Feature Article

December 26, 2012

RIM's BlackBerry Loses Grasp on Subscribers

Research In Motion's stock took a steep dive on Thursday when the company said it wants to change its fee system. RIM also reportedly lost subscribers for the first time, its global usage for the BlackBerry dropping down to 79 million.

On the flipside, the smartphone maker is preparing to introduce new models at the end of next month, which may create a "make or break" moment for the company, ultimately determining the fate of this once-beloved company.

The stock rose significantly when shareholders heard the great news of the new models. But when RIM said it won't collect as much revenue from telecom companies with the BlackBerry 10 platform, those stocks quickly fell 10.4 percent.

RIM is evolving, and it's getting rid of many of its service fees which made the company a handsome amount of money. The CEO for the company, Thorsten Heins, said that at this point, only those who want enhanced security will have to pay fees.

"Other subscribers who do not utilize such services are expected to generate less or no service revenue. The mix in level of service fees revenue will change going forward and will be under pressure over the next year during this transition," he said.

Mike Walkley, an analyst at Canaccord Genuity, doesn't share the optimism that RIM has. "That's what turned the stock from being up 10 percent to being down 10 percent. That's been part of our worry. How do they come back with a new platform and get carriers to continue to share the higher revenue - which sounds like they are not going to - and then subsidize the phone to make it affordable for consumers and enterprises? People are seeing that the services revenue has a lot of risk to it now with the BlackBerry 10 migration," he said.

Heins still maintains his optimism: "We believe the company has stabilized and will turn the corner in the next year."

Heins points to the fact that the company's cash holdings inflated from $600 million to $2.9 million. This happened even after laying off 5,000 workers and restructuring.

If RIM wants to stay alive, it had better make sure that the BlackBerry 10 platform will stun consumers and enterprises enough to go out and line up at stores.




Edited by Braden Becker


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