Last month, I bought a BlackBerry phone but sold it within four weeks for an Android device. Apparently, I'm not the only one running away from Research In Motion (NAS: RIMM) : When the company released its quarterly earnings, shares plummeted by almost 20% after-hours.
Let's see how many negatives lie in store for RIM.
RIM's revenue for the quarter dropped 10% from a year ago and 15% on a sequential quarter basis. Eroding market share and dropping sales are complicating things for RIM. RIM's earnings fell by a whopping 59% as the company grappled with lower shipments and stiff competition from rivals including Google (NAS: GOOG) and Apple (NAS: AAPL) .
Another worrying factor is the declining cash from operations, which now stands in the red for the first time since March 2006. The company had already trimmed its outlook for the quarter.
Very few takers?
RIM's figures suggest there is a glut of smartphones stuck in the warehouse, as inventory more than doubled from the year-ago period on the back of low shipments and delayed product launches. This further underscores that the company has failed to meet the changing needs of consumers as its phones struggle with shrinking popularity when compared to other devices.
The rocky road ahead
RIM has tried its hand at various measures in order to arrest the decline, but none have proven effective. It launched the BlackBerry PlayBook tablet amid huge fanfare. But, as on previous occasions, Apple stole the show -- this time with its iPad. RIM's hope that the roll-out of phones based on a new operating system would help revenues failed to show the desired results. RIM shipped fewer BlackBerrys than a year ago while its PlayBook venture ran out of steam, with the company shipping only about 200,000 units, compared with 500,000 in the previous quarter.
An important point to note here is that PlayBooks run software made by QNX, which RIM acquired from Harman International (NYS: HAR) . The company expects this software to compete against iOS and Android but dwindling sales of the PlayBook indicate otherwise.
The Foolish bottom line
Nothing seems to be going right for RIM. Investors are pressing co-CEOs Jim Balsillie and Mike Lazaridis for a change in leadership because it's becoming a commonly held belief that these two just won't be able to pull RIM out of mediocrity. The stock has shed almost half its value this year and looks like its journey downhill is set to continue. With so many negatives in sight, it seems like shareholders could be in store for even more nightmares.
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At the time thisarticle was published Fool contributor Harsh Chauhan doesn't own shares in any of the companies mentioned above. The Motley Fool owns shares of Research In Motion, Apple, and Google.Motley Fool newsletter serviceshave recommended buying shares of Google and Apple, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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