RIM May Need To Write Off $1 Billion In Inventory

benfrog writes "Blackberry maker Research in Motion may need to write off more than $1 billion in inventory, according to Bloomberg. The potential 'writedown' comes after RIM took a $485 million pretax charge to write down the value of its PlayBook inventory in December. RIM has said it aims to save $1 billion in operating costs this fiscal year by cutting its number of manufacturing sites and is 'reviewing its organizational efficiency' across the company, which may lead to job cuts of 2,000-3,000. Its shares have tumbled 75 percent over the past year and are down 90 percent from their all-time high."

Comments

Translation

[mr1911]

by cutting its number of manufacturing sites and is 'reviewing its organizational efficiency' across the company, which may lead to job cuts of 2,000-3,000.

No need for manufacturing sites or employees when sales have fallen off a cliff.

Amazing amount of mismanagement

[Y-Crate]

NY Times

Since 2007, RIM has introduced 37 models. The company, in a statement, said it did not know how many models were on the market.

Adding to the shopping confusion are RIM’s product names, which generally rely on four-digit model numbers and sometimes have different products sharing a name. The BlackBerry Torch 9850 and 9860 are touch-screen phones that are on some shelves next to the BlackBerry Torch 9800 and 9810, touch-screen phones with slide-out keyboards. (The model number differences reflect models adapted for different cellphone systems.)

By contrast, Apple has introduced only four iPhones since 2008 and all were basically the same phone with differences in the amount of storage, or upgrades from older models.

Ironic that RIM is losing-out to the likes of Apple, by making the same mistake Apple did back in the dark days of the '90s, when it seemed like there was a new Performa out every week.

Re:Amazing amount of mismanagement

[PCM2]

Ironic that RIM is losing-out to the likes of Apple, by making the same mistake Apple did back in the dark days of the '90s, when it seemed like there was a new Performa out every week.

Exactly this. When Jobs came back to Apple, he drew a box on a whiteboard and drew a cross through it. Four quadrants: Pro/Consumer on top and Desktop/Portable along the side. Instead of all these crappy Performas and 4400s and what-not, Apple relaunched with four computer products, grand total. Those were iMac/Power Mac G3 and iBook/PowerBook.

Why can't RIM do this? It could probably get away with two models: BlackBerry (which has a nicer camera, movie player, and integrates nicely with Facebook) and BlackBerry Pro (which has slightly nicer build quality and some kind of easy VPN capability, or something). Model numbers disappear -- they just upgrade the hardware every year or two. It would go a long way to address the problem of sitting on too much inventory.

Then launch it with a decent TV ad campaign. "Imagine a phone... blah blah blah ... introducing the new BlackBerry, from Research in Motion." And then, when customers go to the store, they just tell the clerk "I want that new BlackBerry." Clerk hands him a box that says "BlackBerry" on it. Simple.

Never happen.

Re:HP should buy them

[Jeng]

If HP was smart,

They've outsourced their intelligence to the lowest bidder.

Re:What's With All The RIM Hate?

[sl4shd0rk]

I can only conclude that basically companies are just planting RIM hate and RIM

It's not that diabolical. The press is just magnifying the generalized "shruggs" of the industry when the subject of RIM comes up. RIM has waited far too long to try and resuscitate their potential. They've been very adamant about any kind of radical change and seem convinced they can continue to do foolish things (releasing their fondleslab and *then* nixing it's Android support) and remain on life support with tax dollars from government contracts. In the end, they will probably file chapter 11 and leave the debt with the US taxpayers.

Just a guess, but this may indeed foster a fair amount of distaste for RIM.

Inventory

[PCM2]

"Organizational efficiency" certainly sounds like job cuts. But hopefully it means RIM might take a look at its manufacturing efficiency, as well.

At Apple, Steve Jobs always invested heavily in modern, automated assembly lines for its products, because he realized that the problem of too much inventory is particularly risky for computer makers. If you think about it, technology products have relatively short shelf lives. You can't sit on a pile of inventory and sell it for the next few years, like you could if you were making hammers or dinner plates. By next year, your inventory of shiny gadgets might effectively be junk. So the key is to develop a manufacturing process -- and equally important, supply partnerships -- that allow you to manufacture products at an incredibly fast rate, so that you can respond to market demand rapidly. If the market wants tons of units, ramp up production. When it cools off, stop making more. Then you don't have to sit on so much inventory.

If RIM is sitting on $1 billion in inventory, it certainly sounds like it grossly overestimated the demand for some of its products at launch. But it also suggests that it either isn't paying close enough attention to the market numbers, or is unable to react quickly enough to them. Working on either one might save it some money.

Re:What's With All The RIM Hate?

[MogNuts]

Latest one I used was the Bold 9700. Though I saw the new 9900 and I think ergonomically it's the best designed phone I've ever used. It feels perfect for typing, wonderful keyboard, wide enough to hold but not too big to be unwieldy.

But anyway, I seriously doubt you on the battery life. I used to get like almost a week with whatever OS was pre-BB 7. And neither iOS or Android get more than half a day either anymore. iOS was like 2 days in the 4.x days (I had a 3GS too). But with 5.1, it's gone to crap.

Apps? Has everything I need. But then again, I don't have the need to play the piano or punch the monkey on my phone. I use it for productivity. And as such, BB's market has most of what I need. Not even equivalents, but the actual apps. What exotic apps do you need? No seriously--give me specifics. Otherwise I smell BS.

As for astroturfing, miss the part where I said I own an Android phone? Besides, astroturfers sign up new fake accounts and post like crazy. Look at my UID. I've been posting since Chips and Dips.

I think you just have a case of feeling like u don't look cool with your BB and being too weak confidence-wise. So u bitch and moan at how "i hate it so much but my company gives it to me so that's why I have it." Because u need an iPhone as a status symbol to make u feel better out in public.

Re:HP should buy them

[Archangel Michael]

The problem with Blackberry is that it required (at one point) a server component for Enterprise. And it was EXPENSIVE (at the time). Meanwhile Apple used ActiveSync and now Android does as well, which allows for "security" that most enterprises actually need.

However, what is MISSING that Blackberry had YEARS ago was app management that is still better than anything Apple or Google offer. We are actively looking at MDM that can manage Apple and/or Android and so far, we've got nothing worthwhile to choose from. Apple's MDM is pretty good, but it is based on Apple's model, and not any enterprise.

If HP or any other company wanted the Enterprise market for Smart Devices, they could be had in a second. My guess, is the market is too fluid to build anything that will work in three years.

That, and the whole BYOD in the enterprise is really starting to take off. Why pay for smartphones when your employees will buy something else anyways (and not want what you bought)?

Re:HP should buy them

[bobcat7677]

Actually it's fundamentally less secure (and less reliable for what that is worth) due to the fact that all email must go through RIM's servers instead of going directly to the phone.

Re:HP should buy them

[sootman]

> Honestly, wouldn't that be a legit Apple killer than
> enterprise shops would embrace en-masse?

No.

The thing is, to dethrone a king, you can't be "about as good as" or "as good as and slightly cheaper" or "10% better in some key ways" or even "15% better across the board." You have to be a LOT better--like a night-and-day different--to overcome all the inertia of a large installed base. The last time we saw that happen was in 2007.

Apple might not have the absolute world's best email client but pretty much every major company is happy with it (and all the other stuff it does) so someone else coming out with a whole new device that is slightly better in some ways is not going to gain any traction. Apple is so far ahead (in terms of overall quality, customer satisfaction, number and quality of apps, etc.) that I'm guessing it'll be literally 5-10 years (if ever) before they aren't in the lead.*

HP and BB both tried to displace Apple once and failed. They pulled out all the stops and each managed to create products that were roughly comparable to 1- or 2-year-old Apple products. No freaking way will those two be able to put their corporate heads together and produce, in 12-24 months, something substantially better than what Apple will be producing at the same time in the future.

Tying two anchors together does not result in something that floats.

* They may or may not be actually leading now in terms of raw units out there in the world, but a) they're doing far better than any single competitor in the smartphone arena, and b) they are taking the vast majority of the industry's profits -- about 3x their one and only really profitable competitor.