RIM: Berries Dying on the Vine

NEW YORK (TheStreet) -- The days of an independent Research In Motion (RIMM) appear to be numbered. Apple (AAPL) and Google (GOOG) have destroyed RIM and Nokia (NOK). Nokia is barely able to keep the lights on, and RIM's chart is equally painful to look at.

On August 2011, I wrote an article asking if RIM can survive another year. I believed the odds favored a buyout. By November 2011, I wrote a follow-up article that in a nutshell stated the Apple and Sprint contract will force a RIM takeover.
RIM CEO Thorsten Heins

After Thursday's earnings release and conference call, I am more convinced than ever that RIM will soon either sell off key parts or be bought out entirely. When a house burns down, you don't try to take the remaining pieces and build again. You start fresh with a new foundation and new building materials.

Customers and investors could have lived with a loss and writeoffs of $1.33 a share. They could have even lived comfortably with 78 million subscribers. Unfortunately, RIM CEO Thorsten Heins delivered the one piece of news investors cannot live with -- a delay in the new BlackBerry 10 until 2013.

Slow down a minute: Didn't we just see a preview of BlackBerry 10 not too long ago at BlackBerry World in May? Now Heins is stating RIM has porting issues to BB10 a few weeks before we would expect ramped up activity with BB10.


Heins, on one hand, is stressing the delay was "not related to quality or functionality," and on the other advising the delays are from porting code and will take longer than six months to solve. Well, which is it? If the platform has the desired quality and functionality, why is BB10 not getting released in 2012?

Many global carrier partners "actually prefer a Q1 launch," Heins stated Thursday. That may be all well and true, but investors prefer to know how grim things are as soon as possible. Additionally, investors prefer a sooner rather than later launch after enduring several previous postponements.

When sooner rather than later is the difference between reaching the holiday season or not, the situation becomes increasingly exigent.

RIM no longer provides guidance, and I can't immediately disagree with investors arguing RIM hasn't provided accurate guidance for over a year. What strikes me as odd is the recent warning RIM provided and yet didn't disclose the delay with BB10.

Heins should have already known BB10 needed to wait until 2013 unless the situation changed between the earnings warning and the earnings release. If he knows, why didn't he disclose at the first chance?

Letting the public know of more delays may mean those holding out can "safely" go ahead and buy a Blackberry and not worry a newer model is coming out next week.

There is no reason to protect the stock price, because what's the difference if RIM shares tank as a result, in May or June? None really.

The most logical explanation based on the limited view RIM provides is BB10 is all but dead. Sure, perhaps a "BB10" is released, but for all intents and purposes, the only thing RIM is trying to market and sell now is RIM itself.

If Heins cuts the staff for development along with all the other related staff, the costs for the company can come down dramatically. It's a scorched-earth policy that doesn't work for long in tech, but it doesn't need to work for long.


If all you're selling is the current customer base, IP assets and infrastructure, why put a lot of money into creating new technology that isn't likely going to compete against iPhone 5 and Android? If Hein believes a sale is going to happen sooner rather than later, it doesn't make sense to pour millions of dollars into a project a buyer may not want.

Watch for a sale of RIM. Better yet, if you're an investor, hope for a buyout within 2012. Any other move is unlikely to provide a greater value for shareholders at this point. I imagine management at Nokia is paying close attention also.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication, the author held no position in any of the stocks mentioned, although positions may change at any time.

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