Research in Motion, once the leading player in the Smartphone market, recently posted a quarterly loss of $125 million, or $0.24 per share, amid fierce competition from Apple and Android. Adjusted net income fell from earnings of $934 million this time a year ago to just $418 million, confirming analyst’s weak revenue expectations. Former co-chief executive and board member Jim Balsillie and chief technology officer David Yacht resigned shortly after the posted loss, adding to the company’s woes.
Thorsten Heins, recently brought in as CEO, made a statement claiming RIM would start focusing on the business market, a segment it dominated in the early 2000’s when it was one of the only companies to offer email on a mobile phone. “We plan to refocus on the enterprise business and capitalize on our leading position in this segment,” he said.
RIM has long been losing relevancy across the board as key competitors continue to innovate and crowd out market share. RIM seemed to have been so blinded by their successful stranglehold on the market in its early years that it forgot to continue pushing the envelope, staying true to the basic applications like email, calendars and SMS messaging while Apple introduced us to a world of cutting-edge Smartphone technology.
Many analysts are starting to draw comparison between RIM and Blockbuster, one of the most prominent business flops of the past decade. Blockbuster one dominated its space for years, but failed to keep up with innovative competitors like Netflix who offered a more convenient and cost-effective business model focused on DVD rental by mail.
Is RIM destined to go the way of other obsolete technology companies that fell from market dominance? Top executives think there is still time to make a push to regain market share by refocusing on the foundation of its core business. Investors apparently share this confidence-- RIM stock traded close to $15 with high volume the day after the earnings report was released.
On the short term RIM stock looks to be a risky investment as it undergoes complex corporate refocusing. However, investors seem to be willing to ride the wave for a payout in the long-term as RIM seeks to become the business-enterprise focused company it once was.
-Harper Coulson
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