It’s more like BlackBerry 9.66, not 10

BlackBerry $9.66
By Chris Umiastowski on 5 Jun 2012 02:04 pm EDT
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Yesterday RIM's stock price dropped below $10. It's an arbitrary number, but it's psychologically important. This is a stock that has moved from a high of over $140 to $9.66 to close out Monday's trading session.

Why did the stock get hit so hard yesterday? James Faucette of Pacific Crest put out a bearish note about weak sales in May. But it's hard to believe that's much of a surprise to anyone considering the company already warned of losses for the quarter.

I think the decline is just a continuation of the weakness we've been talking about for a while. Stocks move up when there is good news, and down when there is bad news. RIM hasn't really had anything good to talk about lately, so it keeps dropping. It isn't going to stop until something happens.

That something could be reaching a low enough price that deep value guys start diving into the stock. But diving into RIM here takes big guts. I wouldn't count on value being a floor in the near term. It has to be something else.

Yesterday we talked about strategic alternatives for RIM in case Plan A fails. If the market starts to believe that something will happen, the stock will pop. Or if we get enough signs to show people that BlackBerry 10 is coming on schedule, has great hardware, and support of carriers, it could pop. Oh, and it wouldn't hurt to have some support from Skype or Netflix to give RIM some big-name social proof as a valid future platform.

Without any of those things happening, RIM probably keeps dropping. Remember this article discussing the stock's valuation? I looked at cash, real estate and patents (only the Nortel patents) to guesstimate a floor valuation. Updating the numbers to reflect the most recent financials, this would take you to about $9 per share.

But I also said this value would be meaningless if RIM started losing money, which is exactly what has happened.

Also, let's think about RIM's balance sheet a bit. They had $2.1 billion in cash at the end of Q4. They say cash went up in Q1, despite being unprofitable. In all likelihood, the cash increase was a function of reducing working capital.

For those of you not familiar with what I'm talking about here's a simple explanation. Growing companies will have rising inventory, rising accounts receivables, and accounts payables. The money tied up in running the company is called working capital. As a company shrinks, the working capital also shrinks, so it's a (temporary) source of cash. Shrinking and pulling money from working capital is NOT good news. Ever.

RIM's cash flow statement will also look stronger than the income statement because it takes depreciation charges (non-cash) of over $1.5 billion per year while capital asset purchases were only $900 million last year.

So, roughly speaking, if RIM is at break even on the income statement then they can probably pull in about $600 million per year in cash flow, plus whatever it sucks out of working capital. That will protect the cash position to some extent.

BUT, doesn't RIM need to cut staff? What if they need to reduce 6,000 jobs at an average cost of $50k? That's $300 million in restructuring costs. Ouch.

And what if they continue to shrink before launching BlackBerry 10? RIM is a company that spent over $1 billion in operating expenses last quarter (R&D plus Selling, General and Administrative). It's tough to turn off the taps too quickly. Besides, without promotional efforts, you have a death spiral. It's dangerous.

Finally, let's think about the cash available for a BlackBerry 10 launch. This is something I chatted with my good friend Ed Zabitsky from ACI Research on yesterday. If we assume RIM still has $2 billion by the time they launch, and they need, at minimum, $500 million of cash to cushion the day to day operations, they have $1.5 billion to invest in inventory. If we assume the manufacturing cost is $300 (probably conservative, I know), then RIM can manufacture at most 5 million units before it needs to wait through a cash collection cycle.

Now, selling 5 million BB10 devices would be truly fantastic, and I think it would convince people that RIM has returned. But, what if they screw it up? They do not have the balance sheet to support a large scale screw up. That's the point Zabitsky and I talked through yesterday. RIM will have to roll out BB10 in a way that its balance sheet can support.

I know I could talk about this for another thousand words easily. But I'll wrap up here. Sound off in the comments. Let me know your biggest questions, thoughts, concerns, etc.

... and I'm just dying to see if someone still accuses me of cheerleading, which would undeniably prove some people just can't read. Man, I want RIM to succeed. But we have to keep our eyes open and look at all angles.

Reader comments

It’s more like BlackBerry 9.66, not 10

91 Comments

"Or if we get enough signs to show people that BlackBerry 10 is coming on schedule"
What schedule? Is there even one? That is also hurting the stock, RIM has nothing tangible to offer so far, not even a schedule.

"... and I'm just dying to see if someone still accuses me of cheerleading, which would undeniably prove some people just can't read. Man, I want RIM to succeed. But we have to keep our eyes open and look at all angles."

Agreed, I think this was a very objective way to look at it too. I also want RIM to succeed, but I never considered the cash required to be available for the BB10 launch.

Interesting times ahead that is for sure...

I would not worry too much about that if BB10 is truly a hit.
RIM's zero debt and assets might help to leverage a bit and get the cash required... Right Chris?

Investments might be hard to come by with BB10 not being a hit.

The only other method that income with still come is through the BIS/BES subscription users have.

I just hope BB10 will launch a lower end phone to EMEA (Europe, Middle East, Asia). They will get users there. And that will secure their needed cash to continue with there launch...

I do not know about MEA, but Europe is iPhone and Android. BB's are also losing ground in this continent. Phones are usually strongly subsidised and people go for the big deal.
If you bring low end to Europe without a flagship you are dead... At least for now, let's wait and see what happens with our economy.

MEA for sure seems more BB friendly.

Europe, while I am not sure either the total, it seems there is a good market.

Wow, I actually feel for RIM. Regardless of the fact that I am a Blackberry user, phone and tablet. When I was a Nokia user, and Nokia went down, I didn't really give a damn - because, Nokia never admitted they screwed up. They never tried to improve, they never fought for first place - they marveled at their own creation that was Symbian, and assumed people would come to their senses. Little did they realise, it was them who would need to come to their senses. Well, later they realised their mistake, they understood what needed to be done, and they shook hands with the devil's adopted son, aka Steve Ballmer. By the way I'm a PC user too, so no I'm not taking a cheap shot at MS - just Steve Ballmer.

Anyhow, kudos to Research In Motion, for putting up a fight, for not giving up - for fighting for your right to exist. If this isn't proof enough that RIM will survive, then humanity is just effed up.

I agree, very good post Chris. I also think that Skype and Netflix would do wonders for RIM in the public perception world. Can't wait to get my hands on a BB10 phone.

The fears of a Europe collapse aren't going to help RIM anytime soon. Many times companies will benefit from a good economy, even if they don't do anything. There is a chance though that by the time BB10 releases, we may be seeing another stock market crash that could be worse than the last one.

I'm not claiming it will happen, but there is definitely a fear that it may happen, and that is also important when thinking about RIM's (and any other company) future. 2 things could hurt RIM's chances here. The market collapses and regardless of sales, RIM's price crashes even more. Another possibility is that RIM's sales could be effected by a down turn in the economy.

Let's just hope that Europe gets their shite together and doesn't cause this to happen.

Yes, I think to $500 million.  But we don't know what the covenants are on it.  I haven't checked at least.  Sometimes the details are not public. 

RIM is in a really untenable situation - your article sums it up well.

They have cash and are generating cash, but they are at the tipping point where the shrinking of their working capital is where much of the cash flow is being generated. This can make you feel like that you are better off than you are, until the money is spent on expenses and dwindles until nothing remains. Then the company heads to the auction block for whatever the assets will bring.

RIM needs a great - not good - product release, and they need it very soon. BB10 must happen by mid-October so it can be in stores in time for the Christmas buying season. And it must have flawless form, function, execution, and delivery, due to all of the bad press they've weathered in the last year.

When a company is in such a difficult position, it takes a tremendous effort from everyone on staff to turn it around. If they fail to get BB10 right, there won't be another chance. Which bothers me, because in spite of the shortcomings of my 9900, it really is a good product. I'd hate to give it up for some WMD, Droid, or iPhone.

Good article.

I would say they do have a great product but need GREAT EXECUTION and badly.
So far it is very hard to tell if they will pull it off and investors are jittery.

I still cant believe he stock is below $30!

BTW - i met a guy the other day who was trolling on all on negative RIM media reports, only to share moments later he owns stock and wants to retire soon....then proceeds to pull out an iClone4S... #truestory

Now I know why!

Hard to believe anyone accuses you of being a cheerleader, Chris, when I consider that the columns you've posted over the last couple of days have me pretty dejected, frankly, about my chances of ever getting to wrap my hands around an actual BB10 device.

The more of Chris' articles I read, the more I want to marry him *swoons at his intelligence*

This is starting to get ridiculous. We all have too much time on our hands and we keep talking all talk about BB10 and the stock price, and RIM , etc... I have my sights set on late 2012, (October'ish) and until then I really don't give a crap about all the negative blah blah coming out of whoevers' you know what (not taking a shot at you Chris, more at the media puke-machine).

I'll check in from time to time for an official word from RIM, but apart from that, I am not worried one bit.

Also, where the hell is that troll? He's a little late on this post... lol

After reading this i now feel that rim needs to implement one of the strategic alternatives or they dont stand a chance :(

Or they could just finance their inventory like many companies do? I am starting to dislike all the posting regarding the share price lately. Over the next 6 months the share price is irrelevant from a corporate operations standpoint so why all the focus?

Makes me wonder if a new playbook is set to release this summer... it would be quite a risk with BB10 devices coming up?!

It's funny going from website to website or press event to press event. Looking at anything E3 related, and you see people talking; their enthusiastic and playful; and full of energy - this despite the Wonderbook announcement from Sony (rolls eyes) - then come to Crackberry and it's all doom and gloom, pessimism, replete with a general sense of blah and misplaced hope.

How quickly things can change in the tech industry eh.

Screw october. Summertime releases are better. I wanna show of a new blackberry in augest during the 100 different social gatherings that will be happening.

Chris just points out all the more reason that Plan A is not likely to succeed. They need a deeper pocketed partner for sure. Remember it's better to have a little bit of something than a whole lot of nothing...

@rickbansal.. true, Chris is basically saying that RIM needs more cash. Perhaps a strategic investment by Facebook like Microsoft did with Apple back in the 90's? Millions of bb users have Facebook, and Facebook could easily miss a few billion. Who knows, it could actually support their share price as well as RIM's..

RIM should buy back shares.... about a $1 billion in shares. Then those who have faith in the stock will be nicely rewarded.

How will buying back shares help in promoting BB10? RIM spending $1B on its stock at this point would be extremely foolish; however, a strategic partner buying an equity stake in the company (for a $1B) would be terrific.

They absolutely should NOT be buying back any stock.  They don't have enough of a balance sheet to do a BB10 launch, a reorganization and a buy back.  

Your analysis is very 'point-in-time'. You neglect to consider that RIM sells something like $2-3 billion in hardware each quarter. RIM's inventory is less than half of that, thus it turns over its inventory at least twice a quarter. In other words, because the cash collection cycle may be less than 45 days the balance sheet has capacity for 10+ million units per quarter rather than the 5 million you start with. Even if we agree all your assumptions are correct you would have to assume also that they can do no better than 0% margins on the hardware in order for it to follow that there will be no extra cash for buybacks (or dividend). In fact, you would have to assume negative margins if you think they will actually eat into their existing cash. As you pointed out, at breakeven on an accounting basis they are still generating hundreds of millions in cash. If the company really is destined to stagnate as a no-margin handset maker then at some point there will be nothing left to depreciate and/or write off and the cash profit (from other business lines) will also be reflected as an accounting profit. I imagine there would be a change in perception regarding the value of this company if the EPS ever started to climb up to the level of the actual cash flow. If the change in perception is for the better than it would certainly make sense to buy back shares before that happened. (Assuming, of course, that the shares are undervalued today given the value of the assets you described in your last article and the level of cash flow going forward.)

The tech business is very fluid. What is great today could be behind the times in 24 hours. The common public that follow this industry see a ship sinking they assume it really is.....RIM seems to be moving low in the water but it is still moving......My BB Tour and Style were just wonderful phones and I have tried several other platforms. RIM isn't really putting out to the public what there doing so it's very hard to see light at the end of the tunnel. I'm hoping that they bring us BB10 devices that help me keep doing what my life revolves around. Introduce both virtual and physical keyboard styles and show the world that all this time they were quietly making a platform that leapfrogs over everyone else. I'm not jumping ship and I would surely put my hands on an oar and help row.....I have my money set aside and am patiently waiting to spend it on a new BB10. In this country we still say "United We Stand". I'm still here with the Waterloo based company. RIM, show me that my loyalty is well founded.........

How can a company with $2 billion in cash and no debt be in an "untenable" situation?

Why does reason and logic fly out the window when discussing RIM?

Even if BB10 is a failure, RIM will still sell many devices, and it's other subsidiaries will no doubt contribute to its cash position. They desperately need to get out of the markets gaze.

And you're ignoring existing BB7 sales. Which at least in the forseeable future will be far in excess of BB10. Probably well into 2014.

As efficiencies flow through the cash realised from Curve and Bold sales will fuel cash flow.

At the very least BB10 devices are going to be $600 in the stores. And RIM has to persuade carriers to sell the device. Not much point in launching a device noone can buy.

Turning around the brand is far more important than BB10, and as far as I can see RIM is investing everything in BB10 - so far a totally flawed strategy. They need to fight BB7's corner and drop the OS onto decent (inexpensive) hardware.

For the life of me I can't understand why they've taken the all or nothing approach with BB10. They sold out to QNX leadership far too quickly and are paying badly for the mistake.

Not that QNX isn't great, but it's just an OS.

All that's left for $RIMM is to stick with Plan F

Keep FAILING MISERABLY and F*CKING UP ... Go Thorsten!

See you guys @ $6.30

Who cares... I'm just the "troll" that thinks $RIMM will keep failing.

"bb" stands for your favorite brand of smartphone.

How can a company with 2 billion in cash and no debt be in an "untenable" situation?

Why does reason and logic fly out the window when discussing RIM?

Even if BB10 is a failure, RIM will still sell many devices, and it's other subsidiaries will no doubt contribute to its cash position. They desperately need to get out of the markets gaze.

And you're ignoring existing BB7 sales. Which at least in the forseeable future will be far in excess of BB10. Probably well into 2014.

The reduction in working capital (such as inventory) doesn't necessarily strike me as a bad thing. Couldn't that simply mean that they are winding down the BB7 production in anticipation of BB10 in the near future?

Also, I'm not an accountant, so please correct me if I'm wrong. But the balance sheet shows about $3 billion in accounts receivable (much larger than accounts payable). Will that not eventually convert to cash, which could be used to produce BB10 devices?

Finally, one poster mentioned financing production. That sounds like a reasonable approach as well.

Good observation by looking at AR vs AP.  I suggest you look instead at all current assets (ex cash) vs current liabilities.  That will give you a better measure of what RIM could convert to cash.

 

 

I noticed the big a/r number also. The problem with it is that it could mean people are taking their sweet time to pay them, and/or a lot of that A/R is in dispute, credits, returns, promos, etc. I have not gone back and looked at historic a/r numbers for RIM, so this might be acceptable, but it seems high.

Further, strong companies are fierce about collecting a/r quickly and taking forever to pay anyone (a/p). It generates cash flow, but it takes a certain position to pull that off.

Nick,

I want RIM to succeed and I know everybody is saying BB10 is the answer but honestly as a Playbook and Bold owner, I think qnx is terrible right now handling the things I would want it to do well on a phone.
I mean, just opening up mail on the PB is a pain, not to mention all the syncing issue with read and unread mail. The notifications isn't just there yet and how long has the OS been out? I really hope when BB10 comes out it will be much more polished and refined than PB OS2.0 let alone OS 1.0.

Now the likelihood that it will happen is definitely up there. With all this restructuring and bad publicity, if I were a RIM employee I wouldn't be fully focused on my project but rather be starting to look elsewhere before getting laid off. I mean, we love our blackberries but to them it is still a job that pays the bills.

@19cbb

Your opinion is yours to have, but why do u feel the need to keep coming here spreading such negativity? It's cool to have doubts but u seem to genuinely want them to fail...

Believe it or not, 19cbb wasn't always that way lol. They must be a former Storm owner feeling burned by RIM. :P

Well I mean, I bought the Storm as well but damn....if dude is still butt hurt over that he really needs to see someone about that ha ha

I have a 9810 and have the joys of the spinning clock! No amount of cache, event log clearing, app closing stops it granted its not as bad as on a 9700 but that was one of the selling points for me to get an OS7 model that and the "liquid graphics" that was supposed to run rings around my iPhones smooth flow I don't think I have to tell you how that went. Can you say when BB will cross the 100k App threshold and how many will be available for BB10? Cause as I understand it the apps already in BB's app store wont work so its like starting over! Secondly the app store wont be filled with crap versions of e.g. N.O.V.A.(Game)or Facebook that always seems to be catching up to the competition right? Finally will BB10 be a business class phone, A fun phone like my iPhone or both?

I agree. If you don't like their products or don't agree with the company direction, it is okay to voice your opinion.. but don't be a moron about it.

For a moment there when I saw the "$9.66" picture, I thought you were gonna tell us that RIM will be charging us for the BB10 upgrade. :-)

I agree with this, in that I don't think consumers buy phones for operating systems. They buy phones because of what they BELIEVE the phones can do. It's a tricky distinction, but I believe it is an important one. Does the averague consumer buy an android phone because they know all the technical specifications of ANDROID and believe it to be the best and most efficent operatiing system? No. Do they buy a DROID phone because they know DROID means high functioning and easy to use, with the apps they love? Yes they do. And how do they know that is what DROID is? Because of messaging and advertising, plain and simple.

RIM has not been in control of the message about itself or its products. To get back in the game, RIM will need to get the big apps on board, and start an ad campaign that takes over and controls the messaging about BlackBerry phones.

RIM needs a HUGE and impactful advertising campaign ASAP - i.e., before BlackBerry 10 came out.

The problem is RIM/BlackBerry has no identity at this point in a crowded smartphone market, except the one being foisted upon them by the media - that of a lumbering dinosaur, going extinct before our very eyes. If RIM is to bounce back, they need to be out-in-front on branding themselves, and they need to start YESTERDAY. If BB10 comes out amidst the current pallor hanging over RIM, it will be overwhelmed by the gravity of RIM's downward spiral. RIM needs to change people's attitudes about BlackBerry, and they need to get that process started WELL BEFORE BB10 IS INTRODUCED!!!!

The question is, how should RIM brand/position themselves? People buy Droids because people turn on their televisions and are told that "DROID DOES." People buy iPhones because they turn on their televisions and they see pretty people using simple, straightforward commands to do all sorts of things with a cool-looking little device. But what does the television tell people about BlackBerry? Prior to the last six months, essentially nothing, which is itself a problem - I don't recall ANY ad campaign for BlackBerry before this "tools not toys" idea. And while "tools not toys" isn't a bad concept, that's the wrong way to message it for the consumer market. Turns out, people want tools AND toys.

If I were RIM, I'd think about spending a good chunk of that cash on hand to come up with a very attractive, very strong branding message. For example, one idea that leaps to mind is to get that guy who plays Don Draper in Mad Men as a spokesperson, and perhaps get the rights to the Don Draper character himself, with the basic message that "If Don Draper were real and around today, he'd have a BlackBerry." James Bond works the same way. Position the BlackBerry as a "man's man" kind of phone, for a sophisticated, mover-and-shaker type consumer market. If you want to avoid gender bias (not a bad idea), you could include images of powerful women as well.

It's one idea. But RIM has got to do SOMETHING, or it's gonna sink.

People buy Droids because the carriers foist them on consumers. They make more money per device with Android than with anything else. Why wouldn't they push Android?

Consumers buy iPhones because they are religiously inclined and just want to believe. And because Apple pay attention to software - not just the technology but how it is used. (Technically they're crap).

RIM have to show us how BlackBerry can improve our lives. And not the fantasy realm of BB10 - any BlackBerry.

All RIM have to do is watch the occasional Apple ad, work out how to copy it and they can't go wrong.

Chris-

It was a rather ugly market yesterday, and shorts decided to lean on it some more I think you will see more of this for several months to come, it's an easy mark

The availability of chips potentially scare me. The word is that qcom may not have enough supply ramped up come Q4, with Apple tying up alot of the supply. Personally I would. Love to see the traditional BB 10 device ready by the holiday season. They need to bring some revenue in quickly.

With the handset sales in emerging markets being the bright spot for RIM is the majority of the cash flow losses coming from the US? What would happen if Skype and Netflix don't support the device on release, Alex Saunders said on twitter that Its not RIM's fault, if they wanted us we'd have employees on their door step to help develop the application (or something to that effect) and on the Jakarta Globe he said "It’s not for sitting on the train and watching TV". I really don't think Netflix is coming to BB10, at least by the device launch.

Developers don't want BB10 to succeed. Why would they? Ultimately people will move to Android or Apple. Keep it simple stupid.

Chris, thank you for the dose of cold financial reality. People need to realize that there's a big difference between love and support of the company's product is WAY different than financial support for their business model.

BTW, are you still holding your RIM stocks?

I think you just indirectly made a case for why there are now two investment banks advising the company. If they do not want to directly burn available cash on a product launch, then they can issue a bond, or take out a large loan. This is not something most analysts would expect.

Someone is planning to step in here. Remember Rim is still a MAJOR corporation. They still have alot of assets that are highly desirable (don't believe the bull from analyst). They have managed to run their finances (without debt) very well. They have security locked up. Add the apps and their in.
The investment banks are there to prepare rim for a partnership.

Chris a very disappointing post. You having been hanging around analysts too long. Analysts have never run a business in their life and have no clue about how businesses operate. Your point about cash flow is completely one sided and not well thought through. They can generate additional cash through existing credit which they have not tapped into, they have no debt so have capacity to raise additional funds, well run companies with a good handle on logistics can generate positive cash flow from working capital and be reducing operating costs now, which is what they will do, they can be profitable at lower volumes and margins. They have the means to finance the launch of BB10. I know you guys at Crackberry are bored and really have nothing to right about till BB10 comes, but please don't write about the internal financial aspects of RIM. That is pure speculation. Also forget about what the analysts say. You have to understand their position in the market. If they have shorted the stock they will read the tea leaves as negative. There is nothing at all surprising about where RIM is right now. The existing installed base is waiting for BB10, this is the future, why would you buy a System 7 device. So the top line and bottom line will continue to dampen and the stock price will fall. The only thing I would like to see is for RIM to launch BB10 near the end of August to catch the student sales push and then refresh the launch with a OS upgrade in November to catch the Christmas crowd. However, not sure if the ecosystem will be ready by August. Phone will be there but apps, NOC, content etc. takes time. As the CEO of RIM said his only worry is that the employees will be engulfed by some of the negative press. Just sit tight and see where the company is in August.

You have no idea how many business restructurings & product line transitions I've analyzed over the last 11 years.   

I did mention positive cash generation from w/c.  Not sure how you missed that.  If they need money, they have choices, yes, I know.  Point is RIM probably won't do a full-out HUGE launch of BB10.  They'll start with <5M devices.  And if things go badly, it's big trouble.  

One thing I have not looked into (and should) ... how much of RIM's cash is in foreign countries?  After all that's where they are strong.   

It's funny I posted on the job assistance thread "Blackberry .10$ is more like it" and today someone posted Blackberry $9.66, it's getting there

I hope for the best for research in motion. I'll always use blackberry products. I have faith in the Canadian company.

Chris,
Don't apologize for being a cheerleader!
Doesn't matter what you do :
No matter what you do these trolls will accuse you of being a cheerleader.
I realize you struggle to be impartial, but this a BlackBerry site :
We are all hoping for BlackBerry!
F__k everybody who isn't!
You are doing a great job!,FTW!!!
WE DO NOT APOLOGIZE!
WE ARE BLACKBERRY!!!!!!!
WE INVENTED THE SMARTPHONE BUSINESS :
WE'RE TAKIN' IT BACK!!!

Good-bone,

RIM does make the best hardware out there, but with them struggling to get developers to write apps and get companies to develop apps, there done.

Most of the banks and companies that have apps I want and use are not on BB. This will force me to move on to a lesser hardware device with a stronger economy system.

Though I am very curious to check out the new devices.

this is most likely due to the overall market performance these days.....just of the stock prices are declining in the past few weeks due to concerns about international economies such as a greece and spain.. sometimes it just isn't about the company.

I'm not a blackberry user and never have been (always iPhone), as bb just felt dated. However, bb10 is the first time ever that blackberry has caught my attention and would make me consider moving away from iPhone. I really hope blackberry can hold on to the release of bb10. The only thing I worry about is blackberry going the way of palm - there seems a scarily large number of parallels between the 2 companies up to the point palm launched webos. Palm made a big buzz about webos (which at the time was a superior os to ios), but a long delay in releasing the os together with quite poor quality, unemotive hardware and a small app store/ developer base meant that nobody bought palm phones and the company had to be sold. I can see bb10 will be superior to ios at launch, but if you don't have a healthy app store with some good solid apps and hardware to match your software then there is only so much bleeding bb will be able to take. So for people like me who are getting bored of ios and want something fresh new and innovative I wish you all the best and hope you can live up to your promise

There is simply no comparison to Palm, RIM is well financed, they have a better OS than Palm and their branding is supperb. They need to get the new phone to market as everyone suggests, but they also have time on their hands to get it right. Already we are hearing great things about BB 10 from those that matter. Developers like what they see and as long as the phone itself is cool, 99% of consumers will be happy to do what they always do, surf the Net, enjoy a few games and use the best messaging system on the planet. The rest of the hardcore players will join us when they get a couple of key apps.

As soon as I looked at WebOS I knew why HP dropped them, with QNX it is totally different. I can't put down my PB and never look at the iPad, the wife can have that limited thing.

When Palm launched webos they too kept talking about having about $1.5bil cash in the bank and how they had financial backing to see webos through.They also 'bet the company' on an operating system. RIM is doing the same. RIM are now talking about loss making quarters. It won't take too long to start burning through their $2bil cash pile. They have/ are taking way too long to release. If they release at around the same time as the new iPhone, which are people more likely to buy? A tried and tested platform with good hardware or a startup that may fail? What if people don't buy new bb10 phones? Where can the company go from there?I' m only being so pessimistic because I bought in to such hype before and even bought the new palm phone only to find it to be a dead end.

A few things I would like to point out, the first consideration is that they are well along with both BB 10 and the new phone. Development costs are shrinking and you have to factor in the fact that for the first time in history, RIM is only developing and launching one phone. The all or nothing approach is for only one phone and it is well on it's way towards the finish line. The costs are dropping off, it cost a great deal less to produce just one of them and the operating software must be close to launch as well. I'm suggesting that the vast majority of the costs have been absorbed to date.
Secondly, their services side of the business is a great business with much of the bears conceding that part of the sector to RIM. They make great money in the area and it isn't going away anytime soon. In fact, they could spin off that portion of the business and return a huge part of the asset back to shareholders. If the services side of the business were to be spun off, it would detach itself from the poor P/E showing of the stock as a whole and probably pop the stock back to a $ 25.00/shr level based on real earning potential and growth. Let's say they make $ 1.80/shr on just under $ 5 billion in revenues and a meek 20% PM., that's a $ 25.00/shr stock today at a P/E of only 15 X something that has true growth. Forget hardware, sell off the assets or develop the BB 10 phone further, they would be around forever working on perfecting just one phone. I personally see them succeeding with the first phone and taking it immediately to two phones in 2013. Thoughts?

The idea of RIM betting on one phone is exactly what worries me about RIM - I've made similar comments about this before in relation to Palm, which was another well admired 'smartphone' company that originally helped define the smartphone space. Putting all your eggs in one basket (ie: relying on just one phone) is never a good idea. What does RIM do if nobody is interested? They will HAVE to consider selling up. I REALLY hope this does not happen, as I was really impressed with their bb10 demos.

You have to show and prove,,,RIM keeps talking about the next big thing and it never comes to light. I wouldnt put my money on it either...RIP RIM

This is the exact reason I don't actively play the stock market. Everything hinges around a company's ability to do better each quarter or the stock drops. Guess what? No company CAN do better each quarter FOREVER. That is unsustainable. Markets have crashed and will continue to crash in the near future if we think this way.

China's economic situation faces the same fate. Their economy has been growing leaps and bounds and any sign of slowing sends messages of fear all over the world. China, or any nation for that matter, cannot continue to grow at that pace FOREVER. There is a limit. Analysts, shareholders, and bankers need to understand this and not run around like chickens with their heads cut off the minute they see zero growth.

I would have thought open an account with a stockbroker that has authorisation to trade US stocks?