WATERLOO, ONTARIO — Research In Motion Ltd., the maker of the BlackBerry, is in steep decline. The company, once the crown jewel of the Canadian technology industry, is now worth 1 percent of Apple’s market capitalization.
One way for RIM to stop the downward tailspin: It could sell itself to a competitor or financial firm. But who would step up to buy RIM —and why?
Late Tuesday, the company said it expects to post an operating loss for the current quarter, a sign that BlackBerry sales are falling even faster than analysts expected. On Wednesday, the company’s stock hit its lowest level since 2003, the year RIM went from making two-way e-mail pagers to smartphones.
The stock has fallen 93 percent since its peak in 2008. Since then, the BlackBerry’s dominance as the smartphone for on-the-go business people has been eviscerated by Apple’s iPhone and, more recently, by phones running Google’s Android software.
Research firm IDC says BlackBerrys account for 6.4 percent of the global smartphone market, one-third of what they had two years ago.
In that time, the company’s financial performance has suffered. RIM reported a 25 percent revenue decline in the latest fiscal quarter, to $4.2 billion from $5.6 billion. For the full fiscal year that ended on March 3, it earned $1.2 billion, or $2.22 per share, on revenue of $18.4 billion. That’s down from net income of $3.4 billion, or $6.34 a share, on revenue of $19.9 billion in fiscal 2011.
RIM issued a dire warning about its business Tuesday, saying it is losing money for the second-consecutive quarter and will lay off a “significant” number of employees.
Still, the company is defiant. Chief executive, Thorsten Heins, says he can turn things around with the help of fresh smartphone software. Heins joined RIM four years ago and was most recently its chief operating officer. He replaced co-CEOs Balsillie and Mike Lazaridis in January after the company lost tens of billions in market value.
“My charter from the board of directors is very clear: long-term value creation with RIM,” Heins told The Associated Press in an interview at the company’s headquarters in Waterloo, Ontario, earlier this month.
Analysts give the company only a slight chance of coming out of the crisis and back into the high-stakes smartphone game. To hedge its bets, the company has hired bankers to look at its options. It’s not actively looking to sell itself, Heins said, but it wants to be prepared.
“We are prudent because we know the situation is somewhat challenging,” Heins said. “So we are just looking at everything that could be an option. That doesn’t mean we are pulling on those options. But we need to understand ... what is our field of action that we could take in case we need to?”
RIM has 78 million users connected to this system, but Walkley estimates that only 20 million are corporate and government users who are likely to stick around because of the communications security RIM provides. The rest are consumers who will jump to competing phones, he believes. That business is worth about $2.75 billion to a competitor, Walkley wrote in a research report Wednesday
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Apple killed blackberry. . .