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

HP should buy them

[Enderandrew]

HP is convinced they need to embrace the 'post-PC' world. They could actually salvage part of their 2 billion investment of Palm and Web OS. BB has a terrible platform right now and is dying, but they have a great brand name, and some great apps. Their mobile email client is absolutely the best.

If HP was smart, they'd reach out to Google to help develop Android phones and tablets with some Web OS influence (some great UI concepts actually) and a BB email client. Honestly, wouldn't that be a legit Apple killer than enterprise shops would embrace en-masse?

Re:HP should buy them

[Jeng]

If HP was smart,

They've outsourced their intelligence to the lowest bidder.

Re:HP should buy them

[Eponymous Coward]

Almost the entire WebOS team has been hired by Google. I don't think HP is doing anything with WebOS anymore.

Re:HP should buy them

[LordLucless]

What does HP have to offer though? Google already has all the people who did WebOS. Who should Google work with at HP? The middle management?

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.

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.

RIM may be in freefall

[Baloroth]

RIM still made $3.64 billion in revenue last year, for $197.5 million in profit (a huge drop from last year, but they are still making money). RIM definitely could still succeed, but not like this. They are still a massive company with a huge name-brand, they just need to figure out how to use that. It may be unlikely, but I wouldn't mind seeing them succeed: more competition in the smartphone industry could be a very good thing. I'd hate to see it turn into a pure Android/iOS duopoly with no chance of a third competitor (Windows Phone... doesn't really count).

Re:What's With All The RIM Hate?

[MadCow42]

RUFKM?

Do you even have a current BB phone? I do, and I hate it with a passion, but I'm stuck with it because it's all my company supports for corporate email.

Battery life? half a day if I'm lucky.

Usability? It freezes for minutes at a time.

Apps? Really? Have you compared to any other platform like Android or iOS?

Talk about astroturfing... you're doing it pretty well.

(no, I have no affiliation with RIM whatsoever, besides being hampered by having one of their crappy devices - the 9960)

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:What's With All The RIM Hate?

[Nexzus]

In the end, they will probably file chapter 11 and leave the debt with the US taxpayers.

I know it's hard to believe, but RIM is a Canadian company.

Re:What's With All The RIM Hate?

[epiphani]

Funny, I have a current Bold 9900, and the battery easily lasts a full day with heavy email use and several hours of conference calls. I'm not sure what you're using, but I haven't run into the issues you're talking about since the original Bold like 4 years ago.

Re:What's With All The RIM Hate?

[PCM2]

I don't hate RIM. But I do think RIM is dying. The disease is reversible, I think, but nobody over there seems to be seriously looking for a cure. TFS says RIM stock is down 75 percent from last year alone. Imagine a patient who has lost 75 percent of his body weight but keeps insisting, "I'm not sick!"

My own experience: My last three phones before my current one were BlackBerrys. But I started looking around and comparing prices and it seemed to me that other phones could provide at least most of the functionality that my BlackBerry gave me, plus more besides. I also wasn't impressed with the hardware of the current crop of BlackBerry devices. It seemed like RIM's focus had drifted from its core business market and it was trying to sell camera phones to college students. They didn't seem like they were targeting me anymore, and other manufacturers were. So I switched to Android.

I'd be more than happy to switch back to BlackBerry if they'd show me a really great phone, though. Do they have something like that in the works? I don't see it. The market doesn't seem to see it, either.

You know who you remind me of? Me, when I was a Mac OS admin in the late 90s. Back then, everybody thought Mac users were a cult. We were all convinced our platform was the best, but everybody else kept focusing on how Gil Amelio had fucked up a once-great company. We Mac fans were right, but so was everybody else. It took Steve Jobs' return to get Apple back on track. Unfortunately, I don't think RIM has a Steve Jobs.

TERRIBLE writeup

[Scareduck]

From TFA:

The value of the company’s inventory climbed to $1.03 billion last quarter, up from $618 million a year earlier. Back in mid-2008, when the BlackBerry was still a hot seller and RIM’s stock traded at an all-time high of $147.55, the figure was less than $500 million.

Nowhere in that article does it suggest that 100% of the current inventory will have to be written off. A terrible writeup from someone who clearly has reading comprehension problems.

Re:Not Surprising

[mwvdlee]

Here in the Netherlands (and as I understand it, most of Europe atleast), WhatsApp is the current chat method, and it's available on most mobile platforms, including BB. It's still proprietary, but atleast it's practically platform agnostic.