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Is RIM’s Stock Price Collapse Well Deserved or a Chance to Profit?

RIMM
By Chris Umiastowski on 3 Nov 2011 09:56 pm EDT
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As all of you loyal CrackBerry readers know, RIM hasn't exactly been impressing stock market professionals. The stock has dropped almost 70% this year alone, and there have been a bunch of stories written this week about how RIM is now trading below "book value". 

I've got two goals with this article. The first is to help novice investors understand what all of this stock market talk means. The second is to engage in a discussion as to whether the horrible stock market performance is deserved. Yeah, we all know RIM has disappointed us this year. But does the stock really deserve the metaphorical teeth-kicking that it's had?

Among the Wall Street crowd (and Bay Street in Canada), I've followed RIM for longer than most analysts. Over 10 years now ... and counting. But that doesn't make me right, just well-educated on RIM's history. I've been right and I've been wrong plenty. Lately, on RIM, I've been more wrong. But as we'll discuss, the market is highly volatile and I take a longer term perspective than most investors. I bought stock twice this year and I'm still holding onto every share I've ever owned over 11 years now.

Let's talk about the stock. Last night it closed at $18.85 on the NASDAQ. That's a per share price. The value of the entire company is $9.8 billion. In other words, theoretically, if you wanted to buy every share of RIM (and own the whole company) you'd need $9.8 billion. For comparison, Apple is valued at $374 billion, or 38 times more than RIM.

In the stock market, people find it easier to refer to per-share values, so instead of saying that RIM made a profit of however many billion dollars, we divide by the number of shares that exist and call it earnings per share (EPS).

Profitable companies, like RIM, are usually valued on some multiple to their earnings. Analysts believe RIM will earn $4.77 in EPS this year. Normally, if a company had low growth but a somewhat stable business model, the stock might trade at 10x earnings. So that would be $47.70 per share. But RIM actually trades at only 4x analyst earnings estimates.

This tells us investors think analysts are still way too optimistic. Investors believe RIM won't make a comeback with BB7 devices, and surely won't make a comeback after that with BBX devices. In other words, the market doesn't believe RIM has a stable business model at all.

Another way to look at the stock is called "book value". The first word "book" refers to the company's balance sheet, or the listing of assets and liabilities. The assets minus the liabilities is the accounting value of a company. Again, it's usually expressed as a per share value to keep things simple.

RIM's latest quarterly report reveals a book value of $18.92 per share. About 70% of this book value comes from "hard assets" like cash, money owed by customers, inventory, buildings, and equipment. The other 30% comes from so-called "intangible assets" like patents. Usually when a company's stock price is in the toilet, investors pay no attention to intangible assets. But in RIM's case, everyone knows the value of the company's patents is an important consideration.

The fact that RIM now trades slightly below its book value is another sign that investors don't think RIM will be able to make much money in the future. The stock market is clearly betting that RIM's profits will totally collapse. If you happen to disagree with that conclusion and you end up being right, you will probably make a lot of money on the stock.

I'm not giving advice here, but I have personally taken the view that the market is wrong. Sure, RIM is in a heap of trouble right now and the company has its work cut out. But they also have 70 million BlackBerry subscribers, and that number is climbing by about 5 million per quarter. Aside from the US market, they're doing quite well. Despite all of the competition from Android and iOS, there are still huge numbers of people who prefer QWERTY keyboards and love BBM. RIM owns that market.

Benjamin Graham is an old-time guru value investor. He is famous for saying that the stock market acts like a voting machine in the short term, but a weighing machine in the long term. Right now the market is voting against RIM. But how will it play out longer term?

But the market isn't perfect. It massively overvalues companies at their peak, and it massively undervalues companies at their trough. My own opinion is that the market is massively undervaluing RIM right now.

That said, RIM has done an absolutely horrible job of making its case. There is a reason investors have lost faith. Communication has been a disaster. They've consistently missed their own product launch targets. They've consistently fallen behind the competition on features. They take 3 days to get around to making any kind of public statement when their network goes down. They hold a developers conference where one co-CEO says they'll announce a leapfrogging of the industry while the other co-CEO comes up on stage and announces pretty much nothing.

In short, RIM deserves to be punished, and punished hard. They need to get their act together. They may even need more management restructuring than I've been willing to admit. But RIM is the #3 smartphone operating system on the planet and the #2 smartphone "platform" when we consider that only RIM and Apple control their entire platform (Android is software, and hardware partners make the devices).

As an investor, I'm a fan of the KISS principle. Keeping it as simple as possible, RIM either fails to make the jump to BBX, and essentially dies, or they succeed in remaining relevant. Being relevant might mean the #3 smartphone OS. It might mean being #4 behind Windows Phone. But so long as they are relevant, they should be nicely profitable. Profitable companies don't trade below book value in the long term.

Happy investing.

Disclosures: I own shares of RIM, Apple and Google.

Follow @cumiastowski on twitter and ChrisUmiastowski.com.

Reader comments

Is RIM’s Stock Price Collapse Well Deserved or a Chance to Profit?

144 Comments

Personally I purchased another couple of hundred shares. It'll be easier to make money as it bounces back rather than trying to short something under book value already.

Look: By Comparison BMW is not the "number one" car manufacturer in the world. It's Toyota, GM, Volkswagen group, and then Ford. Even Mercedes is ahead of BMW.

RIM doesn't have to be the biggest (but it IS already huge with nearly 70 million BBM users) - it just has to deliver quality both in terms of devices and experience.

I am very happy owning a "BMW" instead of a "Corolla". It's a lifestyle choice. BlackBerry appeals to a certain kind of person and there are 70 million of us out there and still growing every quarter.

The only place where RIM is not as popular and growing as fast is in the USA but RIM still owns about 10% of the (rapidly growing) Smartphone market. They are still making a lot of money and are hugely profitable.

--TTune.

The Daimler AG ~ 98 Billions (2010) revenue vs. 60 (2010) of BMW (source: wiki)

Mercedes is only one part of Daimler.
(Daimler lost a lot with the "Chrysler acquisition" ;))

BTW my grandfather drove Mercedes, my father BMW but I drive Audi.

Thats our way here in Germany ;)

Where did you get this figures? I couldn't find yours. What I found is more like Daimler AG is more worth than BMW Group.

I hope RIM can make a comeback.

Apple has come back from near bankruptcy, so we know that companies that once soared can get there - and some come back with good leadership and filling a market need.

In these days it is all about cross platform communications - and that reality has yet to sink in at Blackberry. One example: At one time most people I knew were on BBM, but not anymore. They use cross platform tools like Skype etc to communicate to others (mobiles, tablet, PC, Apples etc)

When you put out products like a tablet and aim it at enterprise, make sure it can at least do the basic "standards" VPN into Cisco, Remote desktop etc.. They did a great job on the browser itself.

Many of us are still in denial, but reality is we are looking forward to BBX, because what RIM currently has is behind everyone. In the end the market will tell the tale.

Maybe it would be in RIM best interests to not be traded on the stock market. Investors are looking for money, now and lots of it. They don't care what kinda things they have planned in 6 months or a year, they wanna know how the company is going to make them money now. When RIM said that 2.0 wouldn't come out till Feb, the share went down because they believe that they would sell less playbooks (in turn making them money).

US market may be the biggest and most profitable but RIM has the advantage of getting into the future markets and racking up the market share there. It could be a rough year for RIM but they have lots going for them, just hitting some turbulence.

What i will say is, RIM needs to lower its projections so that they can continue to say the meet there needs rather then falling short because they are overly optimistic.

After reading this post, it's obvious you have no concept of the Stock Market at all.
The Future markets? Wow.

Oh I don't know. Perhaps the writer means RIM should take itself private. Not a bad strategy.

And I think the idea is that overseas markets might be a better place to trade than the US.

If it were possible perhaps RIM could float on the Chinese or other Asian markets for example. That's where the real action is.

The US is diminshing as a world power and a wise company will be hedging against the growth of India and China.

The Playbook was officially relased a week ago in Brasil and, alas, nobody nows about it. It can only be bought online as of now and there is absolutely ZERO advertisement on it.

Sad thing is they coul vefy well multiply the number of user in here by x10 with very few ad effort...

Is RIMM going to be ok? I love the battery life. I have never owned an iPhone, but my iPod touch battery doesn't last all that long. Please RIMM .... be ok. Please !

I totally agree. If senior management's not going to wake up realizing more than half of their wealth from RIM is gone, I don't know what will.

RIM still has a chance to bounce back, but they are testing analyst and investors' patience. Even if they do make a profit, they need to beat analyst expectations AND overcome industry results. Hard to do when most analysts expect RIM to fail, and may be bent on destroying RIM.

If the price goes low enough maybe I can raise enough money through a consortium to buy all the shares and take the company private! Now that could be fun.

leveraged buyout kevin. at their value it actually wouldnt be a "crazy"idea. im sorry tho this post has sooo many inaccurate comments and thats why amateurs especially get burned in markets then they blame everyone else. even the op misstated their "value". that 9.9bln is just their marlet cap, enterprise value is much more accurate for a true comp value. dont buy shares off of rumors headlines and false information ppl. noone will feel bad when u get burned cuz u didnt do ur own hw. u need to find if the thesis ur thinking of is already priced in or not. good or bad doesnt matter.its all relative to if it has already been valued into the shares

Hmm before you condemn someone else’s post you should work on your grammar. YOUR post was annoyingly awkward to read. Your posting on a blog, not sending a txt message.

If you're going to accuse me of posting inaccurate info in my article you better have a stronger argument than market cap versus enterprise value. Two different metrics and both are correct to use.

FYI, RIM's cash position is about 10% of market cap. It's hardly a meaningful difference. And more importantly, it can hardly be considered "excess cash", which is normally when you'd exclude cash and look at EV in a tech company.

****Shifting to English for you ****

im not so kuul to b able 2 no how u shud valu stox and ppl like me r 2 dum cuz we dont do de hw. i get it.

bbpanda, elle-ade, csman...

even after all the noobish comments I still clarified. Clearly a waste of time. Only ones that got owned were the 3 of you! Tards. And I even wrote 2 more comments below to show you idiots what I meant. Sent Chris a PM too. No response from anyone after I laid it all out for you. Owned much? hah

Whoa Whoa WHOA! Easy there Chris I wasn't bashing your entire post just wanted to let all these others in on another, possibly more valuable metric for an industrial comp like RIMM. And for everyone bashing my "english" and grammer, enjoy the PB love as that was straight out typed on the PB. I don't feel the need to waste time doing all the 2nd or 3rd extra clicks to insert hyphens and commas as the PB STILL doesn't have auto correct. The reason I mentioned EV is because you NEED to factor in the debt load of a comp like this if you're talking takeover value or not. They have very little cash, exactly the point, as anyone looking at their value needs to factor in the debt load negations that subtract value (or in some cases can add value).

AGAIN, Chris I wasn't bashing you or saying you should not mention stocks. I have no doubt you know RIMM much better than I do judging by your comments and the fact you've been following them for years. However, I WAS saying that MANY of these comments on the post have such bad info with so much confidence behind it, and knowing the CB forum, people may actually take the info to heart and act on it. A dangerous proposition.

But to everyone that tried to bash me for my grammer. Really??? Is your composition so bad that you can't understand a sentence without commas and apostrophes? Should I go the same route and start bashing LOL for not being a real word? Fkn children

And yes, the only one that seemed to get the point of my comment was Westex74 who posted right below mine. At this point I, along with many others feel it would be best for all of the BB fans and users that RIMM were to be bought out and restructured maybe even with a spin-off. Current management has dropped the ball too many times and erased BILLIONS in shareholder value. Yes, I owned RIMM years ago when it was about $40/share. Dumped it when it hit $120. It peaked out around $144 then went straight down since then. Now we're under $20 and below a P/B of 1, meaning, market thinks their future earnings potential is worth LESS than what their current equity value is now. That is a very slippery slope for a company to climb. If they had strong management that delivered clear, timely messages we may have a better chance. I fear that before QNX or any of the great BB ideas are actually rolled out, the company is going to hit harder times. I used to love my bb/pb but have grown to really not trust anything that RIMM says anymore. It's really sad. They have so many good ideas and good technology, but just can't seem to bridge the gap from concept to commercial delivery. I think a management shakeup would instill confidence in shareholders as well as everyone else (us). Things need to be done

In all seriousness, that is now an option. RIM's stock price is now at the level that would attract a buyer or takeover. It isn't much of a stretch to see a M$FT or Google simply buying RIM, or a Raider buying it and splitting the company into pieces...

The stock market is something I've never gotten into, but my sense has been basically the same: RIM stock is a steal right now. They keep announcing profits and keep having their stocks drop. I agree that the worst case really for RIM is that they stick around as the #4 smartphone maker, probably still with a pretty solid majority in enterprise and in emerging markets. Maybe that's not as profitable as Google, Apple, and Microsoft, but it'll still be a pretty solid business.

The stock market is all about perception so even if RIM starts to do better but the public thinks they arent all that stable, the prices will remain low. Once RIM gets the public's attention and makes them believe they are doing and will continue to do better, Im sure prices will go up.

Sounds like you are always beating a dead horse Kevin. I really don't get your optimism. You and I both know that BBX or a fancy TAT UI can't save RIM. Only a change in leadership can give RIM a fighting chance. I am sick of RIM and the BS. I sold my playbook last week and I am getting the Iphone 4S tomorrow. I still love my BBM and keyboard. Hate that I have to try new platforms but RIM is pushing me away month by month. Would not be surprise if RIM is taken over next year, even if only for patents.

No offense, really, but this sounds like a guy who has a lot of friends that have an iPhone or an iPad and doesn't like getting the bad press; and that is OKAY! I'll see you when RIM is popular again. I take it that all of his friends are teasing him about his Playbook, the stock price, etc. I AM NOT OVERLY OPTIMISTIC. However, taking a look at the road map even with missed projection the future look pretty bright. Qnx phones, OS 2.0, the BES managment of other platforms; this is real, even if the projection is missed. Lol, again.
Last, stock market is based on the perception of the road map that RIM has. RIM has missed projection several times so honestly, RIM has not given the investors a reason to be optimistic. Welll, just call me the fireman because I go in when everyone else is running out. I say buy, NEVER underestimate the guy who created the market for smartphones.

You're gonna love the battery life of the iphone4s. I own one and I tried it. Now Siri stays home and is used as a voice-command alarm clock! =D

When I'm out, I'm rockin' and rollin' with my tethered Playbook and my 9900. =)

I love Blackberrys and Playbooks - investing in RIMM before anyone can see where this QNX thing is going or when is not for me. Zero visibility,no thanks.

That said, it probably close to bottom.

It's selling very well. An analyst report suggested their market checks indicated the 9900 is very popular and is selling very well.

Thanks,
My co-worker has a 9900 and he said its great. I have a 9700, tried his, and I can't wait to upgrade.
It's awesome !

Apple makes computers, TVs, phones, music players and tablets. Apple could actually develop any kind of product and it will sell as hot cakes. They could even make underwear and there WILL be fanboys eager enough to say "I got an apple stuck up in my ..."

Remember it took Apple a decade to get to where they are. They did not start out with all the ipods and computers and itunes ready.

It took time to build that ecosystem, and time is what will determine if RIM can come back strongly with a competitive ecosystem of their own.

Don't forget RIM made the smartphone specifically for business use and when that was the entire smartphone market, they ruled.

Apple and now Google then tweaked it for consumer use, which made the smartphone market grow and RIM just got stuck in the 'boring' business market.

Its now left to RIM to make moves into that growing consumer market.

The only thing that will hurt their quarterly reports is that AT&T hasn't been selling them yet. They start selling them on the 9th....Days before the end of the quarter

the market rewards growth. right now rimm's market share is not growing. any argument about it being a cheap stock, oversold, good value play, etc. is purely irrelevant and inconsequential to the market.

Their market share might not be growing in the US but it's definitely doing fine in Canada, UK, and other parts of the globe. Also, did you not read the part in the article that said they're growing their consumer base by 5 million per quarter??? You call a consumer base approaching 80 million irrelevant? Your stupid comment is irrelevant.

Talk about simplifying things a bit TOO much. Guess what? RIM has been losing market share (smartphone sector, based on your comments) for a while. They never deserved to have 50% share in the USA on the back of the Storm. The drop in mkt share is old news. Yet stock has huge drops on disappointments like PB2.0 delays. Sentiment and stability is the question here.

of course their 'overall' market share is shrinking as the consumer market for smartphones explodes globally. However, they are maintaining their enterprise market share. I am not sure why people are surprised that an enterprise smartphone manufacturer is not selling well into the consumer space. Go Figure.

Sure RIM's marketshare is declining - but so is Apple's, and nobody is too worried about that...

The reality is the market is rapidly expanding and there are new players, so the pie is being shared more. RIM's relative 'shrinking' marketshare is still vastly larger in terms of absolute size than it was 2 or 3 years ago.

Says who you? Its been number one in my country for years! RIM has two great things going for them. 1) Variety 2) Network architecture. Android has too much security flaws and iPhone is always was and always will be incomplete.

Perception, performance and outlook are key to investors and stock valuation. What I think the key factors are that led to the massive devaluation of their stock are:

1. The company is large and riddled with bureaucracy (and likely a ton of dead weight). I could see this back in 2008 and knew that they were in for a rough time ahead in this marketplace as an organization! In the summer, disgruntled senior employees sent anonymous letters to RIM outlining the faults within the organization (notably the bureaucracy and lack of vision from upper management) - the official response was “everything is fine.”

2. They failed to realize that the smartphone market shifted to a consumer-focus after the iPhone came out (this consumer-focus seems so natural to me since it is people who define what they want from their technology rather than IT managers). Many companies in North America (my company included) now allow people to choose their smartphone, and many are choosing phones that allow them to take advantage of social media and awesome apps over BlackBerries. Android, iOS, and Windows Phone 7 are just as secure as BlackBerries when it comes to accessing email/calendar with ActiveSync, and they are easily managed via ActiveSync policies (including remote wipe, lockdowns, restrictions, etc.).

3. They failed to WOW the tech world with competitive technologies - this is largely due to their reliance on the BlackBerry OS, which is clunky, over coded, and difficult to develop for. Even now, RIM has nothing with any sort of WOW factor between now and early 2012 (not good for sales or market value).

4. They failed to advertise. Rather than promoting their strengths (or perceived strengths) in the past 4 years, they did very little - no WOW factor or momentum!

5. They had plenty of untimely mishaps (e.g. The 3-day service outage this past month), and handled it poorly (which the media jumped on). They offered some free apps as an apology, but most of the apps so far have been crap. Vodafone is giving customers discounts that they will charge back to RIM, and there is currently a class-action lawsuit against RIM on behalf of affected customers.

6.Their two co-CEOs (Lazaridis and Balsillie) have a poor public image - Balsillie is widely considered a bully/jerk from his failed hockey team purchase attempts, and Lazaridis clearly came off as defensive/rude during press interviews such as this one: http://news.bbc.co.uk/2/hi/programmes/click_online/9456798.stm).

Many of the strategic things that RIM has done in the past 3 years have also backfired, which will worry investors even more:
1. They started aggressively selling cheaper/older BlackBerries to many other countries around the world. This allowed them to grow their subscriber base when they were tanking in North America, but prevented them from focusing on the technology market that shapes the world: the North American market. As a result, the BlackBerry brand plummeted in value during 2011 - it’s no longer cool to own a BlackBerry.

2. They bought QNX to replace their antiquated BlackBerry OS as well as bought The Astonishing Tribe to design it’s UI (the new BBX platform). These are both EXCELLENT moves - however, it won’t be available until early 2012 - most analysts say it’s already too late right now and that BlackBerry isn’t likely going to be anything more than a niche player at best if things go well in 2012.

3. They released the PlayBook running QNX as a sneak-peek into what their OS will look like in 2012. The hardware was very good, but didn’t have native email and had to be tethered to a BlackBerry for full functionality - the media slammed them hard, and sales were low. To make matters worse, they delayed their major PlayBook update until 2012 (it was to have native email and Android app support).

4. They ditched their slow Marvell CPUs in favor of the fast Qualcomm Snapdragon CPUs in the BlackBerry 7 devices. I can only imagine how low BlackBerry 7 sales would be if they didn’t do this. Unfortunately, they didn’t really add much other than hardware speed - BlackBerry OS 7 is basically OS 6 written for the faster Qualcomm Snapdragon platform., and OS 6 users can’t upgrade to OS 7 as a result.

5. They announced that Adobe Flash, Webworks, HTML5, and native QNX (C/C++) would be the development streams for the BBX platform at DevCon 2011. The first 3 technologies are cross-platform, which will make it very easy for developers to port their apps to the BBX platform and ultimately result in a wealth of available apps for BBX in general. the native QNX (C/C++) tools will be great for serious game developers. The downside is that by ditching the JDK (the method used to create apps in previous versions of BlackBerry), they alienated all of their existing developers who must now rewrite their apps from scratch to work on BBX.

What I think RIM needs to do (addressed to RIM):
1. Get a marketing campaign out NOW! You have to push your perceived strengths - security (use in government/police/fire depts/hospitals), reliability (to negate the downtime this past month), and the big move to BBX (this must be hyped up to grab people’s attention and include sneak peeks of BBX). Focus on North America!!!

2. Get rid of Lazaridis and Balsillie (it’s done guys - nobody will trust you again).

3. Split into a few smaller business units (this will help with the bureaucracy).

4. Get rid of MOST of upper management and replace them with people from organizations such as Google and Apple (total culture change). Get rid of others in the organization that can’t change.

5. Hire a competent PR company to maintain your corporate image and BlackBerry brand.

6. Ensure that BlackBerry car stickers come with every BlackBerry (like Apple) - you’re the underdog now and need people to root for you.

7. Be as nice to developers as Microsoft is.

8. Create an app player for BBX that will allow people to run their existing BlackBerry apps made in the JDK.

9. Ensure that QNX phones (the BBX platform) are flawless in every way possible and competitive with the phones out today. There should be no more than 3 models - high-end, mid-range, and low-end (for emerging markets and teens).

10. Release BBM apps for iPhone and Android - a flat rate cost for the app (e.g. $9.99/year) would allow them to use the BBM services and see why BlackBerry is good.

11. Give me a free 9900 for all of the time I spent to voice my honest criticisms and suggestions.

The day I see a front facing camera and flash on a Bold, blackberry will have created the greatest smartphone off all time. I'm dreaming of the day that you can "facetime" with your BBM Group for business conference calls!!! This is where they should be heading, but continue to fall short.....

Perception, performance and outlook are key to investors and stock valuation. What I think the key factors are that led to the massive devaluation of their stock are:
1. The company is large and riddled with bureaucracy (and likely a ton of dead weight). I could see this back in 2008 and knew that they were in for a rough time ahead in this marketplace as an organization! In the summer, disgruntled senior employees sent anonymous letters to RIM outlining the faults within the organization (notably the bureaucracy and lack of vision from upper management) - the official response was “everything is fine.”
2. They failed to realize that the smartphone market shifted to a consumer-focus after the iPhone came out (this consumer-focus seems so natural to me since it is people who define what they want from their technology rather than IT managers). Many companies in North America (my company included) now allow people to choose their smartphone, and many are choosing phones that allow them to take advantage of social media and awesome apps over BlackBerries. Android, iOS, and Windows Phone 7 are just as secure as BlackBerries when it comes to accessing email/calendar with ActiveSync, and they are easily managed via ActiveSync policies (including remote wipe, lockdowns, restrictions, etc.).
3. They failed to WOW the tech world with competitive technologies - this is largely due to their reliance on the BlackBerry OS, which is clunky, over coded, and difficult to develop for. Even now, RIM has nothing with any sort of WOW factor between now and early 2012 (not good for sales or market value).
4. They failed to advertise. Rather than promoting their strengths (or perceived strengths) in the past 4 years, they did very little - no WOW factor or momentum!
5. They had plenty of untimely mishaps (e.g. The 3-day service outage this past month), and handled it poorly (which the media jumped on). They offered some free apps as an apology, but most of the apps so far have been crap. Vodafone is giving customers discounts that they will charge back to RIM, and there is currently a class-action lawsuit against RIM on behalf of affected customers.
6.Their two co-CEOs (Lazaridis and Balsillie) have a poor public image - Balsillie is widely considered a bully/jerk from his failed hockey team purchase attempts, and Lazaridis clearly came off as defensive/rude during press interviews such as this one: http://news.bbc.co.uk/2/hi/programmes/click_online/9456798.stm).
Many of the strategic things that RIM has done in the past 3 years have also backfired, which will worry investors even more:
1. They started aggressively selling cheaper/older BlackBerries to many other countries around the world. This allowed them to grow their subscriber base when they were tanking in North America, but prevented them from focusing on the technology market that shapes the world: the North American market. As a result, the BlackBerry brand plummeted in value during 2011 - it’s no longer cool to own a BlackBerry.
2. They bought QNX to replace their antiquated BlackBerry OS as well as bought The Astonishing Tribe to design it’s UI (the new BBX platform). These are both EXCELLENT moves - however, it won’t be available until early 2012 - most analysts say it’s already too late right now and that BlackBerry isn’t likely going to be anything more than a niche player at best if things go well in 2012.
3. They released the PlayBook running QNX as a sneak-peek into what their OS will look like in 2012. The hardware was very good, but didn’t have native email and had to be tethered to a BlackBerry for full functionality - the media slammed them hard, and sales were low. To make matters worse, they delayed their major PlayBook update until 2012 (it was to have native email and Android app support).
4. They ditched their slow Marvell CPUs in favor of the fast Qualcomm Snapdragon CPUs in the BlackBerry 7 devices. I can only imagine how low BlackBerry 7 sales would be if they didn’t do this. Unfortunately, they didn’t really add much other than hardware speed - BlackBerry OS 7 is basically OS 6 written for the faster Qualcomm Snapdragon platform., and OS 6 users can’t upgrade to OS 7 as a result.
5. They announced that Adobe Flash, Webworks, HTML5, and native QNX (C/C++) would be the development streams for the BBX platform at DevCon 2011. The first 3 technologies are cross-platform, which will make it very easy for developers to port their apps to the BBX platform and ultimately result in a wealth of available apps for BBX in general. the native QNX (C/C++) tools will be great for serious game developers. The downside is that by ditching the JDK (the method used to create apps in previous versions of BlackBerry), they alienated all of their existing developers who must now rewrite their apps from scratch to work on BBX.
What I think RIM needs to do (addressed to RIM):
1. Get a marketing campaign out NOW! You have to push your perceived strengths - security (use in government/police/fire depts/hospitals), reliability (to negate the downtime this past month), and the big move to BBX (this must be hyped up to grab people’s attention and include sneak peeks of BBX). Focus on North America!!!
2. Get rid of Lazaridis and Balsillie (it’s done guys - nobody will trust you again).
3. Split into a few smaller business units (this will help with the bureaucracy).
4. Get rid of MOST of upper management and replace them with people from organizations such as Google and Apple (total culture change). Get rid of others in the organization that can’t change.
5. Hire a competent PR company to maintain your corporate image and BlackBerry brand.
6. Ensure that BlackBerry car stickers come with every BlackBerry (like Apple) - you’re the underdog now and need people to root for you.
7. Be as nice to developers as Microsoft is.
8. Create an app player for BBX that will allow people to run their existing BlackBerry apps made in the JDK.
9. Ensure that QNX phones (the BBX platform) are flawless in every way possible and competitive with the phones out today. There should be no more than 3 models - high-end, mid-range, and low-end (for emerging markets and teens).
10. Release BBM apps for iPhone and Android - a flat rate cost for the app (e.g. $9.99/year) would allow them to use the BBM services and see why BlackBerry is good.
11. Give me a free 9900 for all of the time I spent to voice my honest criticisms and suggestions.

The voting machine comment is definitely a good analagy for RIM. There are many people that own the stock (like me), however there is an equal amount of people shorting the stock. At some point the shorts will get squeezed, they will be forced to buy in a big way. Rim's 50million++ users gobally are not die'ing any time soon. Yes it is true RIM's total % share of smartphone market is reducing, however the pie is growing larger!

No risk, no reward as they say. To jump in now would to be betting on them unveiling a great BBX smartphone and report solid and profitable earning this quarter with BB OS7 phones (worldwide not a big leap, I believe the US market will still be weak for RIM).

Personally I think they can do it, but it is a gamble...worth taking or not who knows, if it was easy to predict he future everyone would be rich.

I think the stock devaluation is definitely an accurate reflection on RIM's inability to respond to changes in the market (consumer-focus), the way they responded to the open letter from a senior executive this summer ("everything is fine"), their failure to WOW the tech world with upcoming technology (PlayBook OS 2.0, BBX before Xmas), their failure to advertise, their untimely downtime, and the poor public image of Balsillie and Lazaridis.

wrong, they are going to earn in excess of $2 Billion this year, the market is acting very stupid right now

Hmm...since good will is often listed as an intangible asset, I'd be curious to know if this is on their balance sheet and if so, at what value.

I agree that RIM has been dropping the ball. They could have done a lot for themselves at the conference and instead they did nothing.

Lol. I love Chris' writing and ability to take the stock stuff and make it easily understandable to regular joes... That's why I bugged him to write this one!

Hope to see more posts from him here too.

Anyone DUMB enough to put money into the PLUMMETING stock of a SINKING company that has a DYING platform in THIS economy deserves to lose their shirts. There's a reason RIM's stock price is lower than a stripper's thongs on a Friday night.

NOBODY should invest their money on RIM's stock. Give me a break...SMH

why didnt you capitalize SHIRTS. since your obviously SHORTING the STOCK...you DO know that rumor-mongering is ILLEGAL.

Rumor-mongering? Ok, BIG MOUTH. Go invest the house on that stock and see where you're at in 6 months or a year...LOL

do you mind sharing your cystal ball, you obviously have a good grasp of the future.
oh will RIM's EPS be 4.77 or 5.20? that's either $2.5 billion or $2.8 Billion.

i dont know what strip club you go to but thongs doesn't even stay on the clubs ive been at on ANY night. if that's your analogy then RIM has a chance. ;)

besides, why would you even say NOBODY should invest their money on RIM's stock. it's up to the individual if they should or shouldn't invest. it may be a gamble but investing is exactly just that regardless what anaylyst have to say about a company.

There's gambling @ casinos. You're expected to take a loss in a casino. Nobody expects to take a loss on Wall Street. Investing in a plummeting company is ridiculous. Go invest in a yellow page company stock, why don't you? Same theory. The print industry still has companies on the stock market. Their stock price has also went by way of thongs off a stripper's rear. Invest in them while you're at it.

RIM has not shown the ability to produce a product that's going to turn the stock price around. In fact, it's a step closer to dropping than it is increasing. That's NOT the way to go, my friend.

Anyone who "suggests" it's a good stock to buy should be arrested for fraud.

LOL - This is idiotic, Jimmy. If you're going to claim that all "plummeting stocks" are bad investments then you should be able to prove to us how you've made billions by shorting them using your dummy-proof algorithm.

I mean, hey, "plummeting" should be pretty easy to define, no? Pretty easy to just go short them all and make billions!

(Didn't think so)

Hey Chris...Go ask some of the UNFORTUNATE RIM stock owners how they feel about the stock? You know..the guys who now REGRET not selling 3 years ago, but didn't because of people like YOU?

There are no algorithm unless we're talking about Google AdWords and SEO/SEM, dude. There's a simple reality delusional people like yourself aren't getting. RIM has fallen behind, the market realizes this, investors aren't giving RIM a break, thus the stock has SUNK much like the Titanic did after the iceberg introduced itself to her.

Get real....

This kind of thinking is generated by fools. The market, by definition, is made up of equal numbers (of shares) being bought and sold. Stocks go up and down. Your all caps screaming wreaks of emotional investing. Good luck.

Put your money where your mouth is. Go INVEST on RIM if you're dealing with facts we don't know about. If you're not, then you're just talking SHEET. Emotional spending would be a BB fanatic blindly buying 10,000 shares of this PLUMMETING stock. You buy low because the market is dead, with the hopes it will pick up. BB has seen their price DROP because the market is slow AND because their products are INFERIOR to the competition.

LMAO @ BB fanatics going after someone telling the truth.

thanks for the article Chris, this is one good article, I bought some shares of RIM @25 and I will hold on to them as RIM is worth more than what it is.

Just curious, Warren Buffett specializes in finding undervalued companies. Does anyone know if Berkshire Hathaway has a position in RIM?

Certainly believe RIM's stocks going down was something they were asking for. They delayed Playbook OS 2.0, BBX release timeline looks like will be delayed, and other issues are occurring. Because of that, people do not want to invest in the company. The future is looking bleak. Does RIM have a chance to give people profit tho? They certainly do. Make some good things happen early 2012 and the stocks will certainly rebound in their favor.

why CB keep asking stupid questions/posts about if RIM/BB going down.. we all know its going down by the way company has been running from last 3-4 years. These are all the ripple effect and there are many more to come..

Pushing OS2 to Feb. 2012 may be a sign that this management is finally accepting, listening to what their R&D team is telling them. If that were the case, this would be good for stakeholders longer term. Short term, the company just need to tune out all the noise and focus on doing what they do best.

good time to get some rim stock.
I predict when ATT get the 9900 the stock will rise and
when the playbook 2.0 release the stock will go off the chart !!

On the internet I found an article that states 66% of RIM shares are held by institutional & mutual fund owners. I presume this kind of investor is nervous when there's bad news. Their analysts are probably telling them to sell.

Maybe RIM is stuck with too much of this kind of investor, investors that play with other people's money and when there's bad news they panic.

Good article Chris, but I don't share your conviction on RIM as an investment. The stock market has humbled many professional investors holding RIM stock. The market is a forward discounting mechanism and it believes what is happening to RIM in NA market will also befall RIM in other markets. The market has no confidence in Mike Lazaridis and Jim Balsillies. RIM is strictly for speculators at this point. It is not a blue chip investment like Microsoft, Google or Apple.

Betas are a measure of relative volatility not speculation. The three companies I referenced are leaders in their respective core markets (PC operating system, internet search/ advertising, mobile ecosystem) with high barriers to entry for competitors.

RIM is in an extremely competitive mobile market where it has wasted its lead by failing to innovate. It can't even execute "me too" products in a timely manner. This does not inspire confidence and the market is right. It's a show me stock where it can trade in a narrow range for years or continue to fall precipitously like Nokia.

I don't own RIMM (yet). I'm in the financial planning business though, and the thing that separates people from their money faster than anything in the markets is.... emotion. You don't have to read very many posts on this site to know that's something that isn't in short supply!!

The markets don't like uncertainty and there is a lot of that going on with RIMM right now. If you look at the hard numbers though, I think it's probably been oversold. Companies don't trade below book value for very long without either:

a) going bankrupt (RIMM has positive cash flow still) or,
b) getting bought out (usually at a premium to the current share price, or
c) trading above book value as earnings improve and market sentiment turns positive

Meatloaf said that "two out of three ain't bad" so I'm leaning towards it being a BUYING opportunity myself, but time, as always, will tell.

i was not in favour of the buyback that RIM announced during Q1 earnings but at these current prices they need to buy up as much as they can afford, too bad their inventory level were so high at Q2 the cash would be handy right now.

going forward RIM needs to change their image/perception in the US, all the negativity starts to.become reality in the minds of people whether it is true or not.

RIM is fortunate they have a very healthy balance sheet, it should help them overcome their troubles.

btw, RIM please produce a qwerty BBX phone, as much as i like my PlayBook, i cannot stand typing on a touchscreen!

i was not in favour of the buyback that RIM announced during Q1 earnings but at these current prices they need to buy up as much as they can afford, too bad their inventory level were so high at Q2 the cash would be handy right now.

going forward RIM needs to change their image/perception in the US, all the negativity starts to.become reality in the minds of people whether it is true or not.

RIM is fortunate they have a very healthy balance sheet, it should help them overcome their troubles.

btw, RIM please produce a qwerty BBX phone, as much as i like my PlayBook, i cannot stand typing on a touchscreen!

I heard on BNN one night that the Canadian Pension Fund owns a big chunk of RIMM shares. Something like 18% (if memory serves) May be they will entertain taking this company private.

Agreed on all the points.

Unfortunately, there is no silver bullet like a BBX that will save RIM. Getting the developers community to support RIM and change of leadership by empowering new blood from acquisitions will be positive for the Company well being.

No, the Company is not going bankrupt ... Not yet, anyway.

It is sad to see a Canadain success spiraling down. But, that's what happens all the time. What happened to IBM, DEC and now Intel (ARM) ... Microsoft empire eroding against the tide of open source and Google (anyone track MSFT share prices?) ... So, what is so unique in RIM?

RIM will survive but the glory days are over unless we see support from the development community and fresh young minds taking the reins ....

Buy below $10 :)

I`d say 50% to 50%.

50% yes:
RIM did too less in some parts.
Many people were frustrated after the 8900/9000 era, they hope to get something better.
There was a lot of innovations-talk going on the past years about new things that never happend (like liquid lense etc.) or came far too late.

Best example: Playbook - awesome device, but except for browsing via WiFi almost useless, if you don´t own a bb-smartphone.
That shall be the result after 2years of research from a leader?

50% no:
There was too much bad press going on.
But it´s also clear, if you were once a leader and you showed some weak sides, that the press uses that to blow up a "hate compaign" with frustrated people.
Thats not good for your goodwill.
People keep to stare with eagle eyes on every move you do - with tripple criticism!

Chris what. You forgot to mention in the blog you wrote is rims eps is expected to be $4.72 the problem is what was it supposed tobbe I believe somewhere around $7 that's the pronlam its not only that the market has lost faith rims profits are starting to decline and once the spiral down starts with profitsb it becomes hard to stop

RIM revised its EPS during their Q1 earnings call to 5.2 - 6.0 and they reaffirmed it at the low end in Q2. I believe the average analyst estimate is 4.77, so even they don't believe RIM will meet their low end guidance.

Nobody wants to see RIM do poorly or go under - especially since (I assume) that everyone posting here carries a BlackBerry (I do!). But market valuation is largely dependent on the company's perceived roadmap - and with tech companies, it isn't hard to see a few years in the future. And RIM's future is looking rocky given recent trends and the way that they have interacted to industry/customers/partners/developers. Sure, they still ship smartphones, but they are largely older/cheaper devices to emerging markets rather than North America (and emerging markets are easy to penetrate by others such as Nokia). I honestly think that the best thing that can happen to RIM right now is getting rid of upper management, including the co-CEOs!

I think that it is reflective of how poorly RIM has been managed. The co-CEO business model hasn't worked and they have run the company into the ground. It is past time for restructuring.

For the past several years the management at RIM has been asleep at the wheel, and now they are being punished. The stock has declined so much, that the BOD is going to to give them a wake-up call very soon.

This is a perfect example of how inept the 2 co-ceo's are. IMHO even if create a "super product" based on the new technologies "BBX" it will be to little - to late.

They are doomed to be a small niche player in the eco-system.

I find it interesting that years ago Mile L was talking about how the bandwidth usage was just 1/6 of the competitors for getting email, etc. If thats still the case why does it look like most vendors are only carry just one model of BB'

GE traded around 60 back in 2000-2001. Then it crashed over the period of a year or so, and has traded around 20 or so for the last several years. So do I think GE is worth more than 20, with it's diverse portfolio (financial, healthcare, lighting, appliances, engines, etc)? Sure I do. Would I buy stock? Heck no. GE was overvalued all these years, and it has settled on where it should have been And there's nothing that RIM is doing at the moment that would make me believe it will regain all the market share it has lost quickly, so I think the stock is where it should be, it will probably go a little higher next year if they deliver on the new OS, but no one is going to get rich quickly.

RIM should not be trading below book, its current assets alone suggest a higher valuation the bears have taken control of RIM share price.
RIM has to continue with its transition to BBX but one of the CEO's has to step down however you won't see this happen until Q4 (March 2012) unless they turn the tide, the clock is ticking Mike and Jim.

I think the market on RIM has always over reacted in both directions. Right now it is on the downside.

I believe RIM stock will climb because it is below book value and we are talking about a company that is growing (not so hot in the U.S.) but worldwide it rocks.

However, I think people should consult a financial advisor to make this kinds of decisions.

RIM has been loosing Market Share for a few years now, but they had been able to increase their user base and sales during this time.

But as of the third quarter they have started to loose sales - shipped 600K fewer BlackBerry's in the third quarter. Now this could be because they had not release a new device in almost a year, and many were waiting for the new OS7 device. Hopefully the forth quarter will see a BIG increase in sales. But if the increase is small, or if the decline continues...

RIM biggest problem maybe focus. They should consider simplifying. Instead of several models - focus on two models (w/ keyboard and without) and one tablet. Make them beat or at minimum meet current competition. Release new improved versions of those two models each year.

Deserved. The co-CEO's have made statements with dates and time lines for critical features for devices that did not happen. They have made many comments like the "leapfrogging" for DevCon that have turned out to be duds. RIM's CEO's have zero credibility and no one should believe a word that they say.

Great article Chris. I too am a RIM stock holder but where we differ is that I am not convinced the stock has hit bottom yet. When it does I intend to buy heavy, but it won't hit bottom until both CEOs step down from their positions and we begin to see a wholesale leadership change in the company. The day that happens, the stock will rebound in a big way I believe...

PG

PG - I'm not sure it has hit bottom either! So we're not that different.

I am not great at calling bottoms, as evidenced by my own trades.

But I don't need to pick stock up at the bottom to make money. And if I'm wrong, and I end up losing money, I can deal with it. I accept my own wins and losses.

I was going to write about trying to catch a falling knife, but the article would have gone on an extra thousand words :)

Well, at this price, if the possibility of an acquisition was ever serious, this would be the time it would occur.

IMO, there is one product left in RIM's tank, MAYBE two.

1) BBX super phone device - this needs to be executed to perfection - does RIM have the people behind the potential launch in the near future. There is no question now, hardware, RIM is ahead of Apple and Android phones by way of reliability. The legacy OS is what has been the real problem with Blackberry's.

The product is solid, the marketing is questionable...

2) Cyclone - when the BBX device in question has calmed a tad

Just like when you travel to Las Vegas, don't bring your life savings with you, but I'm going to bet on black, and let it ride. It is going to be gamble BIG TIME on whether RIM can execute cause they failed with Torch, failed with Playbook, and are failing on BB OS 7...

With android doing hundreds of thousands activations per day...
Rim is in serious trouble with only 5mil per quarter.
The growth is not quick enough.
The phones are about a year behind in development, indeed bold 9900 is an awesome replacement but it should have been here last year. Three years to get a refresh model?
Playbook... love/hate the playbook... what a flop with the version 2.0... Bridge? as an add on it would be great where you connect a second blackberry to the playbook, but as a main replacement of the email system? Who are you kidding?
Rim had an opportunity this fall but it is not quick enough, the BBX is coming out when? next year? Playbook 2 OS next year? but next year you will also see iPhone 5 and iPad 3... plus there is whole bunch of Windows phones and tablets all getting to the market with their Metro stuff and it is good. If you think it is a tough fall wait until next year.

Seriously, does anyone actually use their tablet for email?

I use my Playbook constantly - its fantastic for traveling. But I've rarely if ever used it for email.

I haven't used an email client on any device (other than BlackBerry) for a decade. I always use web email.

And next year will see a number of patent lawsuits against Android hit the headlines. There's a good chance Android will be dealt a fatal blow by Oracle if Google don't play ball. Either way it's all good for RIM.

Apple has run out of ideas and lost its leader. They're going to stagnate and then fall.

Owning shares in a company incapable of competing with the iPhone and Droid is what's sinking stock price. Even if they were to produce something comparable, the damage is done.

Droid and iPhone have successfully turned the QWERTY fans to touchscreen users. Once you go touchscreen, you're not going back to QWERTY unless you have enormous fingers or are too stubborn to learn how to use a touchscreen.

The email issues are a thing of the past with iPhone and Droid. 99% of people don't give a hoot about email security. I sure don't. What we care about is a device that does it all. Good screens, fast internet, plenty of apps, reliable phone service, no lags, games, a good camera, a good recorder. All the stuff blackberry fell behind. Yes, they sort of caught up in the eyes of those who left BB behind. How do you bring those customers back? All they've done with OS7 is keep their customer base happy. And judging by the members of this site, it's not too hard to keep a collection of BB junkies happy with the occasional "fix". Those of us that strive for better products, and expect a company to stay up with the times, will move on. BB has done NOTHING to bring back customers. The only ones who do are the ones who complain about battery life of the Droid and iPhones. As an adult who owns a car, and uses it when he's out of the house, battery life is never an issue.

I have seen dozens of my friends abandon BB for other devices. The price of BB stock will continue to drop until they find a way to produce a product that TOPS Droid and iPhone. Over the last 4 years, BB has STUNK in that regard. Only in the eyes of delusional, excuse making BB fanatics, does BB even come close to matching iPhone and Droid products. That may be fine for this message board, but in the REAL WORLD, the numbers speak for themselves. The stock price does not lie. People don't believe, nor trust, that RIM will make a competitive device.

Good luck to those with RIM stock. Sell now before the bottom drops out. If you're so inclined to buy after it bottoms out, do so. Until then, you guys are vested in a money losing venture.

Opening sentence of the argument:

"Owning shares in a company incapable of competing with the iPhone and Droid is what's sinking stock price"

LOL. This reminds me of building financial models and screwing up a formula. Excel would scream at me "circular reference".

If you typed in your defense of RIM's stock on a Word document, it would spell out "BULLSHEET!"

Too bad you're not a washing machine. Your spin cycle is FANTASTIC...smh

if RIM had even some hint of a turnaround plan i'd have some faith in them but they seem to be saying nothing and doing the same old thing.

RIM is valued around $10bn, yet has revenues of $20bn a year and profits in the order of 1 or 2 bn.

It's stock price is ridiculous for two reasons. One, because the Apple dominated media has ensured negative PR for RIM over the past four years and two, because the price is being driven by options traders who have made fortunes shorting RIM stock.

But that doesn't make a BlackBerry a bad product, nor does it deny the fact that in a number of markets BlackBerrys is the number one by a clear margin - and elsewhere in the world continues to grow.

It is really only in the US that RIM is having a tough time. The idea that the company is doomed because it doesn't produce the iPhone is an argument not worthy of a four year old.

Sure RIM has terrible PR problems. Some self inflicted, others inflicted by its competitors. But RIM continues to grow; appears to have positive product development; and a reasonably loyal customer base that at this point in time still cannot find a device to replace the BlackBerry.

Perhaps when iMessage matures and the iPhone develops a keyboard RIM will need to worry.

In the meantime the price is so low I'm surprised the major investors don't take the company private. Freed from the shackles of public company reporting and the downward pressures of options traders, RIM could make the strategic investments necessary to protect its future.

RIM had got its number one phone, something like Apple has with the iPhone, some years ago - it was the Bold 9000. If RIM would every year bring a new version of the Bold 9000 construction with significant improved OS features and HW, the customers would be happy. But what have RIM done? They let the cash cow die. RIM has a bad management, which destoied the good products with itsbad decisions.

Everybody cool down!
If all of you naysayers looked at yourselves the way you look at some companies, in this case RIM, you would ALL be 6 feet under. RIM is a viable company making good profits EVERY quarter and it is going to be viable for many years.
I own a BB 9810 and a Playbook (64 GB) and I am VERY happy with both devices. They do exactly what I want them to do. As far as apps are concerned, there are already more apps for both than I can use. The fact that Apple and Android devices have gazillion apps more is really irrelevant to me.
I also own xxxx number of shares in RIM and I sure do not lose any sleep about it. In fact, this morning I bought additional xxxx shares more. I have been investing for many years and more often than not, my investments made/make money for me than not.

Shortsellers says this company is dead.
Shortsellers symply are looking for reasons to sell.
American media every day try to put down this stock.

Check out the specs on the current BB Touch 9860 or the Popular Bold 9900.
check out the specs on the future Blackberry Colt.

A company that just posted a year with record revenue is dead? A company with cash and no debt? A company with more then 70mil subscribers?

No. It is a fairytale land of insane valuations. A Fairytale land that thinks AAPL and GOOG can grow at 500% forever.
People change and change FAST.

They will regain marketshare with the new line of phones and their future phones in 2012.
They will expand marketshare in key regions such as India and Indonesia

Rimm is looking for growth in the Right places and not (maybe) in the superstupid country apple world (USA).

Shortsellers says this company is dead.
Shortsellers symply are looking for reasons to sell.
American media every day try to put down this stock.

Check out the specs on the current BB Touch 9860 or the Popular Bold 9900.
check out the specs on the future Blackberry Colt.

A company that just posted a year with record revenue is dead? A company with cash and no debt? A company with more then 70mil subscribers?

No. It is a fairytale land of insane valuations. A Fairytale land that thinks AAPL and GOOG can grow at 500% forever.
People change and change FAST.

They will regain marketshare with the new line of phones and their future phones in 2012.
They will expand marketshare in key regions such as India and Indonesia

Rimm is looking for growth in the Right places and not (maybe) in the superstupid country apple world (USA).

That's a pretty strong narcotic you're using that leads you to believe a platform as SOFT and BlackBerry is capable of competing with Droid and iPhone. They call them hallucinogens. Don't take too many of them or you might need a trip to the rehabilitation factory.

Apple and Droid are growing because their products are elite. BlackBerry has not been elite since before they released the "iPhone Killer" and what not. iPhone began the purge. Droid'a arrival in 2009 has effectively DEMOLISHED RIM.

It's 2011 and RIM just released an 0S7 platform that should have hit the market in 2009. I had faith in QNX, but they're not going to be better than Droid of iPhone. Seeing their MASSIVE flop with the PlayBook using QNX is a prelude to what promises to be another wire hanger ABORTION release by RIM. I would wager a toe QNX comes out with a half-ass introduction, which will once again leave RIM fans holding a worthless bag of broken promises.

PlayBook is a flop due to lack of native PIM tools, email and general lack of business apps. Plus the confusing marketing, "It's a professional tablet" Yet all that RIM management touts is its gaming capability.

RIM fanboys can drink Co-CEOs' Kool-Aid, "You don't need native email and PIM tools"

But it's not convincing the majority of BB users, nor Android users nor iPhone users.

A good and interesting article. I also enjoyed your appearance on the DevCon podcast. Refreshing to hear reasoned argument instead of unthinking RIM fanaticism.

Though I wish I was as close a friend of CrackBerry Kevin as you are. :)

Folk are routinely branded as disloyal haters and trolls in the forums for stating even half of what you say in the last few paragraphs of your article. :)

Looking forward to more from you!

Nicely done. You might want to cover Open Interest on your next column about RIMM shares. At the moment that is the bulk of activity and likely to remain so at least until February 2012.

My shares are actually down in value, and I originally bought half of what I wanted to hold long term. However, despite the below book value dive, I don't think RIMM shares have bottomed out. Due to their recent poor guidance, and some preliminary sales volume figures for this quarter, my guess is RIMM will miss guidance on their next quarterly. Then share prices will get hammered even more.

I agree with you a bit on where they should be in share price, especially when you look at other P/E rations of tech companies. Unfortunately there needs to be a big shock of confidence to get investors buying back into this company.

Perception, performance and outlook are key to investors and stock valuation. What I think the key factors are that led to the massive devaluation of their stock are:

1. The company is large and riddled with bureaucracy (and likely a ton of dead weight). I could see this back in 2008 and knew that they were in for a rough time ahead in this marketplace as an organization! In the summer, disgruntled senior employees sent anonymous letters to RIM outlining the faults within the organization (notably the bureaucracy and lack of vision from upper management) - the official response was “everything is fine.”

2. They failed to realize that the smartphone market shifted to a consumer-focus after the iPhone came out (this consumer-focus seems so natural to me since it is people who define what they want from their technology rather than IT managers). Many companies in North America (my company included) now allow people to choose their smartphone, and many are choosing phones that allow them to take advantage of social media and awesome apps over BlackBerries. Android, iOS, and Windows Phone 7 are just as secure as BlackBerries when it comes to accessing email/calendar with ActiveSync, and they are easily managed via ActiveSync policies (including remote wipe, lockdowns, restrictions, etc.).

3. They failed to WOW the tech world with competitive technologies - this is largely due to their reliance on the BlackBerry OS, which is clunky, over coded, and difficult to develop for. Even now, RIM has nothing with any sort of WOW factor between now and early 2012 (not good for sales or market value).

4. They failed to advertise. Rather than promoting their strengths (or perceived strengths) in the past 4 years, they did very little - no WOW factor or momentum!

5. They had plenty of untimely mishaps (e.g. The 3-day service outage this past month), and handled it poorly (which the media jumped on). They offered some free apps as an apology, but most of the apps so far have been crap. Vodafone is giving customers discounts that they will charge back to RIM, and there is currently a class-action lawsuit against RIM on behalf of affected customers.

6.Their two co-CEOs (Lazaridis and Balsillie) have a poor public image - Balsillie is widely considered a bully/jerk from his failed hockey team purchase attempts, and Lazaridis clearly came off as defensive/rude during press interviews such as this one: http://news.bbc.co.uk/2/hi/programmes/click_online/9456798.stm).

Many of the strategic things that RIM has done in the past 3 years have also backfired, which will worry investors even more:
1. They started aggressively selling cheaper/older BlackBerries to many other countries around the world. This allowed them to grow their subscriber base when they were tanking in North America, but prevented them from focusing on the technology market that shapes the world: the North American market. As a result, the BlackBerry brand plummeted in value during 2011 - it’s no longer cool to own a BlackBerry.

2. They bought QNX to replace their antiquated BlackBerry OS as well as bought The Astonishing Tribe to design it’s UI (the new BBX platform). These are both EXCELLENT moves - however, it won’t be available until early 2012 - most analysts say it’s already too late right now and that BlackBerry isn’t likely going to be anything more than a niche player at best if things go well in 2012.

3. They released the PlayBook running QNX as a sneak-peek into what their OS will look like in 2012. The hardware was very good, but didn’t have native email and had to be tethered to a BlackBerry for full functionality - the media slammed them hard, and sales were low. To make matters worse, they delayed their major PlayBook update until 2012 (it was to have native email and Android app support).

4. They ditched their slow Marvell CPUs in favor of the fast Qualcomm Snapdragon CPUs in the BlackBerry 7 devices. I can only imagine how low BlackBerry 7 sales would be if they didn’t do this. Unfortunately, they didn’t really add much other than hardware speed - BlackBerry OS 7 is basically OS 6 written for the faster Qualcomm Snapdragon platform., and OS 6 users can’t upgrade to OS 7 as a result.

5. They announced that Adobe Flash, Webworks, HTML5, and native QNX (C/C++) would be the development streams for the BBX platform at DevCon 2011. The first 3 technologies are cross-platform, which will make it very easy for developers to port their apps to the BBX platform and ultimately result in a wealth of available apps for BBX in general. the native QNX (C/C++) tools will be great for serious game developers. The downside is that by ditching the JDK (the method used to create apps in previous versions of BlackBerry), they alienated all of their existing developers who must now rewrite their apps from scratch to work on BBX.

What I think RIM needs to do (addressed to RIM):
1. Get a marketing campaign out NOW! You have to push your perceived strengths - security (use in government/police/fire depts/hospitals), reliability (to negate the downtime this past month), and the big move to BBX (this must be hyped up to grab people’s attention and include sneak peeks of BBX). Focus on North America!!!

2. Get rid of Lazaridis and Balsillie (it’s done guys - nobody will trust you again).

3. Split into a few smaller business units (this will help with the bureaucracy).

4. Get rid of MOST of upper management and replace them with people from organizations such as Google and Apple (total culture change). Get rid of others in the organization that can’t change.

5. Hire a competent PR company to maintain your corporate image and BlackBerry brand.

6. Ensure that BlackBerry car stickers come with every BlackBerry (like Apple) - you’re the underdog now and need people to root for you.

7. Be as nice to developers as Microsoft is.

8. Create an app player for BBX that will allow people to run their existing BlackBerry apps made in the JDK.

9. Ensure that QNX phones (the BBX platform) are flawless in every way possible and competitive with the phones out today. There should be no more than 3 models - high-end, mid-range, and low-end (for emerging markets and teens).

10. Release BBM apps for iPhone and Android - a flat rate cost for the app (e.g. $9.99/year) would allow them to use the BBM services and see why BlackBerry is good.

11. Give me a free 9900 for all of the time I spent to voice my honest criticisms and suggestions.

Global financial turmoil has brought business enthusiasts to try the best technique they know to adapt with the existing challenges. One car company has been successful in its own field but still looking for some ways to improve or at least maintain its profit. As reported by the Automotive News, first-half profits for General Motors Company reached $6.3 billion. However CEO Dan Anderson said that it was not good enough. He announced that cutbacks will follow. Determined to recapture the lead in global sales, GM is currently aiming at Ford Motor Co. and Volkswagen AG’s 7 percent margin as the next hurdle, said GM spokesman Jim Cain. That means laid off employees will need installment loans to get by.