RIM faces possible $1 billion writeoff of unsold inventory

RIM’s stockpile of unsold BlackBerry phones and PlayBook tablets is growing as sales continue to struggle ahead of the fall 2012 release of BlackBerry 10. The total value of these devices sitting in RIM’s warehouses is over $1 billion, putting RIM in a tough spot when it comes to next quarter’s financials. The company has taken charges of $485 million and $267 million in December and March (respectively) to write down the value of its PlayBook and BlackBerry inventories, and likely faces another significant write-down in June.

While we won’t likely see a full $1 billion write-down in June, we also don’t see that inventory moving anywhere fast. People have simply stopped buying RIM devices, either holding off until the BlackBerry 10 platform is released later this year, or abandoning the platform altogether. RIM’s market share was down to only 6.7% in Q1 2012, according to the latest data from IDC. BlackBerry’s current stash of PlayBook and BlackBerry 7 devices will likely sit in RIM’s warehouses for a long time, as RIM’s carriers and retail partners are also sitting on significant amounts of inventory.

In an effort to cut nearly $1 billion of costs at the ailing handset maker, RIM is cutting several manufacturing sites as well as 2,000 to 3,000 jobs, according to estimates from an analyst at Northern Securities Inc. in Toronto. Further job cuts are likely, according to a source for Business Week.

One thing is clear: RIM has a tough couple of quarters ahead of it. BlackBerry 10 is slated to launch around October of this year, and RIM needs BlackBerry 10 to be successful if its doors are to remain open. We have a hard time seeing BlackBerry 10 stealing too many customers away from iOS and Android, though around 50% of cell phone owners have not yet adopted a smartphone, suggesting the market is still ripe for the picking. Time will tell if RIM has what it takes to become relevant again.

[via Business Week]

  • Sooooooooooooo, too stubborn to have a sale? I need to pay $599 for a Bold 9900, for a cheap housing and one circuit board, and you guys need to lay off thousands? Why not have a fire sale like HP did and unload everything? Seems better eh? But no, the Crystal Ball the managers look at told them to keep stock till it’s outdated, and recycle it?

    •  Hello Craig,

      I completely agree with your questions? I think these are the questions they should know about.

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