It has taken a while for the penny to drop, but today RIM has pre-announced that that they expect a loss in their current financial quarter, due to â€œlower volumes and highly competitive pricing dynamics in the marketplaceâ€
As the Statcounter graph clearly shows, the company has been losing market share sharply and steadily for more than a year now, as their competitive position in terms of operating system and ecosystem gets rapidly eroded.
The company also announced they would be making significant cuts in staffing (up to 38%) and have â€œengaged J.P. Morgan Securities LLC and RBC Capital Markets to assist the Company in reviewing RIMâ€™s business and financial performance and to evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives.â€
The companyâ€™s current range has been selling slower than expected, with their internal inventory increasing by two-thirds in the past year because of slumping sales of Blackberries and Playbooks.
â€œClearly this stuff isnâ€™t selling,â€ said Monga, who maintains a buy recommendation on RIMâ€™s stock in anticipation of the company being sold. â€œDespite all the writedowns theyâ€™re taking on the inventory, these inventory levels are not dropping.â€
â€œThereâ€™s their own inventory buildup and then thereâ€™s the inventory with carriers and retailers,â€ said Sameet Kanade, an analyst at Northern Securities Inc. in Toronto, who recommends selling RIM shares. â€œItâ€™s more than likely there will be a writedown.â€
Sales will not have been helped by RIMâ€™s announcement that current phones will not be upgradable to their new operating system, effectively Osborning their current range.
â€œUntil you have a new product, thereâ€™s nothing to transition to,â€ said Colin Gillis, an analyst at BGC Partners LP in New York , who advises selling RIMâ€™s stock. â€œItâ€™s still very much in the early stages.â€
RIMâ€™s current performance mirrorâ€™s Nokiaâ€™s from last year, and it is likely even when their new range is released they will also face a long battle back to relevance, all the time providing an opportunity for competitors to feast on their still-breathing carcass.