RIM: “It’s Going to Be an Absolute Gong Show for the Next Few Quarters”
After the company’s grotesque fourth-quarter earnings yesterday, many on Wall Street are asking themselves that very question. And the broad consensus seems to be that RIM’s downward trajectory isn’t going to change anytime soon, despite CEO Thorsten Heins’s plan to reverse it. As Jefferies analyst Peter Misek said this morning, “We expect trends to get worse from here and think the August quarter will be dire.”
His was the first of many dour predictions from Wall Street analysts following RIM — over the past year, they have become the Greek chorus in the company’s rapidly unfolding mobile market tragedy.
Pierre Ferragu at Bernstein, for example, says there is little reason to put faith in RIM’s ability to change with the current strategy. “We think the company will continue to lose traction until it showcases its next generation of products based on QNX, and the latter is very unlikely to generate renewed consumer traction,” he says. “Developing a software platform and the attached ecosystem is an iterative game few got right in the first place and in which QNX is many years late compared to iOS, Android and even Windows.”
That’s a view held by Needham analyst Charlie Wolf, as well. “RIM appears to be pinning its hopes on its new QNX operating system, which will power its BlackBerry 10 line of smartphones due out sometime in the second half of the year,” he remarks. “But we think it’s an open question whether BlackBerry 10 can save the day. QNX, which runs on the Playbook, did not save the Playbook’s day.”
Meanwhile, Barclays analyst Jeff Kvaal is raising an eyebrow over the company’s effort to prioritize enterprise and entry-level products over consumer ones. “We believe RIM’s decision to prioritize enterprise over what it called the media consumption segment of the consumer market (which we interpret as the high end consumer) is a mistake,” he says. “RIM believes that its partnerships will allow it to be successful in high end consumer. Our view is that RIM’s declining unit volumes will make partnerships more difficult to strike.”
And then there’s Misek at Jefferies, who says RIM’s performance is a complete disaster, of which its leadership “should be ashamed.”
“They’re going to scramble around now for the next three to six months and every poor shareholder that had faith in them is going to be potentially impoverished,” he vents. “I’m so angry as a Canadian; every Canadian investor should be angry. It’s going to be an absolute gong show for the next few quarters.”