How long before RIM burns through its cash?

[PineappleUnderTheSea]

With the delay, seems to me that RIM needs to ensure it has enough cash to properly launch BB10. Is 2.2 billion dollars enough? RIM has been "giving away" handsets, which doesn't build cash, and using its service revenue to build cash...but isn't that unsustainable? Especially Since global growth appears to be slowing, and surely the subscriber fees RIM charges will likely be beaten down by carriers?

So I'm basically wondering if RIM will be able to afford a proper launch of BB10...

[njblackberry]

They also have undrawn lines of credit (which are expensive, but offer credit in a cash crunch). The flaw in the assumption is that RIM will have no revenue and have to draw down the $2.2; RIM will continue to have revenue and won't have to draw down their case. Will they have enough for a proper launch - yes, unless the company is broken up before then.

[mikeo007]

It will last 6 weeks. At which point, RIM is going to buy a fleet of F22's for a BB OS 7.1 advertising campaign.

[cgk]

It is very difficult to say at this point because of the assumptions you have to make and also a number of unknown variables - however...

* it is likely that the sales of 'premium' blackberries (the ones that actually make a decent margin on rather than curves which they either make nothing or next to nothing on) will continue to decline

* ARPU will also decline and they mentioned this in their earnings call

* Suppliers are likely to demand harder terms from RIM leading to additional costs

* Carriers are starting to pressure RIM for a larger cut from subscription revenue (again they mentioned this themselves in the earning call).

$2.2 billion sounds a lot but for an organisation the size of RIM that could disappear quite quickly under the right circumstances.

[dagerlach]

I suspect that they have at least a years worth of cash to burn. Basically, they have one last chance to get a new set of phones and PB2 released. If the consumer doesn't come back to Blackberry next year by Christmas 2013, the 'fat lady will begin to sing' and I will be out of a load of money!

[OniPod]

It is very difficult to say at this point because of the assumptions you have to make and also a number of unknown variables - however...

* it is likely that the sales of 'premium' blackberries (the ones that actually make a decent margin on rather than curves which they either make nothing or next to nothing on) will continue to decline

* ARPU will also decline and they mentioned this in their earnings call

* Suppliers are likely to demand harder terms from RIM leading to additional costs

* Carriers are starting to pressure RIM for a larger cut from subscription revenue (again they mentioned this themselves in the earning call).

$2.2 billion sounds a lot but for an organisation the size of RIM that could disappear quite quickly under the right circumstances.

Good points. Probably major contributors to the decision to let almost 1/3 of their workforce go. We'll probably see some serious restructuring. First their manufacturing restructuring, then tightening the payroll. I doubt they will run out of cash before they can release BB10 though.

[cgk]

Actually listen to the crackberry podcast, it seems that overall the margins for hardware are already negative.

[kfh227]

With Prem Watsa as a large shareholder and on the BoD, I think raising capital would be easy for RIMM if they had to. I'm sure he would be happy to offer RIMM convertable debt.

[silversun10]

the cash position has no bearing on the introduction of BB10, the only thing that matters is that BB10 works as advertised and or RIM can convince financiers that it works, if BB10 does not work RIM could have ten times more cash on hand and it will not help RIM, well it might help RIM's share price, it would trade at around cash value...

[lnichols]

With Prem Watsa as a large shareholder and on the BoD, I think raising capital would be easy for RIMM if they had to. I'm sure he would be happy to offer RIMM convertable debt.

Prem Watsa should just raise the money to take the company private. Take them out of the eye of analysts and Wall Street and let them finish the transition in peace. With RIM pushing back BB10, having two more miserable earnings calls before BB10 even releases it is just going to further tarnish RIM's image and the death stories will continue for the next nine months non-stop.

As for the cash, hard to tell. Sounds like they think things are going to get worse globally and plan BB10 to be a global launch now, where before it was stated to be a NA launch because that was where the bleeding was greatest. They have existing credit facilities to tap into if the want to. Maybe when the stock hits a couple bucks a share in December I'll buy some as a gamble.