RIM's Q2: Ugly results on tap
Summary: RIM's fiscal second quarter will be horrible and all eyes will be on the company's cash burn and whether it can hold the fort until new devices arrive.
Research in Motion's developer powwow delivered a small dose of good news as the company touted 80 million subscribers and kept its BlackBerry 10 timelines, but the bad news is on deck: Fiscal second quarter financial results.
To say expectations for RIM's second quarter were low would be a major understatement. Wall Street is expecting RIM to report a loss of 47 cents a share on revenue of $2.5 billion for the fiscal second quarter and a miss wouldn't surprise anyone.
In fact, analysts are more focused on RIM's cash burn rate and whether it can merely hold the fort. A sampling of comments from Wall Street analysts, which were pessimistic across the board.
Related: RIM's BlackBerry 10: Why I still believe | RIM banking on BlackBerry Balance, HTML5, BYOD trend
Wedbush analyst Scott Sutherland said:
RIM is at a long-term competitive disadvantage as we remain doubtful QNX OS (BlackBerry 10) devices will ignite a turnaround. While other competitors are well along the way in developing a connected device ecosystem, RIM remains channeled mostly in smartphones and autos (QNX). Tablets have been disappointing, and the company is non-existent in the PC and interactive-TV space. More so, RIM has greatly lagged in creating a cloud-based content management platform like Apple’s iCloud. With RIM missing the key holiday season with new devices and Window 8 device announcements by Nokia, Samsung, and HTC, we continue to see Windows emerging as the potential third viable ecosystem.
TD Securities analyst Scott Penner said:
Given the consensus for losses in Q3 and Q4, we see the market focusing on cash – RIM should close Q2 with $2.2bln (flat with Q1) or $4.17/share. Although the stock is just 1.5x cash, we see tangible book value falling to $9.06 in Q4 from $11.90 in Q1, given the operating losses. We expect any BlackBerry 10 news to filter out mid-week at BlackBerry Jam Americas (runs Tuesday-Thursday) rather than with the earnings. Our question is whether there will be any buyers left after the holiday season bun fight of high-end devices?
Evercore analyst Mark McKechnie said:
Fundamentally, RIM faces an uphill battle to hold onto its 80M subscriber base and recurring revenue stream with stale products by cutting its smart phone prices below cost, while it races to bring out new BBX phones in early 2013. We note increased traction for independent Mobile Device Management (“MDM”) players such as Airwatch, Mobile Iron, Good and Zenprise to serve the BYOD market with secure smart phone and tablet management systems. RIM’s challenges are intensified by the ramp of new products from each of the three competing ecosystems including Apple’s iPhone5, Android’s Galaxy SIII, Kindle Fire and RAZR refreshes, and Windows Phone8’s Lumia 920 (NOK), Ativ S (Samsung) and 8X/8S (HTC), all of which will come before RIM’s BBX products.
Of those aforementioned comments, the most notable one may reside around RIM's upcoming product cycle. Will there be smartphone buyers left after all those new devices hit the market? Will people wait for RIM? There are reasons to believe a bit in RIM, but the reality is its cash position and mindshare need to hold on for a few more quarters.
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Talkback
Mobile is growing
1. RIM wasn't gaining smartphone users
2. Smartphone growth had stalled
By all accounts only 47% of the population have a smartphone. Of that the bulk are likely on cheap Android devices running a 3 year old OS (Froyo / Gingerbread).
The question no one can answer is if (and yes it's a big if) RIM has a comparable device with decent hardware, adequate App support and a robust OS can it attract customers. What also is unknown is how many of RIM's 80 millions users are waiting for BB10?
Considering the lack luster iPhone 5 launch I'd say everyone who wants an iPhone has one. Apple is selling to the same group over and over, the bulk of iPhone 5 sales are going to 3GS and 4 users who passed on the iPhone4S. No one is reporting how many NEW accounts iPhone 5 is drawing. I'm sure there is a good amount but nothing like before. Another huge part of Apple's launch sales wind up in other parts of the world it's not on sale yet, iPhone is a hot black market item.
Part of this is Android is sucking off people that want a cheap, big screen touchscreen that has Apps. These people don't know an iPhone from a Galaxy S III. They get whatever is low cost / free on contract.
The sales on Windows Phone are worse than Blackberry, did they even announce the Nokia Lumina sales? Considering it's price is slashed I'd wager not that well. Microsoft's market share is barely registering on usage trending. The new devices look nice, the OS has some new features but the bulk of consumers just don't like it.
Blackberry will have a unique market with the BB10 keyboard device as no one makes that form anymore and it's still very popular with heavy TXT / email users. Add all the BB10 newness and BB10 could be the next big thing in a vertical that lives on having the latest gadget.
We don't know everything BB10 will provide, all the App developers on board, the marketing strategy as well final hardware specs.
Back to today - Anyone expecting a positive quarter today or the next one needs to adjust their expectation. RIM is not selling anything to consumers (US) so outside of corporate sales everything is happening in other parts of the world. Bottom line is their still selling devices, how much their losing is the key thing to look at today.
Wrong about WP. People who try it love it. By a very wide margin
WP's other problem is lack of carrier support
Re: They don't push WP as it's well documented.
Re: The problem is the bulk of consumers have never heard of it.
People are avoiding Windows Phone, and it's not out of ignorance.
I agree with the following:
Why? They will never be able to create something really worthy. So the fast they close the better.
47% of the people are using cheap android devices
I always have said that. Android is the first OS in the world just because it is used in the vast majority of cheap devices (I wonder: why people do us Android and cheap devices?)
It really gets me people not using apple products a.k.a. iPhone 5?
Cheap Android devices.. agreed.
See?
Most people are not using smartphones, it's still a quickly growing market and there's room for a handful of players. Phones will become harmonized and commodities. Android is on the forefront of that. The Android model ensures they will be #1, but it doesn't mean it will be the only one, nor the best one. Only one OEM is making scads of cash off of Android. Look, how many car manufacturers are there? Do you only see GM and BMW cars on the road? Does every car cost either $1000 or $1M? There are many manufacturers and there are many price points.
If you want RIM to fail, you are a fool. You will be stuck with eating Apple or Google. Innovation will flounder. New models of business will stagnate. There will not be a drive to improve. Looks how RIM has improved its mobile OS! That's a result of competition. Yes, they are late, which is unfortunate. But really; they are singing a new tune. They are humble. They are trying. Cut them some slack already and stop drinking the hate-aid.
No, I still dont see it.
80M subs is great, but it is clearly not paying the bills. Failed leadership, failed product launches, and poor marketing are now taking their toll. Making excuses won't change that. Delayed product launches wont change that either.
It's a tough market and even MS is struggling to gain foothold--and their devices are an attractive alternative to the Google -- Apple duopoly.
No excuses.
I would disagree on two things
2) Add all the BB10 newness and BB10 could be the next big thing in a vertical that lives on having the latest gadget.
I think you have things reversed. Blackberry is the one losing sales because people just don't like it anymore. Other smartphones are now good enough to buy over BB.
as for WP8, with teh same marketing behind it that BB has gotten over the years, that may very well be the next big thing in a vertical that lives on having the latest gadget.
No comments on the new BB10
BB10
N O W ...!!!!
what it is the logic of spending money in the employees and high level executives? All of them they have to prepare the resume and start looking...!!!
PD
I will not endorse hiring them in Apple..!!
No weight
To add, a largely Canadian workforce does not want to work at Apple. Part of the BlackBerry culture is proud Canadian roots.
Let he who is without sin among you cast the first stone!
Oh how the might have fallen...
The Usual RIM bashing
Agreed.
RIM Bashing—Is That Like Titanic Bashing?
Multiple uses..