Research In Motion shares are sliding after an update from the BlackBerry maker's new President and CEO Thorsten Heins and an unexpected announcement that it may lose money in the current financial quarter. RIM's first-quarter financial results will go public June 28.
Heins said RIM is going through a significant transformation as it moves towards the BlackBerry 10 launch, and its financial performance will continue to be challenging for the next few quarters. He said the ongoing competitive environment is affecting RIM's business in the form of lower volumes and highly competitive pricing in the marketplace.
"We are continuing to be aggressive as we compete for our customers' business -- both enterprise and consumer -- around the world, and our teams are working hard to provide cost-competitive, feature-rich solutions to our global customer base," Heins said. "On the positive side, we expect to further increase our cash position in Q1 from the approximately $2.1 billion we had at the end of fiscal 2012."
Looking for Answers
Heins quickly moved to focus on BlackBerry successes, specifically noting developer enthusiasm around the coming BlackBerry 10 platform. BlackBerry 10 is set to roll out later this year. RIM's subscriber base is also growing, especially in international markets like India and Latin America.
"To further enhance our commitment to successfully completing our transformation, after the release of our year-end financial results, we engaged J.P. Morgan Securities LLC and RBC Capital Markets to assist the company and our Board of Directors in reviewing RIM's business and financial performance," Heins said.
"These advisers have been tasked to help us with the strategic review we referenced on our year-end financial results conference call and to evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives."
Will RIM Sell Itself?
Some speculate that RIM hiring J.P. Morgan and RBC Capital Markets as strategic advisers could increase the likelihood of a sale. But Shaw Wu, an analyst at Sterne Agee, believes the risk is a potential "take-under" or price offered that is a slight premium or even below where RIM shares have recently traded.
"This is what happened to Palm in its acquisition by HP . We frankly find it difficult to value a mobile device vendor where the price and future of its core assets are unclear and its primary competitors [Apple and Google] have essentially limitless capital," Wu wrote in a research note. "As we have said in the past, we believe potential logical buyers include Amazon, Microsoft , Samsung, HTC, Nokia and possibly Facebook (should it decide it needs to be in the mobile device business)."