Analysts meet RIM: We want to believe, ‘but just can’t yet’

[Shlooky]

Analysts meet RIM: We want to believe, ‘but just can’t yet’ - The Globe and Mail

In an hour-long meeting with roughly two-dozen analysts, Thorsten Heins, who took over from RIM's long-time co-CEOs Mike Lazaridis and Jim Balsillie, stressed that the company needed to focus on marketing by recruiting a new chief marketing officer, get out a software update for its struggling PlayBook tablet and concentrate on the next-generation BlackBerry 10 software that will come out on devices later this year.

But some analysts, judging by notes to clients released Friday morning, were disheartened that Mr. Heins seemed to be abandoning a serious investigation into licensing RIM's BlackBerry 10 (BB10) software to handset rivals, a strategy that could bring in revenues even as it added scale to a proprietary platform that has struggled to attract third-party application, or app, developers. Mr. Heins, apparently, wants to ensure that BB10 is a success before he hands it out to rivals.

“RIM wants to prove to the world that BB10 will be a success before approaching (original equipment manufacturer) partners,” wrote Kris Thompson of National Bank Financial. “RIM does not appear to be conducting a dual-track program of investigating the licensing of its software to potential partners. This may be a mistake if BB10 is not successful.”

In his comments, Mr. Heins said the newer devices – which were delayed to a launch date of late 2012 – would focus on the high-end of the consumer market, leading Mr. Thompson to write that these new devices may be too expensive for some of the international markets that have given RIM its strong financial base over the last year. In previous interviews, former executives have credited Mr. Heins with executing RIM's international strategy, including overseeing the expansion of its device portfolio to include BlackBerrys at price-points that allowed the company to penetrate new markets without forgoing profit margins for volume.

Regardless, Mr. Thompson thinks that the current crop of BlackBerrys running the BlackBerry 7 mobile software are insufficient, by themselves, to continue RIM's overseas momentum. “We expect market-share erosion in many international regions to follow the U.S. trend,” Mr. Thompson wrote, referring to the brand's flagging fortunes in the U.S. Even as research firm Gfk says that the BlackBerry was the United Kingdom's best-selling smartphone in 2011, another analysis firm, Nielsen, released figures showing that RIM's share of the high-value U.S. market tumbled further to around 5 per cent due to fierce competition from Apple Inc.'s iPhone and devices running Google Inc.'s Android software.

UBS Investment Research analyst Phillip Huang said he was buoyed by Mr. Heins's attempt to engage the Street, writing that the RIM executive's approach was “refreshing.” However, his enthusiasm did not extend to RIM's near-term financial prospects.

“We remain of the opinion the next 2-3 quarters could remain challenging for RIM with no new compelling product platform until BB10 and ongoing competitive threats,” Mr. Huang wrote in a note to clients. “We remain unconvinced that increasing marketing expenses will win consumer mind share and reverse the waning momentum in the U.S.A. While international momentum could sustain, that alone is unlikely to fortify the business model as evident by the challenges the past few quarters. Success with BB10 in the U.S. will be critical.”

Meanwhile, after the meeting and his own checks, Jeffries analyst Peter Misek downgraded RIM to “underperform,” in a note subtitled, “We Want to Believe... But Just Can't Yet.” Mr. Misek pointed to the apparent abandonment of software licensing and said he was under the impression that RIM had been actively “investigating partnerships” with a possible announcement in the spring.

“We recently met with Heins and found him engaging, articulate, and thoughtful,” Mr. Misek wrote in a research note. “We see no evidence that he is under the influence of the former management in any way. But we respectfully disagree with him. We believe that an [approximately] one-year delay in licensing BB10 (what we believe to be an excellent [operating system]) is a mistake. We believe decelerating efforts to offer enterprises the ability to get their fast, secure BlackBerry e-mail on an iPhone or an Android device is a mistake. We want to believe in RIM, but see the near-term risks as too high.”

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Analysts still not happy, they want RIM to licence BB10 to hardware vendors, I think that is a good idea, because RIM is slow in hardware development, and cannot compete against the likes of Samsung and HTC.

[Superfly_FR]

let's hold our breath until the hype ...

[louzer]

February will give us both the Super Bowl and OS 2.0. What do these two have in common? Too much time before for hype and speculation such that there is so little new info to report and too much time until the results will be seen. The end result could be good or bad (depending on your bias). But the bottom line is that shortly, there will be no more questions and only the actual results to report on. Bring ot on! Go RIM (and Pats)!

[undone]

Originally Posted by Shlooky

Analysts still not happy, they want RIM to licence BB10 to hardware vendors, I think that is a good idea, because RIM is slow in hardware development, and cannot compete against the likes of Samsung and HTC.

If I was Samsung or HTC I would be more worried about Google locking people out once the Motorola deal is finalized.

[Thunderbuck]

Originally Posted by Shlooky

Analysts meet RIM: We want to believe, ‘but just can’t yet’ - The Globe and Mail



Analysts still not happy, they want RIM to licence BB10 to hardware vendors, I think that is a good idea, because RIM is slow in hardware development, and cannot compete against the likes of Samsung and HTC.

I can guess what the strategy is: RIM isn't at risk of going under by the end of 2012, and wants to make as big a splash with BB10 on their own as they can.

If they build the value of BB10 on their own, they can get a much better licensing deal than they could before it hits the market. It's a gamble; I support the strategy, but I can understand the analysts' skepticism.

[Economist101]

Originally Posted by undone

If I was Samsung or HTC I would be more worried about Google locking people out once the Motorola deal is finalized.

This isn't an issue at all. Motorola hasn't exactly been setting the world a fire with its devices, and Samsung is currently the most successful Android vendor. In fact, it seems more likely that Samsung might fork Android the way Amazon did long before Google locks out Samsung. As for HTC, they aren't as successful as Samsung, but they're a lot better off than Motorola Mobility.

[trelawrence]

Originally Posted by undone

If I was Samsung or HTC I would be more worried about Google locking people out once the Motorola deal is finalized.

Wishful thinking. How does that help Google? Purchasing Moto gives Samsung and HTC more leeway.

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[lnichols]

Originally Posted by Shlooky

Analysts still not happy, they want RIM to licence BB10 to hardware vendors, I think that is a good idea, because RIM is slow in hardware development, and cannot compete against the likes of Samsung and HTC.

Have you compared a Playbook to a Samsung or HTC Tablet for hardware. Playbook is superior quality to both in hardware. RIM makes great hardware, the software is what has been lacking. They don't need dual core processors for BBOS, but will for BB10. They are also trying to guarantee a certain user experience and battery life. Samsung's Galaxy 3 is rumored to have a quad core A9 architecture at 40nm and will come out sooner than both Apple and RIM who are both going with dual core A15 architectures at 28nm which won't have chips out till 2nd half of 2012. RIM probably decided, based on what they have learned with the OMAP4430 (which is a dual core A9 design) in the Playbook that the battery performance that they want could not be delivered in a phone with a much smaller battery. The A15 28nm architecture is supposed to use 60% less power than the A9 architecture and offer 3 times the performance. Hopefully with BB10 they will have the best software, and the best hardware of all the phones. BB10 will no only allow them to offer more in features than they have been able to offer, but probably require them to keep up current specs for hardware unlike with BBOS which was the limiter before.

[Knightcrawler]

wallstreet is looking for a quick buck, and that's evident in their analysis.

“We recently met with Heins and found him engaging, articulate, and thoughtful,” Mr. Misek wrote in a research note. “We see no evidence that he is under the influence of the former management in any way. But we respectfully disagree with him. We believe that an [approximately] one-year delay in licensing BB10 (what we believe to be an excellent [operating system]) is a mistake. We believe decelerating efforts to offer enterprises the ability to get their fast, secure BlackBerry e-mail on an iPhone or an Android device is a mistake. We want to believe in RIM, but see the near-term risks as too high.”

So the initial fears that Heins was in the pocket of mike and jim have been done away with. the prospect of bb10 not being on par has been done away with. Those were the two big things these analysts were worried about just a few weeks ago. Both have now been dealt with. But they're still not happy that RIM wont recover quickly enough for their liking. Basically they're just concerned with thier clients not making (as big of a) profit in the next 2 quarters, nothing else. Analysts are all short sighted, they only care about the immediate benifit, which is why their analysis is inevitably wrong.

If RIM wants to liscence BB10, it is much better to do so when you can point to a solid ecosystem and say "we want $x to licence it, because it's worth that amount". Before anyone has seen it in action, they have no reason to pay for it, and every reason to not pay for it.

[JAGWIRE]

i like hearing the opinions of the annalists, it is definitely a better feel then when Mike and Jim where in charge. RIM does get a lot of its money from overseas and if they make the BB10 to expensive and doesn't sell there will the BB7s be enough?? easy way to counter that idea. the 9900 is about 550/600$ and its their big flag ship phone and its selling well. Yes we all hope that RIM cuts its amount of phones down and just focuses on a few models but with the success of the BB7s at their current price i don't see how the BB10s are going to have any issue.
Thorsten said already that if need be he will license the BBOS to other people but its not something that he is actively looking to do. if it crosses his table and its going to make the company money then he will consider it if it doesn't then no big loss.
totally agree that the BB7s aren't enough to keep RIM afloat. The tech world changes so fast that you gotta keep up on it and the BB7s are behind as is, they need fresh faces out there and the BB10s are going to be it.

[sleepngbear]

Originally Posted by Knightcrawler

wallstreet is looking for a quick buck, and that's evident in their analysis.



So the initial fears that Heins was in the pocket of mike and jim have been done away with. the prospect of bb10 not being on par has been done away with. Those were the two big things these analysts were worried about just a few weeks ago. Both have now been dealt with. But they're still not happy that RIM wont recover quickly enough for their liking. Basically they're just concerned with thier clients not making (as big of a) profit in the next 2 quarters, nothing else. Analysts are all short sighted, they only care about the immediate benifit, which is why their analysis is inevitably wrong.

If RIM wants to liscence BB10, it is much better to do so when you can point to a solid ecosystem and say "we want $x to licence it, because it's worth that amount". Before anyone has seen it in action, they have no reason to pay for it, and every reason to not pay for it.

I've been saying this for years, particularly with the advent of online trading where everybody is looking to make a fast buck from one day to the next, let alone six months from now. If these so-called experts had any kind of foresight at all, RIM's stock would have bottomed out two years ago and would have started a slow climb back up again around the time of the purchase of QNX. But they don't, because this is so frighteningly accurate: most of them can't see past the next quarter.

I also agree with your take on licensing BB10 -- it makes a whole lot more sense than this drivel:

“RIM wants to prove to the world that BB10 will be a success before approaching (original equipment manufacturer) partners,” wrote Kris Thompson of National Bank Financial. “RIM does not appear to be conducting a dual-track program of investigating the licensing of its software to potential partners. This may be a mistake if BB10 is not successful.”

This pearl takes the cake. If BB10 is not successful on RIM's own phones, what the he ll kind of shot would they have licensing it to somebody else? smh smh smh.

[Dapper37]

RIM needs more addvertising around the world almost as much as in the US. Samsung is everywhere.

[sam_b77]

I don't get this. Analysts want RIM to license out their research, OS and software to third parties and part with the one thing which makes them unique.
This might bring in short term revenue and make stock market investors happy, but in the long term it might make RIM irrelevant.

Here is the exact case where the interests of stock market investors is not aligned with the interest of the company. The shareholders are fair weather friends. They will make their money on the licensing deal and move on while RIM might die. I feel the company's management first obligation is to the company itself. The shareholders are big boys who bought the share for speculative pricing and are not stakeholders in the company. If they don't make money on speculation, tough.

[Rickroller]

Originally Posted by sleepngbear

This pearl takes the cake. If BB10 is not successful on RIM's own phones, what the he ll kind of shot would they have licensing it to somebody else? smh smh smh.

I think the point is, right now RIM could market the potential of QNX. If they release it and it's a dud, then how are you going to try to sell it after everyone's seen it's a dud? (I'm not saying it will be, but it's possible).

It's a gamble really. If it turns out to be an overwhelming success..then the sky is the limit. If it's not well received, then they are going to have a hard time shopping it around to potential buyers (imo). It's much easier to sell the hype..

[sam_b77]

Originally Posted by Rickroller

I think the point is, right now RIM could market the potential of QNX. If they release it and it's a dud, then how are you going to try to sell it after everyone's seen it's a dud? (I'm not saying it will be, but it's possible).

It's a gamble really. If it turns out to be an overwhelming success..then the sky is the limit. If it's not well received, then they are going to have a hard time shopping it around to potential buyers (imo). It's much easier to sell the hype..

The danger is if the other adopt it early due to hype and it has issues, the other manufacturers can kill RIM simply by talking sh!t about it and dumping the OS completely. Easiest way to kill a competitor. Why put your neck in someone else's noose and hope he doesn't tighten it. Better to launch it and make it a success and if its not then stay the course and improve it. Let the other's come asking for it. Then you can demand top dollar. Hype is all fluff. Quality survives in the long run. iPhone is a success because its a good product and lives up to the hype.