RIM 'blindsided' by Kindle Fire, may lose $75 per PlayBook
updated 08:00 am EST, Mon December 5, 2011
RIM said losing 50-75 on each BlackBerry PlayBook
RIM's prolonged BlackBerry PlayBook discounting came after it was "blindsided" by the Amazon Kindle Fire, according to a research note from Sterne Agee analyst Shaw Wu. Citing "checks" in the supply chain, he understood RIM hadn't expected Amazon's loss-leading $199 price and had decided to take even more of a loss to follow suit. RIM was estimated to be losing $50 to $75 on every PlayBook it shipped.
The company was also being squeezed in smartphones, Wu said. The pricing of the $99 iPhone 4 and (in most countries) free-on-contract iPhone 3GS was squeezing RIM's lower-end BlackBerry line.
Wu still saw value in the company, but he was mostly basing it on its value as a takeover target. Its 70 million users, the BlackBerry platform, its BIS push data servers, and its patent collection could all be valuable. RIM's contribution to the Nortel patent buy led the analyst to estimate RIM's full patent catalog by itself was worth $2.5 billion to $4 billion.
The $485 million pre-tax ($360 million after) hit from unsold inventory is likely to see RIM fall short of guidance yet again and should make 2011 the company's worst year to date, having bled share through most of the year. Its tablet effort has been so low-key that it doesn't register in the top ranks of non-iPad makers, who themselves sell just a fraction of the tablets Apple manages.
Fresh-Faced Recruit
Joined: Sep 2001
at this point
I see only two possibilities for RIM:
1) fire the co-CEOs, bring in someone to get the company in shape to be bought out at a somewhat fair price
2) keep the co-CEOs and end up in the Canadian equivalent of Chapter 7, or they run it so hard into the ground that it gets bought out at a fire sale price
possibility #3, that these guys figure things out, is not very likely at all.