Last Thursday Research In Motion Ltd, , once the blockbuster powerhouse in smart phone technology, reported worse-than expected quarterly results. It lost $192 million, or 37 cents per share. Revenue declined 43 percent to $2.81 billion
RIM also announced it will not launch its next-generation BlackBerry 10 in 2012. The delay till early 2013 has already contributed to a 40 percent drop in the company's stock price so far this year.
"If RIM continues to be run as it is, we believe that the company will eventually fail," Nomura Equity Research said. "We do not expect RIM to successfully drive a turnaround of its financials, even with the launch of BB10 next year," the brokerage said in a note to clients, adding that its model assumes that RIM disappears by 2020 in a gradual decline.
"We question if RIM's new BB10 products will even matter as it may be too little too late," the analysts said, adding that they expected the company's smartphone sales growth to be less than half of the industry average in 2012.
Analysts at Citi Investment Research and Jefferies slashed their price targets on the stock to $5.00 for RIM's U.S.-listed shares, a fall of 45 percent from Thursday's close.
RIM will lay off 5,000 workers, about 30 percent of its workforce, as it tries to save cash. However,
Citi believes the company should be hiring instead of firing to get its products out on time. "With the distraction of this large layoff, it will be difficult to retain and motivate employees to develop new products."
With a weak product portfolio and the BlackBerry 10 delay, RIM faces continued volume pressure as well as declining average selling prices, said Credit Suisse.
RIM's board is under increasing pressure to consider options such as selling its network business or forming an alliance with Microsoft Corp, three sources familiar with the situation said on Thursday.
Cannacord Genuity does not believe the launch of BlackBerry 10 will turn around RIM. "We believe RIM will need to sell the company," Cannacord said. However, Baird Equity Research thinks there is no likely buyer.
From Reuters and Policymic
