RIMageddon: Heins follows turnaround playbook, doubles down on enterprise

RIMageddon: Heins follows turnaround playbook, doubles down on enterprise

Summary: RIM struggles to hold its subscriber base as it refocuses on enterprise services and pulls back on me-too consumer efforts.


Research in Motion's fourth quarter was the trainwreck that was expected, but new CEO Thorsten Heins cleared the executive suite and lowered the expectations for the future. In other words, Heins is following the playbook of many new CEOs and focusing on the company's strengths.

The moves from the new CEO playbook (not to be confused with RIM's tablet): Reset expectations, shake things up a bit and hunker down for what's going to be a bumpy ride for the quarters ahead. When Dell started its turnaround it also stopped providing an outlook.

How bumpy? RIM's business doesn't look good. The company reported a fourth quarter net loss of $125 million, or 24 cents a share, including goodwill and inventory writedowns. Revenue for the fourth quarter was $4.2 billion, down 25 percent from a year ago. Excluding charges, RIM's fourth quarter earnings were 80 cents a share. Wall Street was looking for fourth quarter earnings of 81 cents a share on revenue of $4.53 billion.

CNET: RIM results look bleak on fourth-quarter loss

On a conference call, Heins said that RIM needs an aggressive shakeup and left the door open to multiple possibilities. "We are undertaking a comprehensive review of strategic opportunities including partnerships and joint ventures, licensing, and other ways to leverage RIM's assets and maximize value for our stakeholders," said Heins.

Heins added that RIM will focus on managing multiple devices as well as doubling down on its enterprise strengths. "We can't succeed being all things to all people," said Heins. RIM will also look to exit media delivery and consumer focused efforts. Heins added that the company has been whacked because it lacked 4G support.

RIM's quarter could have been worse, but the company stopped providing an outlook. That move by Heins makes sense. His predecessors missed earnings projections by a country mile after coming out with overly optimistic projections. RIM's new policy is to refrain from providing an outlook. RIM did say that "company expects continued pressure on revenue and earnings throughout fiscal 2013."

Even though Heins said that RIM wasn't a turnaround story when he took over all signs point to the company being a reclamation project. To wit:

  • The company shipped 11.1 million BlackBerry smartphones, which was light.
  • RIM wrote down BlackBerry 7 inventory.
  • 500,000 BlackBerry PlayBooks were shipped.
  • Heins said that RIM has a strong subscriber base of 77 million.
  • BlackBerry 10 phones are on track for the latter part of 2012.
  • But Heins said: "the business challenges we face over the next several quarters are significant."

Clearing the exec suite

RIM's fourth quarter results also came with a bit of house cleaning. Jim Balsillie, former co-CEO, has resigned from RIM's board. CTO David Yach will retire. Jim Rowan, chief operating officer of global operations, has resigned to pursue other interests.

RIM said that it will look for one operating chief across the company.

These moves---especially Balsillie's resignation---put a definitive end to RIM's previous regime.

However, Heins will need a seasoned turnaround team to compete. RIM's market share is eroding rapidly, according to Nielsen. Meanwhile, analysts note that RIM's BlackBerry 7 devices are aging rapidly.

Heins added that RIM is on track to hiring a chief marketing officer. He will also outline his new team going forward.

Another home run needed

RIM's fortunes largely hinge on new BlackBerry devices on deck later in 2012. In the meantime, Heins said RIM will focus on pushing new BlackBerry 7 devices and catch new smartphone users. Heins said the company must keep its subscriber base in tact so it can develop new services for the enterprise. Heins was even forced to acknowledge that security and push email support---RIM's historical mainstays---aren't valued as highly anymore.

Heins noted that BlackBerry 10 devices will be on time, but analysts said that RIM needs a better ecosystem to compete. Developer devices will be delivered in May with shipments of BlackBerry 10 devices later this year.

The biggest worry for RIM going forward is competition. Wedbush analyst Scott Sutherland said in a research note:

With the continued momentum and global expansion of iPhones and Android-based phones, our checks with industry contacts and carriers indicate interest is minimal for BlackBerry phones outside of certain emerging markets. Furthermore, with Window 8 devices coming to the market with Nokia and others, we see increased competition.

Sutherland argued that RIM lacks the content, ecosystem and devices to compete.

Related: RIM's Q1 outlook expected to be weak as BlackBerry 7 devices age rapidly

Topics: Security, Mobility, BlackBerry

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  • Nokia & RIM: Digging Too Deep They Cannot Climb Out...

    One more thing: You cannot beat the Android based platform and its huge community. Few options left for RIM and Nokia: clean up and sell company to highest bidder as soon as possible, while you can.
    • Nokia has a Game Plan!

      Windows Phone is a great OS with a great ecosystem. I can't say the same for BB! RIM should just adopt Windows Phone as their OS. It's the best fit for their enterprise customers.
      Android is unsecure and a bag of hurt!
      • Move to Windows Phone? Don't think so

        I don't think adopting Windows OS would be a good move. Nothing to do with how good or bad Windows Phone OS is. But it would disrupt or probably decimate their current subscriber base, it would break or at least cost millions to incorporate into their existing BES and BIS infrastructure, among other headaches. I don't know if sticking to their BB OS will save them, but switching over to a new one would certainly kill them in short order.
      • FUD

        If Android was as unsecure as you project, why is it that the Department of Defense has adopted Android as one of the primary smartphone platforms for military use (the other is Apple's iOS)?

      • Nope

        Windows 7 Phone is not even remotely enterprise class. That's one reason WinMo 6.5, failing as it is, was still the bulk of MS's mobile sales in 2011, Win7Phone's second year. Win7Phone is an option for low-end consumer, and at least had a chance there. It's not for business.

        RIM would have done well to harden Android if they it didn't meet their security requirements. Sure, QNX is a dandy OS, but they had to put that same effort, probably more, locking up QNX their way (QNX has been very reliable for embedded applications , but it came with nothing for enterprise or internet security).

        Truth is, it's way too late to change direction again.. either the QNX + repackaged Android apps thing works for RIM, or it doesn't. They also need to understand that consumer traction is a critical part of business success today.

        And that HW matters.. you can't expect people to get excited about new products that look like someone's offerings from two years ago. Even Nokia seems to only be a year behind everyone else these days. When smartphones were all boring, that was fine, but not today.
      • U.S. DOD may not have Android for long...

        DonRupertBitByte - I work for the federal government (though not in the Dept. of Defense) and I can you my agency is discontinuing support for BYO Android devices at the end of this year.
  • RIM don't need that

    At this moment i am writing this post using my playbook and making it clear that i am not a bb fanboi i have to say that this little tablet is amazing. I really don't know what happened with the market and the support not received by the playbook. Maybe if rim had adopted a different method for advertising and distribution the reallity was other. I can not find a product (tablet) with the stability, multitasking, ease of use, brilliant UI, sound, internet capacity and another a lot of things that is capable to compare with the playbook. The problem with the playbook was not having a great product, it was not having a great competitor, the problem was not knowing how to channel this diamond within the market and woo developers to develope applications using the various plataforms that they can choose. I know that the iPad is being loved for everybody and the ads are bringing more of them to the homes, but i invite you in order to obtain a playbook at least used by fewer than 150$, and you will see what this product can do and what might captivated consumers if they had made the right decisitions. My brother has an ipad 3 and really do not envy him at all. RIM has a great product, but they don't know yet.
    • Like it or not consumers do make the right decisions...

      In fact the way you worded your post about them NOT making the right decision points more to your problem than the consumer in general. You assume the right decision for you is the right decision for everyone? How absurd!

      Pagan jim
      James Quinn
      • people are just people, and their decisions are flawed

        after all, if consumers were making all the right choices, who then buys all the tobacco, hard liquor, sugary drinks, pizza and burgers?
      • it's not just the right decision for me.

        sorry if my English is not the best (I'm writing from Venezuela). I am not assuming the right decision for me is the right decision for everyone. If RIM's executives were made better choices maybe you and I were using a product (tablet or smartphone) that is much better that the android device that's sure you are using now. the price is much better and perhaps also many people who can not buy an iPad because of high prices could have a device like the playbook. If perhaps the playbook of entry would have brought the applications are now available in the new version many people would not have to spend more money buying other phone and a data service to access the Internet, such as when you have an android phone or iPhone and a tablet. I really don't give a s...t if you prefer an android device or iOs device, but I am concerned about people of my country who have blackberry phones (76%) and could benefit from those phones to connect to the internet using their playbooks (using blackberry bridge) without having to buy an expensive device with a mediocre OS. It is not fair
    • No thanks, not interested in a tablet that doesnt run W8. Id much rather

      save my money for now and buy a W8. The windows ecosystem will be there for many many years to come. RIM is just as likely to exit the "consumer" tablet market as it was to pull todays announcement. With RIMs performance over the last 2 years there's absolutely no reason to believe they will not continue losing marketshare and revenue and no reason to believe they will ever grow a competitive ecosystem or even be around in a couple more years.
      Johnny Vegas
      • There was a time in the 90's when you could have written

        the same post and replaced RiM with Apple. Look at Apple now:) i do wish MS well in mobile but don't count RIM out till they are actually dead and buried. Until that time there is always a chance and QNX is a great product with huge potential.

        Pagan jim
        James Quinn
  • Not surprised

    They set the bar low and somehow managed to smack their face in it. BB10 won't help them. It's about time to abandon their platform and move to what the market wants.

  • Playbook FTW

    Maybe it is where you're coming from. I have never had a mobile phone, except when work demanded it, but always had a couple of computers on the go. This Playbook is the most amazing, convenient, polished, miniture computer I have ever owned. I LOVE IT!! LOL
    • YOUR perspective

      To a technophobe, or a layman who is far enough removed from technology to not even have a cell phone (much less smartphone), any of this technology would seem whiz-bang amazing, in all the same ways they played up that made the Back To The Future movies happen.

      That doesn't make the Blackberry Playbook the "best of the bunch".

      What's important isn't how the Playbook stacks up to 1987 technology, when we all had wall-mounted phones on cords.
      What's important is how good it is with respect to 2012 standards. And in that comparison, it falls flat, with numerous key disadvantages.

      And that's analogous to all of RIM's failures to compete in recent years that make their declining marketshare very understandable.
  • Playbook and Blackberry QNX IS solid

    I own a many mobile OS devices, including Android OS, iOS, Windows Phone OS, Blackberry 7 OS, Blackberry QNX OS, and webOS-powered devices. Blackberry QNX OS, the operating system on the Playbook, really is a very good operating system (and will be the basis for Blackberry BBX/10 OS), certainly better than Android OS and miles better than Blackberry 7 OS based on my first-hand user experience with all 3 systems. I think it is also more intuitive to use than iOS, due to its webOS-like gesture/swipe interface. The Playbook itself is also a very well-constructed piece of hardware. It isn't without faults (the battery life is a little low and the browser sometimes freezes, though the latter is of high quality when working properly), but it is very solid. Though it is highly unlikely Blackberry BBX/10 OS will have a large market share when (if?) it is released, if it is similar to Blackberry QNX, it will deserve some user adoption. I'd personally like to see BBX/10 become of the 3 primary mobile OS, along with Windows 8 and iOS (Windows Phone OS is VERY smooth and easy to use, and from what I've read Windows 8 should be similar; as many people know iOS is also very smooth, albeit with, in my opinion, outdated single button user interface). I doubt that will actually happen though.
  • RIM RIP 2015

    They will never recover. Too much competition at this point with apple, google and MSFT in the same market. When they thrived it was only MSFT, and even they now have a tough (but very doable) road ahead. This is different than what apple faced in 2000. At that time it was just MSFT, and apple grabbed onto a market MSFT wasn't really going after.

    No, I think RIM will go the way of Novell imo.
  • It's not about ecosystem/keyboard/touch screen/enterprise...

    ...it is about the fact that RIM had a game changer with Blackberry, the first smartphone. They did not innovate since and they are dying. Simple a that. If they come up with something new in the near future, the share price will shoot up and Thorsten Heins will be rich and famous. Otherwise, RIM is done and dusted.

    If Apple does not innovate again in the next ten years, they will be where RIM is today.
  • And the next time the BB network goes down

    People are going to say screw it and leave.
  • It's All About Marketing!!!

    I have been a blackberry smartphone user for the last four years. I currently own a Torch 9800 and RIM makes very reliable and durable products. After considerable research, my blackberry playbook will be delivered to me on Monday and I just can't wait!!! My Torch has taken "tons" of physical abuse and is still working just like brand new. The number of system outages that have adversely affected me, I can only count them on "one" hand over a four year period. Corporate email networks do experience "hiccups" from time to time in addition to those associated with cell phone carriers. RIM has a solid product with a dedicated enterprise level customer base in addition to being very widely used by military personnel. Compared to other manufacturers, they will be in business for the "long haul". Their greatest challenge is getting the Blackberry brand widely accepted as a "hip" consumer product similar to Apple. Too many people who sell them through cell phone carriers simply don't know a damn thing about Blackberries, PERIOD!!! They can talk about the iPhone 24/7 but not much else which is a great disadvantage to all smartphone manufacturers. The Torch is a "sexy" masculine phone that should have a much more recognizable media presence. I can easily see it appearing in James Bond movies and being promoted by celebrities. Not being able to get the Torch 9810 in "red" was a real bummer. The grey and white colors are so dull. What about selling them in dark blue, purple or pink. Yeah, I know you can buy another plastic cover to go over a Torch but actually having more color choices would be somewhat enticing. Believe it or not, children also significantly influence the type of phones their parents purchase. Durability is an issue in households with very active toddlers and preschoolers.