1. cgk's Avatar
    RIM only profitable area is coming under sustained pressure as carrier sense weakness:

    RIM said it faces demands to cut the fees paid by customers such as AT&T Inc. after posting its first loss in a decade last week. The fees account for more than a third of revenue at RIM, which is racing to introduce BlackBerry 10 phones and engineer a turnaround.

    �There�s definitely negotiations going on right now to reduce� the fees if the company has acknowledged its concern, said Sameet Kanade, a technology analyst at Northern Securities.

    Kanade, who rates RIM a sell, estimates revenue from the monthly fee could drop 17 per cent to $3.4 billion this year and another 18 per cent to $2.8 billion in fiscal 2014 as carriers such as AT&T and Verizon Wireless seek lower fees amid the company�s diminishing clout. RIM is the only handset maker to charge such a fee.
    Lower service fees in emerging markets, where RIM is increasingly reliant for growth as U.S. sales tumble, also pose a threat to business margins, said Kanade.

    For now, it�s still a growing part of the business as RIM�s subscriber numbers rise, helped by increasing sales in markets such as Indonesia and South Africa. Revenue from those fees and other services climbed 4.1 per cent last quarter from a year earlier as device sales plunged 57 per cent. That lifted services� share of total revenue to 36 per cent last quarter from 20 per cent the year before.

    The fee revenue is expected to drop to $2.7 billion in fiscal 2014 and $2.3 billion in fiscal 2015, according to another estimate from Sanford C. Bernstein Ltd. analyst Pierre Ferragu.

    While that may still give RIM enough cash to last two years, that doesn�t mean the company can afford to burn through its reserves, Kanade said.



    �Devices are definitely burning cash at a rapid rate,� said Neeraj Monga, an analyst at Veritas Research in Toronto. �They need to have the services business continue to give them cash so they can maintain their flexibility.�

    Monga, who rates RIM a sell, said RIM may run out of cash by May if the new phone hasn�t launched by then, as hardware losses overwhelm shrinking service revenue.
    BlackBerry-maker RIM under pressure to cut carrier fees - thestar.com
    07-04-12 07:41 AM
  2. kevinnugent's Avatar
    It had to happen. The sharks smell blood in the water.
    07-04-12 07:55 AM
  3. madman0141's Avatar
    Wonder who is going to end up with the patients?
    07-04-12 08:02 AM
  4. DuexNoir's Avatar
    Does this include Canadian carriers as well or just on the American side?

    Well, the carriers do need more cash to pay the overly expensive Apple iPhones that they subsidize.
    morganplus8 and maddie1128 like this.
    07-04-12 08:52 AM
  5. cgk's Avatar
    They will see pressure world-wide.
    07-04-12 09:08 AM
  6. morganplus8's Avatar
    Let's see"

    Analyst "A":
    "While that may still give RIM enough cash to last two years, that doesn�t mean the company can afford to burn through its reserves, Kanade said."

    Analyst "B":
    "Monga, who rates RIM a sell, said RIM may run out of cash by May if the new phone hasn�t launched by then, as hardware losses overwhelm shrinking service revenue."

    There, who said you need an MBA to figure this stuff out? These guys nailed it within a little over a year using the same exact data! LOL

    Enterprise continues to grow, contracts already established will remain the same, we all know that Blackberry phones don't sell in America because the media told us so. Government contracts won't be affected by all of this. The assumption here is that BB 10 won't launch, or that it will fail, or that it will not gain market share and therefore Enterprise will not grow from "no sales" in North America.

    I would like to think that RIM's 5% of the NA market will likely grow somewhat thus increasing their Enterprise count in a significant way such that an 18% speculative drop in contract services will in fact be off-set by an 18% increase in sell through as BB 10's are sold in 2013. They paint the most negative picture of RIM under every scenario and it just makes no sense what so ever. At some point, there is going to be a HUGE snap back in media talk.
    07-04-12 09:33 AM
  7. phinsphan's Avatar
    I might be the only one but I'm not sure I believe carriers are pressuring RIM any more than usual to reduce their fees.

    Carriers shouldn't care either way if a device maker lives or dies. They should only be concerned with what benefits them.

    The carriers pass the fee onto most subscribers and when they don't RIM offers them increased network capacity. I've heard this issue brought up since 2010 and so far I haven't seen it happen.

    I can't tell the future, so I could wind up being wrong, but I don't think this is as likely to happen as some boutique shop analyst and journalists pretend it is.
    07-04-12 10:25 AM
  8. needforbbx's Avatar
    I would ignore anything that Sameet Kanade of Northern Securities has to say....

    Northern Securities is owned by Northern Financial. CEO is Vic Alboini. Vic Alboini is CEO of Jaguar Financial. Both have never had anything good to say about RIM.
    07-04-12 10:33 AM
  9. njblackberry's Avatar
    That's funny. Blame the media. Is that the right wing media or the left wing media? We need to know who is behind the anti-RIM North American conspiracy! This is important so people can make an informed decision, and go out and wait for their BB 10 devices.

    Everyone trusts the media and what they have to say. Right. Please.
    07-04-12 10:48 AM
  10. kingbernie06511's Avatar
    Running out of cash in May? Wow, this is earlier than I thought. If BB10 phones are introduced in Jan-March timeframe, this gives them little flexibility.
    07-04-12 11:03 AM
  11. app_Developer's Avatar
    I've heard this issue brought up since 2010 and so far I haven't seen it happen.
    You may want to listen to the last two earnings calls again. The CEO and CFO both talked about this effect. It's not just analysts saying this.
    07-04-12 11:05 AM
  12. palomartian's Avatar
    Those fees are for throttling Blackberries so they use less data. It's a catch 22. Do they give up the fees and let their customers have the features other smartphones have and fail from lack of revenue, or stay the BIS course and fail because even the new BB10 can't match the data throughput of a 5 year old iPhone? Either way RIM is a write off, you don't need a GED to figure that out.
    07-04-12 11:12 AM
  13. trsbbs's Avatar
    RIM needs to stand tough on this. For that small fee we get a good, fairly solid quick and secure network.

    RIM needs to push this with the carriers. The value of having BIS vs not having it.

    The carriers are just looking for anyway to get a dollar. Slap them and tell them to go away.

    Tim
    penk likes this.
    07-04-12 11:55 AM
  14. palomartian's Avatar
    RIM needs to stand tough on this. For that small fee we get a good, fairly solid quick and secure network.

    RIM needs to push this with the carriers. The value of having BIS vs not having it.

    The carriers are just looking for anyway to get a dollar. Slap them and tell them to go away.

    Tim
    It's not our fee. RIM gets a kickback from the carriers for slowing and squishing our data and email. Its fair. RIM maintains the NOC and the carriers' networks do less work. Fair unless you're a customer. Then you pay the same for your data but get less of it, slower and clunkier. BIS is killing RIM as much as the OS and hardware.
    07-04-12 01:18 PM
  15. raino's Avatar
    It's not our fee. RIM gets a kickback from the carriers for slowing and squishing our data and email. Its fair. RIM maintains the NOC and the carriers' networks do less work. Fair unless you're a customer. Then you pay the same for your data but get less of it, slower and clunkier. BIS is killing RIM as much as the OS and hardware.
    How so? If I'm getting 200MB of BIS data, and 200MB of data on a platform that doesn't compress, am I not getting better "mileage" since my 200MB BIS data will last me longer?

    IMO, it's a double edged sword for carriers. They must appreciate RIM's compression in that it isn't as taxing on their networks, but hate the fact that this same compression may be preventing them from upselling their unlimited data plans. I guess they must have now decided to go for the kill, given the relatively small (and shrinking) BB market share.
    Last edited by raino; 07-04-12 at 02:47 PM.
    penk likes this.
    07-04-12 01:49 PM
  16. mithrazor's Avatar
    First it's not as slow as you guys make it out to be. It's pretty negligible.

    And second, I hope RIM doesn't give in to these carriers. Many of their devices are EOL. They're not selling in America. So what's the point of reducing BIS costs to carriers?

    So why would RIM in their right mind reduce prices for carriers that don't even pay much to RIM because of their marketshare?

    These carriers would recoup much more money if they tried to get a cheaper price from Apple for these iPhones.
    07-04-12 02:59 PM
  17. bk1022's Avatar
    Carriers have enough choice already I guess. If they see they can take advantage of RIM they will. Although, I suspect they won't want to ruin their relationship with RIM in case BB10 is awesome.
    07-04-12 03:54 PM
  18. W Hoa's Avatar
    Carriers are more inclined to balk at phone makers that demand an exorbitant sum of money to be allowed to push their product. Apple comes to mind.

    When a telco is forced to pay full price for a $600 phone vs demanding a drop of a few cents in service fees I would argue that it makes more sense to ask for some relief from excessive phone costs.

    "Sprint subsidizes most of its iPhone sales. The carrier started selling the iPhone last October 7th and pays Apple a subsidy for each phone it sells that is 40% higher, or $200 more, than the subsidy it pays to manufacturers for other phones."

    Rising Apple iPhone subsidy costs force Sprint CEO Dan Hesse to take pay cut
    07-04-12 04:34 PM
  19. njblackberry's Avatar
    Sprint begged Apple to carry the iPhone, so they have to pay to play.
    How that plays out for RIM remains to be seen.
    07-04-12 05:38 PM
  20. xandermac's Avatar
    I predicted this a couple of months ago and got all kind of "Troll bashed". oh well.

    Simple logic told me that with bb10 switching to activesync that carriers would no longer tolerate the RIMTax. It doesn't matter what other magic RIM added to their BIS, as soon as activesync was mentioned carriers would use it as an opportunity to save money.
    Last edited by xandermac; 07-04-12 at 06:18 PM.
    07-04-12 06:14 PM
  21. palomartian's Avatar
    How so? If I'm getting 200MB of BIS data, and 200MB of data on a platform that doesn't compress, am I not getting better "mileage" since my 200MB BIS data will last me longer?

    IMO, it's a double edged sword for carriers. They must appreciate RIM's compression in that it isn't as taxing on their networks, but hate the fact that this same compression may be preventing them from upselling their unlimited data plans. I guess they must have now decided to go for the kill, given the relatively small (and shrinking) BB market share.
    Apparently most people are putting quality over quantity and thus abandoning RIM.
    07-04-12 09:01 PM
  22. palomartian's Avatar
    First it's not as slow as you guys make it out to be. It's pretty negligible.

    And second, I hope RIM doesn't give in to these carriers. Many of their devices are EOL. They're not selling in America. So what's the point of reducing BIS costs to carriers?

    So why would RIM in their right mind reduce prices for carriers that don't even pay much to RIM because of their marketshare?

    These carriers would recoup much more money if they tried to get a cheaper price from Apple for these iPhones.
    Try RDM sometime. Something is going on and it can't be just the hardware and OS.
    07-04-12 09:02 PM
  23. raino's Avatar
    Apparently most people are putting quality over quantity and thus abandoning RIM.
    That may be so, but you still need to explain how BIS data plans are gypping the customers
    07-04-12 09:28 PM
  24. palomartian's Avatar
    That may be so, but you still need to explain how BIS data plans are gypping the customers
    Limits on attachment size. Want me to go on?
    07-05-12 12:08 AM
  25. addicted44's Avatar
    Let's see"

    Analyst "A":
    "While that may still give RIM enough cash to last two years, that doesn�t mean the company can afford to burn through its reserves, Kanade said."

    Analyst "B":
    "Monga, who rates RIM a sell, said RIM may run out of cash by May if the new phone hasn�t launched by then, as hardware losses overwhelm shrinking service revenue."

    There, who said you need an MBA to figure this stuff out? These guys nailed it within a little over a year using the same exact data! LOL
    Analyst B is considering the scenario where BB10 is not released on time. Analyst A is likely considering the expected scenario where it is released on time.
    07-05-12 02:30 AM
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