Market watch: RIM down to $10 per share in early trading

RIM CEO at BlackBerry World 2012

RIM announced yesterday that it would take yet another significant operating loss in the next quarter, in part due to its need to write off as much as $1 billion in inventory sitting in RIM’s warehouses. The company announced it had hired J.P. Morgan Securities LLC and RBC Capital Markets to assess the short and long-term business strategies for the ailing smartphone maker. Obviously, the company needs more than just “laser focus” if it’s to succeed long-term in the smartphone market.

It is widely believed that RIM will begin licensing some of its business units such as BBM Messenger, though the actual impact of such a move is questionable given the mass exodus from RIM’s services in the past several years. Further, RIM has recently announced that it was no longer considering that strategy, which may be more due to lack of an installed user base than anything else. With a market share in the single digits, customers have simply moved on and are no longer using RIMs services, instead opting for those found on Google’s Android and Apple’s iOS platforms. Similarly, there’s no indication that anyone is actually looking to license RIM’s services, making this option unlikely to right the sinking RIM ship.

The news was so bad that RIM was forced to halt trading before the closing bell yesterday. RIM closed the trading session at a stock price of $11.23 per share, though the price fell dramatically to between $9 and $10.25 per share in after-hours trading. This morning, RIM is hovering right around the $10 mark at the time of this posting, which would amount to a nearly 11% decrease from yesterday’s close. We’ll likely see that price dip a bit amid analyst skepticism about both the short and long-term outlook for the Waterloo-based smartphone maker.

Analysts are grim about the whole RIM situation, with many believing that a sale of RIM to a competitor is all but certain at this point. That is, if RIM could manage to find someone who wants to buy. According to Reuters, analysts at Robert W. Baird stated that “a potential buyer remains uncertain, and potentially a long shot in our judgment…Microsoft is likely to be rumored, though given its focus on Windows 7 and 8, that seems increasingly unlikely to us.” Further ruling out the case for an acquisition, BMO Capital Markets asserts that it has a hard time seeing a potential suitor for RIM, whose integrated hardware and software strategy is well behind market-leading Apple’s.

RIM is betting the farm on the successes of BlackBerry 10 to save the company, though initial reactions to a preview of BlackBerry 10 were less than stellar. Industry experts simply don’t see BlackBerry 10 surpassing Android or iOS in any meaningful way, and many believe that Android and iOS will continue to hover around the 80-90% market share mark, leaving RIM, Microsoft, and others to fight for the remaining 10-20%. For a company who once dominated the market not so long ago, struggling for third place may not be a tolerable position.

The market opens in just under 30 minutes, and the tech world will be keeping a close eye on RIM in the first live trading session since the news.

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