RIM'S New CEO Is Buying Time To Postpone Sale

| About: BlackBerry Ltd. (BBRY)

RIM (RIMM) has been struggling since it has not launched decent smartphones and tablets. Thus, the stock has been in a downward trend since 2008. While RIM's international revenues (other than US and Canada) are growing, it is not at the same rate as Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL). See this market share graph. The North American consumers' intentions to buy a Blackberry are only (2%) and it has fallen another point to its lowest level ever in a ChangeWave survey. Since it peaked back in September 2008, Research in Motion's planned buying ranking has fallen in 9 of the past 12 ChangeWave surveys. RIM (22%) ranks dead last in the all important satisfaction sweepstakes -- down 2 points from September, again to its lowest level ever in a ChangeWave survey.

Furthermore, US market shares are very low. According to Business Insider: "Blackberry's share of the US market (by operating system) has fallen from 43% to 19% in only two years and we don't expect this trend to let up anytime soon." It is losing attention from consumers around the world. In several countries, no RIM handset is in the top 3 choice of consumers across the world. The previous co-CEOs of RIM mentioned in the past that native apps were not so important compared to mobile browsing. This lack of importance is among the key driver toward RIM collapse. Consumers definitely want native apps and there are widely available on Android and Apple smartphones and tablets.

The new CEO just said when he was nominated that RIM's problems were mainly due to "We are a great innovative company, but sometimes we innovate too much while we're building a product."

In fact, the lack of decent smartphones and tablets with a large applications ecosystem is what is killing RIM. RIM's mobile advertising network is poor. Competition is so fierce from Android manufacturers and Apple, that the pace of innovation is each three to four months. A lack of planning and adjustments to market demands and competition has now put the Blackberry brand a far laggard.

RIM's actual value may be over $18 in the case of a sale of the firm, because of the good value of its patents and large actual customer base. However, new surveys mention that BB users are ready to shift the boat and go to competition. BB10 (QNX) and Playbook 2 may be interesting but their launch is so late that the value of RIM will still suffer. Upper management indicated that they don't want to sell until they fix the company and benefit from BB10. The option of waiting to sell may destroy a lot of value to actual RIM's shareholders. Since market shares are falling quickly the value of RIM's subscriber base won't be the same at the launch of BB10.

The modifications to RIM's board of directors are positive but it will take a long time before it has concrete results. The new CEO, Thorsten Heins, is a 4 years RIM employee and 23 years former divisional CTO of Siemens. It appears that RIM's culture will stay mainly engineers-focused. It has presently no CMO. And desperately needs a new consumer driven vision and appealing new products. It can't be done in few months, another reason why the stock will face strong pressures. The possibility of a sale may offer a certain cushion to another important downward trend, but the longer the sale, the lower will be the valuations.

Since RIM has no debt and a decent "actual" 75M subscriber base it may be acquired in the near term by players such as Amazon (NASDAQ:AMZN) or an Asian Android manufacturer. RIM's subscriber base is growing at a 40% annual rate by quantity while sales of phones by quantity are less than required to replace and grow existing BlackBerry phones.

Mr. Heins can create significant value to its shareholders only by selling the company: the sooner, the better. He has a huge job of fixing RIM's poor strategic portfolio management of innovation projects.

Disclosure: I am long AAPL.

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