RIM To Revamp as BlackBerry Sales Plunge 12 Percent

Research In Motion has reported a 12 percent sales decline for the BlackBerry maker's latest business quarter, which ended in late May. RIM shipped approximately 13.2 million BlackBerry smartphones and 500,000 PlayBook tablets in the quarter, but this wasn't enough to reverse the sales slowdown the company first reported in April.

In response, RIM said, it intends to streamline operations, implement job cuts, and focus on accelerating a new slate of products. Earlier this month, RIM said it would launch the PlayBook in 16 more markets worldwide.

"We believe that with the new products scheduled for launch in the next few months and [by] realigning our cost structure, RIM will see strong profit growth in the latter part" of the company's current business year, said RIM co-CEO Jim Balsillie on Thursday.

Competitive Pressures

Wall Street financial analysts advised clients Friday that RIM's problems shouldn't be interpreted as a reflection of the broader smartphone market, which has been enjoying robust growth. "We estimate smartphone units to grow 37 percent year over year in calendar year 2011 and tablets to grow 222 percent year over year," wrote Piper Jaffray analyst Andrew Murphy in an e-mail on Friday.

For Apple, Piper Jaffray estimates iPhone sales to grow 66 percent year over year in 2011. Apple's iPad shipments are also expected "to grow 114 percent" -- although the comparison is limited "to a partial year of iPad sales in calendar year 2010," Murphy noted.

The financial firm views RIM's current problems as the result of strong competition from iPhone and Android devices. "Both Apple and the smartphone market have seen accelerating growth in the past two quarters, while RIM has lagged the market, with a significant downturn in the second quarter," analysts Gene Munster and Andrew Murphy wrote in a new investor note.

A Long-Term Decline

As many industry analysts have observed, touchscreen smartphones have been the dominant sales driver in the past few quarters. However, RIM's current portfolio lacks the key features offered by the iPhone and Android devices, analysts at Piper Jaffray and Gartner said.

"Other issues are linked to a defocus from operators as Android gets more important [as well as RIM's] weaker ecosystem offering compared to competitors," Gartner Vice President Carolina Milanesi added in an e-mail on Friday.

RIM said it's continuing to see slow growth in the quarter currently under way. As a result, the BlackBerry maker cut its full year earnings-per-share estimate to between $5.25 and $6.00 -- down from its $7.50 per share forecast in March.

Gartner expects smartphone sales overall to grow 57.7 percent this year. But the firm's analysts expect RIM's market share to fall 2.6 percentage points this year to 13.4 percent.

Gartner believes RIM's transition to a new QNX platform next year will make the company more competitive. Nevertheless, the firm forecasts the BlackBerry maker's share of the smartphone market will fall from 16 percent in 2010 to 11.1 percent in 2015.