Oh, how the mighty have fallen.
The analysts have spoken, and most believe it would take nothing short of a Jobs-ian miracle to save ailing Research in Motion. As a refresher, the company announced a $518 million loss yesterday, and delayed its savior BlackBerry 10 platform to early 2013. Its stock fell nearly 15% at the opening bell this morning, currently trading at $7.77 per share.
At least 10 firms have cut their stock price targets by as much as 50% with analysts at Citi Investment Research and Jefferies pegging RIMs stock at $5.00 per share, which would represent a 45% decrease from the closing bell yesterday. Cannacord Genuity added that BlackBerry 10 will not save the company, and RIM needs to strongly consider selling the company in full as soon as possible.
Nomura Equity Research took this a step further and stated that they believed RIM would ultimately fail lest they see a drastic turnaround quickly. The company expects RIM to continue its decline, and will ultimately disappear by 2020.
“If RIM continues to be run as it is, we believe that the company will eventually fail. We do not expect RIM to successfully drive a turnaround of its financials, even with the launch of BB10 next year.” – Nomura Equity Research
Citi was equally bearish on RIM, with its analysts issuing the following statement:
“We believe fundamentals continue to get worse and RIMM could run out of cash and need to raise capital within two years implying that as time rolls forward, if we are correct, the value of RIMM continues to go lower. We expect more write-offs and impairments to RIMM assets and we question if RIMM’s new BB10 products will even matter as it may be too little too late.” - Citi Investment Research
With the grim news comes continued rumors of a partial or full sale of the company, and three sources familiar with the matter have suggested that RIM’s board of directors is even being pushed to consider a strategic partnership with Microsoft, which would see RIM hardware running Microsoft’s Windows Phone 8. While this scenario was previously unfathomable, the delay of BlackBerry 10 likely means that RIM will need to do something drastic in the short-term in order to give it the money it needs to build out BlackBerry 10.
Of course, RIM would need to stop laying off employees in order to put adequate resources into the BlackBerry 10 platform. The company has announced layoffs of around 10,000 employees to date, representing over half of RIM’s global workforce.
We want to be wrong on this. We want RIM to succeed at some level, but the chances of that happening are growing slimmer by the minute. With its one shot in hell at emerging from the black hole it’s currently in being delayed by several months, missing the ever-important holiday shopping season, and a severely dwindling cash flow, it’s tough to see a viable turnaround for the company that once made the hottest phones on the planet.
Will RIM be able to pull off a miracle? I guess we’ll have to wait and see.