News Analysis: Research In Motion is in deep trouble, and the problems it faces could linger a long time and eventually bring the company down if they aren't resolved promptly.
Research
In Motion is quickly becoming one of the most troubled companies in the mobile
technology industry. For years, the company was atop its game, delivering some
of the finest products in the business and generating stellar earnings for
shareholders.
It's
problems go far beyond the service outage that started Oct. 11 in parts of
Europe, the Middle East, Africa and South America and began affecting users in
North America on Oct. 12. RIM has sustained major outages in the past and
asserted that infrastructure upgrades would ensure they wouldn't happen again.
However,
over the last year or so, RIM market prospects have fallen off a cliff as its
sales have dropped, earnings have slid, and stock price has plummeted. Now,
some are wondering how much longer RIM will be able to stay profitable before
it slips into the red and major trouble ensues.
Unfortunately
for RIM co-CEOs Mike Lazaridis and Jim Balsillie, there is no easy solution to
RIM's troubles. The company is currently faced with a host of issues that,
combined, could be enough to take the mobile firm down if not resolved soon.
Even separately, these troubles could wreak havoc on RIM's future.
Simply
put,
RIM is in a tenuous position that could have a profound effect on its
business for years to come.
Read
on to find out the issues plaguing RIM right now:
1. Look at the financials
One
of the biggest issues facing RIM and its prospects for success in the future is
its financial performance. Over the last several quarters,
RIM's revenue and profit figures have slipped, causing some to wonder how
long it'll take before it starts losing money. In fact, during its
last-reported quarter ended Aug. 27, RIM generated $4.2 billion in revenue and
a profit of $329 million. During the same period last year, its revenue was $4.6
billion and profit reached $797 million. In other words, trouble is afoot.
2. It's no Apple
When
it comes to being successful in today's mobile space, being more like Apple
isn't such a bad thing. After all, that company has been delivering products for
years that consumers and enterprise users want. Plus, companies like Google and
Samsung have been successful by delivering products that mimic the
functionality of Apple's solutions. RIM, meanwhile, has stuck with its same old
strategy. As the last several quarters have shown, that's not a good idea.
3. The co-CEOs are killing it
Unlike
so many other firms in the industry, RIM has two CEOs-Lazaridis and Balsillie.
Although the company has said in the past that it believes that's a good thing,
it really isn't.
Neither of the CEOs really knows what to do to be successful today. Worse,
they're stubbornly clinging to the past. That's not good for RIM or its
customers.
4. Investors have no faith
RIM's
troubles have been a major issue for shareholders. Over the last year, RIM's
stock value has declined by more than 50 percent as many shareholders lost all
faith in the company's ability to turn things around. If the decline continues,
a significant shakeup in management and market focus could come about. As
history has shown, such tumult is rarely good for a company.
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