The Good, the Bad, and the Ugly of RIM's Report

You know that something wicked this way comes when a company halts trading right before releasing news. That's what Research In Motion (Nasdaq: RIMM  ) did on Thursday night. Trading of RIM's shares were halted at 4:15 Eastern, the report hit the wires about 20 minutes later, and the market opened up at 5:10 with a roar of disapproval. At its worst, share prices plunged 8.5%.

So what's the big news? It breaks down into three parts.

The bad: RIM missed Wall Street's estimates for sales and earnings. BlackBerry units shipped slid in at the bottom end of management's own forecast. Even worse, those estimates weren't all that rosy to begin with. We're looking at a 24.6% year-over-year revenue slide and a hair-raising 55% drop in earnings.

The ugly: Management will stop giving out financial guidance. Investors are getting less clarity than ever because management can't possibly hand out specific targets given the sorry state of RIM's business and the cutthroat market it works in.

The good: Yes, there is an upside here. New CEO Thorsten Heins and Chairwoman Barb Stymiest are getting serious about healing what ails RIM, and the report included farewells to several high-level executives. The biggest of these was former co-CEO and co-Chairman Jim Balsillie, who has left the board entirely and has no further ties to RIM, except for a large number of shares.

This may sound cold-hearted, but I've been waiting for Balsillie to leave. Alongside former co-chief Mike Lazaridis, who remains aboard as vice chairman of the board, the duo did untold damage to the company they founded by reacting slowly or not at all to a changing industry. Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) killed the old RIM years ago with their iPhone and Android smartphones; It just took the corpse a few years to fall over and stop moving. The gap between the two front-runners and RIM just keeps growing -- BlackBerry is even losing its stranglehold on enterprise accounts to iPhones and Androids.

I was afraid that Heins would simply stay the course into even deeper waters, but if this housecleaning signals a whole new direction, maybe there's still hope for the Canadians. I'm ending my bearish CAPScall on RIM right now to harvest my gains after the price drop and to get out of the way in case there's a turnaround brewing tonight. In this fast-moving trillion-dollar industry, you have to adjust your investing strategy when the winds are turning.

Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Google and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.

We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (3) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 30, 2012, at 9:47 PM, melegross wrote:

    Sorry, but it's now over. What do they have? BB7 phones that have been piling up in the warehouse. A few more new BB7 phones coming out, and then nothing until the one BB10 phone, the London, arrives late this year, having been shrunk from three phones, and delayed from the first quarter.

    The Playbook has been a failure, and announcing that they shipped 500,000 last quarter means nothing, as we know what happened to shipments last year.

    They're going to concentrate on a market, enterprise and government, which they are now losing. They will abandon the one path to recovery, which is consumer oriented devices.

    Wrong, wrong, wrong.

  • Report this Comment On March 31, 2012, at 6:33 AM, funspirit wrote:

    the only company capable of making it a three way race is Microsoft, Rim is done.

  • Report this Comment On March 31, 2012, at 6:57 PM, ampezzi wrote:

    Look's like the small and pathetics shortsellers (like always) missed the point... Rim is for sale. The real value is between 17 and 20. If the big closed the shorts...I think is time to understand...

Add your comment.

DocumentId: 1852137, ~/Articles/ArticleHandler.aspx, 7/23/2014 12:45:59 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement