RIM worries mount: Will its quarter get Torched?

RIM worries mount: Will its quarter get Torched?

Summary: Research in Motion's second quarter results land Thursday and analysts are fretting that the launch of the Torch, the flagship BlackBerry, has been disappointing.


Research in Motion's second quarter results land Thursday and analysts are fretting that the launch of the Torch, the flagship BlackBerry, has been disappointing.

Simply put, Wall Street analysts appear to be in no mood to hear co-CEO Jim Balsillie's usual confidence and swagger. RIM is expected to report earnings of $1.35 a share on revenue of $4.47 billion, but reports that Android devices are gobbling up share have observers spooked. The big question is whether RIM can regain past glory when its recently launched device may not even be able to hold ground against Android and Apple's iOS.

Now things may not be that dire, but the consensus view definitely falls on the pessimistic side of the fence.

To wit:

William Blair analyst Anil Doradla said in a research note:

For the second consecutive quarter, RIM did not have a top-selling smartphone at any of the four major North American operators. Android devices, led by HTC, Motorola, and Samsung, continued to take market share from RIM, most notably at Verizon. Relative to our June checks, RIM had a similar number of second or third best-selling devices, but our sense is the gap widened, with the top-selling devices dominating the smartphone segment in recent weeks. Additionally, as we noted in an August 13 first look at the Torch response, although we believe the Torch held the No. 2 position at AT&T, we believe the launch was largely disappointing, particularly in light of a strong launch of the iPhone 4. In our view, the recent checks confirmed a pattern in which RIM is losing its grip in the North American smartphone market.

Susquehanna Financial Group analyst Jeffrey Fidacaro said:

In our opinion, the Blackberry 6 OS is a much anticipated and necessary upgrade for RIM devices; however, it only incorporated features and functionality that we believe places it just shy of iOS 4 and Android 2.2. Moreover, our checks with AT&T stores show Blackberry Torch demand that is somewhat disappointing. While we expect Blackberry 6 to create an upgrade cycle for existing Blackberry users over the next few quarters, our findings show that the new OS platform is not compelling enough to significantly sway users from the iPhone or Android-based devices...

And it's not even looking so hot in the enterprise, Fidacaro added:

The increasing interest in employee-owned devices within the enterprise, combined with advancing features and functionality from platforms that compete with the Blackberry Enterprise Server are  expected to become a material chink in RIM’s enterprise armor.

Wedbush analyst Scott Sutherland said:

We believe that RIM has significant international potential with only 34% of FQ1 revenue from markets other than the U.S., U.K, and Canada, despite presence in 550 countries and 175 carriers, and ~75% of smartphone sales outside these markets. However we believe that a timely resolution of the security concerns in these markets such as India and the Middle East will be needed in order for RIM to continue solid growth internationally. We also believe that balancing concerns of enterprise customers over surveillance with the security concerns of the governments could prove tricky.

Add it up and it's a bit difficult to find anyone upbeat about the Torch's sales and that pessimism is likely to filter through to RIM's enterprise business. If the consensus is to be believed, RIM's foothold is slipping in most key areas. Balsillie is going to need one great performance to convince observers otherwise.

Topics: Hardware, Mobility, BlackBerry, Smartphones

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  • I think they need to quit avoiding the elephant in the room.

    Until Torch is on all carriers it is doomed to failure just like the Storm before it.

    Blackberry users have alternatives on other carriers and are gonna just replace with a new Bold rather than switch to AT&T.

    Secondly, Android may pose a threat in the future, but for now it is no where NEAR a Blackberry in functionality, stability and security. I know you guys haven't used one in a while...but I have used my wife's Epic 4G and I think my Tour 9630 blows it completely away. Basic functionality is missing and open source clunky solutions are merely a stop gap. It is just as half baked as Ubuntu is on the desktop. Android can't read .ics calendar files natively? Really? Give me a break.

    Shiny, fun gadget. Not a real smartphone.

    Now if RIM would just get a clue and put the torch on t-mobile, Verizon and Sprint... they would sell some.
  • galactic

    rimm has a presence in 550 countries? wow, really a galactic brand.
    banned from zdnet
    • That country stat just made me realize

      there are way too many countries in the world to allow for any significant gains in productivity and efficiency going forward. They need to be consolidated. Who to invade next? hmmmmm.....
      @not-yet-banned from zdnet
  • RE: RIM worries mount: Will its quarter get Torched?

    I'll always curse the day RIM bothered to think they should attempt to compete in the fashion space of consumer gadgets.

    They built their business providing the corporate space with a reliable mobile communications device, a space that was ripe for invasion after Palm essentially abandoned it.

    The corporate space is far less fickle, and is more interested in stability, functionality, supportability...in a world where Lotus Notes still has paying customers, the latest hot gadget is of no relevance.

    But you wade into the waters of flavour-of-the-month, cool gadgets, and you're now spending inordinate amounts of cash on R&D to chase a moving target. That's tough to do, right Microsoft Kin?

    Referring again to Palm, there are still millions of Palm OS 5 users in medical and healthcare, engineering and aviation, etc., who depend on the detailed input that only a stylus can provide. webOS's abandonment of this for a warm'n'fuzzy fat finger input screen is just another typical demonstration of a lack of focus on a company's core strength. Sorry, the teenies aren't generally texting and Facebooking with fat fingers, but then they're not the ones sending attachments in email while walking to a meeting, and the people who are don't care if the phone comes in razzle dazzle neon fuchsia.
    Non-techie Talk
  • RE: RIM worries mount: Will its quarter get Torched?

    I agree that the Tour 9630 is a great smart phone. RIM made the Torch to compete with the fad driven touch screen media gadgets. Big mistake. The BB keyboard rocks, and works much better than the lame touch screen devices.
  • RE: RIM worries mount: Will its quarter get Torched?

    550 countries!! Wow...what planet other than Earth (which has around 195 countries) is RIM in?
  • Do you mind providing reference source's to your quotes.

    Links if possible what publication they're in if not. I'd like more detail.
  • RE: RIM worries mount: Will its quarter get Torched?

    I sometimes wonder if these worried analysts, have received free Iphones from none other than Chicken Little. Nooo. The sky is not falling. I'm personally not interested in the flavor of the week smart phone, preferring the more robust OS and secure e-mail of the Crackberry