RIM faces a hard fight for increased revenue and BlackBerry market share, according to analysts. RIM reported declining revenues in its last earnings call.
Research In Motion's executives are intent on selling a
story of a company in transition. Sure, the BlackBerry maker faces significant
competition from the likes of Apple's iPhone and Google Android, both of which
are making substantial inroads into the business space that's served as RIM's
traditional stronghold. But RIM's upcoming QNX "superphones," and a revamped
PlayBook tablet, are supposed to strengthen its product portfolio and bottom
line.
During its Sept. 15 earnings call, RIM reported revenues of
$4.2 billion for the second quarter of fiscal 2012, a 15 percent decline from
the $4.9 billion it earned during the previous quarter. The company shipped
some 10.6 million BlackBerry smartphones and around 200,000 BlackBerry-branded
PlayBook tablets during that period. RIM acknowledged that demand has slowed
for older BlackBerry models, yet insisted
that the new devices running BlackBerry 7 OS are selling strongly in their
first few weeks of release.
RIM's quarterly revenues also represented a 10-percent
decline from the year-ago quarter, when it made $4.6 billion. BlackBerry's
subscriber base grew around 40 percent year-over-year, to more than 70 million
users.
RIM co-CEO Mike Lazaridis told media and analysts listening
to the earnings call that sales of the PlayBook were "below where we'd like it
to be." However, he suggested that the tablet would "ultimately be successful
in a market that's in its infancy." A major software update for the tablet,
which will reportedly include native email, is due at an unspecified date after
October's BlackBerry DevCon conference.
But a handful of analysts see a much harder road ahead
for RIM.
"Our checks indicate slowing sell-through of new OS 7
handsets, and we believe a new low-cost iPhone and low-end Android phones will
pressure RIM in the mid-range and low-end, respectively," analyst Peter Misek
wrote in a co-authored research note for Jefferies & Co.
"Management did not reiterate an early 2012 QNX handset
launch and implied that OS 7 QNX would coexist for some time," he added.
"Prototypes of QNX handsets and a Playbook 2.0 software update that will
include native email/calendar should both be available in coming months, but no
precise timetable was given."
Others see RIM as facing some fierce competition from Apple
and Google.
"While RIM management remains bullish on its prospects for
the Playbook and new BlackBerry 7 smartphones, we maintain our more cautious
view as we believe RIM is underestimating the increasingly competitive
smartphone environment," T. Michael Walkley and Matthew Ramsay wrote in a
co-authored Sept. 16 research note for Canaccord Genuity.
RIM's lack of a "competitive ecosystem," they wrote, is
"contributing to gross margin pressure for its hardware products, and we
anticipate further margin pressure in F2013."
Still other analysts embraced RIM's more positive view of
its prospects.
"Given already muted expectations for Research In Motion as well
as the consumer end-market overall, we believe the potential downside to
revenue in C3Q11 related to Research In Motion is in the 1 percent to 3 percent
range," Brian Alexander and Nabil Hanano, analysts for Raymond James &
Associates, wrote in a Sept. 15 research note. "That said, we see a potential
for a similar degree of upside in the subsequent quarter, and therefore believe
the Research In Motion's results and guidance are, on balance, in-line with our
expectations."
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Nicholas Kolakowski on Twitter
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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