media apologizing for the problem — which the company said had been fixed.

“Our apologies to any customers impacted by the BlackBerry service issue today. We can confirm that services have been restored and are now operating normally,” the company said in an e-mail.

Meanwhile, people a lining up outside of Apple stores to get their hands on the iPhone 5 as it launches today. One wonders how many of them are defecting from the BlackBerry platform? I’m guessing that what ever number that is, it has just increased.

It’s not a secret that RIM is in trouble, but this is another sign of how much trouble they’re in. James Faucette told All Things Digital that Blackberry sales were, well…. Let him break the bad news:

“Our sell-through checks in the United States indicate that BlackBerry sales were largely unchanged in August versus July; however, we detected meaningfully lower inventory levels versus a month ago,” Faucette explains. “In terms of sell-through, we believe that current run rates are roughly one-fifth of those we saw in the United States just eight months ago. Further, we found a meaningful number of carrier retail locations which had not sold a single BlackBerry in over a month.”

Translation: Nobody is buying BlackBerry products and carriers aren’t going out of their way to stock them. When it comes to the latter, why should they? Carriers have to stock what sells. Otherwise their shareholders will be ticked off that they aren’t rolling in the dough. Considering that the new iPhone 5 hits the streets tomorrow, there’s lots from the Android universe, and even Microsoft has a new Windows Phone OS out there, RIM is looking like less of an option for smartphone buyers. Any answer that RIM has comes next year, which may be way too late for them.