RIM's impending collapse: By the numbers

RIM's impending collapse: By the numbers

Summary: RIM is in dire straits. This week it announced it would suffer an operating loss and suspended its shares on the Nasdaq. Here's what you need to know before market open.

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TOPICS: BlackBerry
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Towards the end of market trading on Tuesday, Research in Motion temporarily froze its shares to deliver the inevitable news: the BlackBerry maker was in deep financial trouble and was no longer generating profit.

A profit loss means RIM is no longer a functioning business. It's a dead weight around Canada's neck.

The terrifying thing is that RIM saw this coming and did nothing. It only shouted, "train!" as the company was being hit by he train.

RIM hedged its bets on BlackBerry 10, its forthcoming operating system, along with its new range of smartphones. Whether or not RIM can survive until then remains unclear. Many think not. Some believe the company can keep going under the wing of a new owner.

Short term, however, RIM has to cut spending and because it doesn't have any spare assets, it's going to have to cut its staff.

RIM has already fallen 9 percent in pre-market trading. Here are the numbers you need to know before the markets open.

Before the Nasdaq wakes up and begins trading again, RIM is currently standing at $11.23 a share. It lost more than 10 percent of its value as it dipped as low as $10.57 a share after the news broke. The company recovered most of Tuesday's losses in the afternoon.

The value of RIM shares have been down more than 75 percent over the past twelve months, and continues to slowly drop. It was trading as high as $70 a share in May last year but its share price dramatically fell in the face of aggressively competing rival smartphones.

RIM went from a company worth $78 billion in mid-2008 to one that barely scraps the bottom of the barrel at $5.2 billion today. It has lost more than 90 percent of its value. In comparison, Apple wouldn't even fit on the chart below. It's so high up; it would be around where the "summary" box is on this article.

But this is where the company made headlines on Tuesday after it royally stuffed up.

You'll see from RIM's profit margin that it dipped below the 0 percent mark towards the end of January. By the time February came, RIM was no longer generating profit and was losing money. It now stands at around 3 percent below the profit line.

RIM said its pegged its cash total at $2.1 billion at the end of Q4 2011, ending in March. By now it's likely less than that but still around the $2 billion mark. The BlackBerry maker can take sustained losses for a while but investors would rather see a company sale than losing any vast chunk of its strong cash position.

RIM ran out of fuel, and ran on fumes for mere days before it totalled below the 2 percent profit loss mark. The company is in utter free fall and there seems to be nothing stopping RIM slipping further into trouble.

For now, RIM can only cut, cut, and cut some more. It has to drastically reduce its expenditure and operating costs. In the absence of new income as its old income stream dries up, RIM is literally looking around for things to get rid of to shed weight to keep the boat afloat.

Without dipping into its cash savings, all it can do is send people home.

The company said last week it would lay-off around 2,000 employees, or as many as 6,000. It has around 16,500 employees worldwide. A slashing of 6,000 staff represents more than a third of the company. Though anyone connected to BlackBerry 10 --- the company's lifeline --- is thought to be safe. it leaves actually very few left on the software and hardware side of things. Its data network needs maintaining for its remaining 78 million BlackBerry customers.

RIM's total subscriber base includes 8 million in the U.K. and 7 million in Indonesia. Surprisingly, the number has continued to rise even in the face of a global outage which spread over four-days in October 2011.

RIM has two areas: its smartphone sector and its data infrastructure. BlackBerrys are useless without the data infrastructure, meaning if RIM goes bust and fails to sell its data networks, more than 78 million people will suddenly lose service. RIM may have nothing left to lose but its customers certainly do.

But because RIM has avoided laying off its staff wherever possible, the company hasn't been shrinking. The last major layoff was 2,000 staff in July 2011.

ZDNet associate editor Andrew Nusca nailed it in a line: "You're looking at one-and-a-half years of denial in that chart." Had RIM knew how deep in trouble it was, it would have started shedding excess baggage a long time ago.

If you haven't already noticed, every single graph you've seen so far is on a downward trend. Despite the next two showing an upward trend, do not be deceived. The two remaining graphs continue to cause headaches for RIM.

RIM's third-quarter earnings are out June 28. We'll brace ourselves for a firework show in the coming hours.

Get your popcorn at the ready.

Image credits: Yahoo FinanceYCharts, Guardian/ZDNet.

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Topic: BlackBerry

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118 comments
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  • No gloating, please.

    I'm not a Blackberry user anymore but there is no joy in seeing this happen. People who have never been through a business failure just don't understand the pain and suffering this is going to cause.
    ddmcd
    • there is a difference between gloating and telling stock holders to get out

      telling employees to move on,, and customers to look else where. that's what we're left with since we've spent the last 3 years telling rim to change to no avail. They should have beat Nokia to WP and W8 tablets. Qnx+bb10 is going to amount to nothing so waiting and hoping for it is useless. It's more of what they've done for the last couple years. No developer interest, no new consumer interest. They let opportunity pass them by. It's time for the last employees, customers, and stock holders to get out
      Johnny Vegas
      • Whoaa Nelly!

        WP isn't going to save anyone- BB/RIM simply beat MS to the bottom! The farmer already has the gun to the horse's head named RIM and is seconds away from pulling the trigger. Next bullet is for a gimpy, dieing horse named Window's Phone. Goodbye good buddies, it's been fun, you've provided many hours of meaningless debate.
        lampson@...
      • RE: Nelly

        Slow your roll there lampson... What evidence do YOU have concerning the fall of WP7? Everything I've read has said that the platform is doing well and is gaining market share. You sound like one of those anti-MS naysayers who wish to believe that WP7 is dead because it is a Microsoft product.
        NonFanboy
      • Can you read?

        Your reply just goes to show that geeks don't necessarily know how to interpret a balance sheet. RIM is in excellent financial shape and can weather this storm.
        bobwinners
      • They came from nothing in a short space of time, and may well recover.

        Who doesn't have a crisis? Are you telling us Apple never hit a crsis and bounced back? You must be about 20 year old cos the resty of us know many companies go close to the wall and bounce back, including Apple.

        Re RIM... Far too many models with very little difference between them. I love my Torch but hate the other junk with small screens. I've said it for years; Ditch most of the range, focus on a few devices that can be upgraded... maybe the next range of qnx devices will do that, I sure hope so. And cut the clutter; who needs a range of 10 phones? Apple have one and it works; Android makers have way too many and can't keep them current. This is a 'no brainer'.

        Next I suppose they need to look at the BES. As far as I can see it only supports one device per user and probably why the playbook had to be thethered to an enterprise phone. That needs fixing at grass roots level ASAP !!!!
        pjmckay
  • Bad as it is...

    it's nothing new and RIM can come out of it. Case in point: US Air, Chrysler (twice), General Motors. All were on the brink of collapse but returned stronger than before.

    "But those circumstances were different," you say. "Just about all of them were in bankruptcy. Plus, the mobile tech industry is fickle. Once the albatross is hung around your neck, there's little you can do to fly higher. Look at Microsoft."

    There's some truth to that. But even Apple returned from the brink of destruction (remember the days of "Apple Clones") to be where they are today. It's going to take strong leadership with practical yet entrepreneurial vision to pull RIM out of this.

    I'm not saying what will happen to RIM one way or another. Nonetheless, as close as they are to the precipice, they haven't gone over yet.
    tallbruva
    • Well...

      ...here's hoping there's more to RIM's future than permanent taxpayer life support such as Chrysler and GM I mean the UAW require.
      TaxNerd
      • Obviously you only write, not read

        Since you are unaware that GM and Chrysler are making good on repayments to the various governments (US and Canada) with better than normal returns on the investment, and generating profits for their shareholders in addition?
        dimonic
      • dimonic: Better check again, because, GM still owes the taxpayers some $35

        billion, and, if they are actually paying anything back, it wouldn't amount to anything that would bring down that huge debt.

        The only thing keeping GM afloat, is the taxpayer, and if the "taxpayers" ever do decide that, enough is enough, GM will go into bankruptcy immediately, just like they should have 4 years ago. GM is still a "dependent" corporation, and, though they may seem to be in recovery mode, the $35 billion in debt is still there to lend some reality to the situation.

        GM is still in operation because of the heavy union lobbying in Washington, and without the unions, GM would've disappeared a long time ago. But, the unions are the ones that put GM in dire straits, and they've the same ones that will put the final nail in the GM coffin.
        adornoe
      • Slow down on the Kool Aid...

        @dimonic

        Slow down, son. The only reason GM is "profitable" is because they have been exempted from billions of dollars of taxes. Please try to look at the facts before you pipe up and call somebody else out. You'd suffer less embarrassment that way.
        aaronc0027
      • canadian taxpayers must prop up RIM

        govt subsidies insure that a poor product will be released and that the difficult, but necessary management changes will never occur.

        GM and Chrysler are as bloated as ever with many uninspiring products.

        So govt subsidies will make Canadians poorer and all but assure that RIM will release a crappy product.
        otaddy
      • GM Doesn't have any debt...

        Nearly $45 billion of the various loans (from the USA and Canada) were converted into stock. GM has repaid the government loans, but they're still owned by the governments: the USA and Canada together own about 75% of GM. No loan to repay here -- we only get our money back if they're successful enough for that interest in the company to eventually be sold off.
        Hazydave
      • Are you for real?

        I suspect you'll find a few more jobs, and a few more cities dependant on Chrysler being kept afloat than RIM. How many folk would be out of work if Chrysler went under? How many kids would be in poverty? How many folk would be dependant on financial aid from stste/government?

        Two totally different problems.
        pjmckay
  • These guys were completely deluded right from the bottom to the top..

    I work a few doors down from RIM and went to school with a good portion of the UX and Industrial Design team.. you'd talk to them, overhear RIM employees talking on the bus.. saying their mantra.. [i]a blackberry is a business tool.. an iPhone is a toy...[/i] they saw the iPhone and dismissed it.. saw android and dismissed it... they had an example of what they needed to do shown to them and they couldn't/didn't even bother to just copy it.. at least the guys at Google recognized what they were looking at and bothered to copy it.. they guys at RIM were to stupid, too egotistical to even just do that...
    theFunkDoctorSpoc
    • Agreed.

      All Torontonian-Blackberry users used that exact reason as well. "Blackberry is a business tool, iPhone is a toy".

      So much arrogance.
      JL05XI
      • So much arrogance?? :)

        Why would anyone have thought that the 1st iPhone would be successful? Here is a factual list of how great it was: a feature incomplete, bland, uncustomisable, slow, low resolution so-called phone, with an awful camera to add insult to injury. Microsoft, RIM, Nokia - they ALL saw it, laughed and rightly so - it was garbage. Of course now thanks first of all to Apple fans for making it trendy and then to consumers who know so much better yet somehow found it difficult to navigate a 4-folder file system to find their pictures, we are blessed with a variety of closed platforms. Anyone daring to try something good, is automatically sunk, because... it ain't Apple....
        12312332123
      • bland

        ((( "Why would anyone have thought that the 1st iPhone would be successful? Here is a factual list of how great it was: a feature incomplete, bland, uncustomisable, slow, low resolution so-called phone, with an awful camera to add insult to injury." )))

        That's not the way I would characterize the iPhone, but you're mostly right. Where you're most definitely wrong, though, is in calling it "bland." Compared to everything that came before it, the iPhone was the most exciting piece of tech to come along in a generation. That's why, despite its initial high cost, it sold through the roof. That's why, five years on, the iPhone is still the single best-selling phone in the world, and Apple is the most valuable company in history.
        buddhistMonkey
        • I don't want to labour the point

          but, seriously, it black with a screen and 1 button. It is as bland as they come. I actually know people who own an iPhone, hate it, say things like "I don't know why I bought that thing" and yet they own an iPhone. There isn't a great deal of thought in the average consumer and Apple is the only one who got a good deal.
          12312332123
    • and dismissed it

      I agree completely.
      I worked for DEC back in the 80s when the IBM PC came out.
      We could not understand why anyone would want one. We (inside the company) had great tools connected to VAX minicomputers and we liked our IT guys.
      We had no clue how much workers in other companies hated their IT department. We had zero comprehension about crappy the computer tools were for most workers.
      And, the PC killed DEC.
      davebarnes