Why Is RIM So Optimistic About the Second Half of the Year?
That Research In Motion has started to have a tougher time selling its BlackBerry is hardly a surprise.
The real surprise in RIM’s earnings warning was the fact that the company somehow thinks the situation will turn around in the second half of the year.
On Thursday, RIM slashed its forecast for the current quarter just one month after issuing the forecast, which itself was below what analysts were expecting. However, RIM also said Thursday that it sees things picking up toward the end of the year with full-year earnings still hitting $7.50 per share, reflecting “anticipated strong revenue growth in the third and fourth quarters of the fiscal year.”
That RIM is so confident seems surprising, particularly given what is known about the direction the company is headed.
By all accounts, the company is losing ground in mature markets like the United States and can expect much stiffer competition in emerging markets as cheaper Android phones become a global mainstay. In the United States, for example, RIM saw its share of the smartphone market drop 5 percentage points in the first quarter, to 14 percent, according to NPD.
Nonetheless, RIM sounded an upbeat note in both the earnings warning and subsequent conference call.
“As we’ve said before, we feel great about the BlackBerry platform and the PlayBook and how they’re doing,” co-CEO Jim Balsillie said on the earnings conference call.
But just why is that?
The PlayBook has debuted to rather disappointing reviews. On top of that, AT&T has yet to even enable the software that lets the tablet tether to a BlackBerry, severely limiting the tablet’s appeal for BlackBerry owners on that network. Verizon, which had been believed to be planning to launch a version of the tablet, said after the Wi-Fi version hit the market that it is still evaluating whether to offer a model that connects directly to its network.
RIM said it expects PlayBook shipments this quarter to match its estimates, but it didn’t specify a number. Plus, the company is still in the process of getting the device out to retailers. The real question is how well those tablets leave the store shelves.
As for the company’s phone products, enthusiast site Boy Genius Report has leaked a whole lineup of yet-to-be-announced BlackBerries–and they mostly resemble the current crop, albeit with a touchscreen added on.
The touchscreen is certainly a nice feature, but as the Storm and Torch have shown it is certainly not a panacea for an aging platform and a lack of top-notch apps. RIM has talked about eventually bringing to the BlackBerry the QNX operating system that powers the PlayBook. However, it has yet to give a time frame for that.
Luckily, the world shouldn’t have to wait too long to make up its own mind about the future of the BlackBerry platform. The company’s key event of the year–BlackBerry World–takes place next week in Orlando.