How the 'CrackBerry' cracked

BlackBerry's owner has called in bankers to conduct a strategic review and there are fears about thousands of job losses at the smartphone maker

The bad news from BlackBerry owner Research in Motion just gets worse, as the Canadian group has warned of an operating loss in the second quarter to June. RIM, once the darling of the smartphone industry before being eclipsed by Apple and Samsung, appears to be waving the white flag as it has hired JP Morgan and RBC Capital to carry out a strategic review.

Thorsten Heins, the chief executive, who has been in the job only four months after taking over from the long-serving co-chief executives Mike Lazaridis and Jim Balsillie, has warned of "significant" job cuts.

His decision to seek the advice of the banks suggests he feels that RIM's ability to help itself may befast running out.

Poor products, technical and network faults, a clunky software operating system, and a failure to embrace tablets are just some of its problems.

The options seem to be limited:it could put itself up for sale, strikea licensing deal, tie-up with another partner or tap the stock market for cash.

Research in motion: The options

Sell

Industry analysts have speculated for at least a year that RIM is "in play". Asian technology giants such as Samsung, HTC or LG have all been mooted as being interested. Amazon, the maker of the Kindle e-reader, above, might also come back for another try after RIM rebuffed an approach last summer.

It's important to remember RIM has a customer base of 78 million and a BBM (BlackBerry Messenger) user base of 56 million. Millions of business people rely on their BlackBerrys every day.

Another attraction is RIM's array of patents that could still be sought after by a fast-growing new tech player. That was a key motivation for Google's recent purchase of mobile firm Motorola.

However, bidders have kept their distance from RIM and the share price, which was down 7 per cent yesterday on news of the strategic review, tells its own story. The market sees no buyer.

But the 90 per cent slump in the shares since 2008 means RIM looks quite cheap at $C6bn (£3.75bn).

Licensing and partnerships

Some sort of licensing deal or joint venture might appeal to another company as a new partner would not have to stump up a lot of cash. JP Morgan and RBC are said to be making this a key focus of the strategic review.

Any marriage would likely see RIM as the junior partner given its parlous and weakening position.

But RIM's security technology is regarded as the best in the market, which is why it remains the favoured tool for police, government and military use in countries all over the world.

The problem is that time is short for BlackBerry. As the months go by, the risk is that RIM's proprietary technology appears to fall further behind rivals such as Apple and Samsung.

Other mobile operating systems have swept the market. RIM has 80,000 apps in its store, and 15,000 for its PlayBook tablet, compared to Apple's iOS and Google's Android, which respectively have 650,000 and 500,000 apps in their stores. RIM has belatedly embraced touchscreens with its forthcoming (and delayed) BlackBerry 10 handset which does not have the trademark "external" mini-keyboard.

"BlackBerry 10 is the last chance saloon for RIM," warned Dexter Thillien, an analyst at IHS Global Insight.

Raise cash

The chief executive Thorsten Heins said the banks are looking at the "feasibility of various financial strategies", but a fundraising seems an unlikely avenue given RIM had C$2bn of cash and equivalents on the books, although any loss will eat into that buffer.

Shareholders, who have already lobbied for a change of management and strategic review, are desperate for any cash. The activist investor Jaguar Financial Corp has called for a sale of part of the company – such as the handset business and network services operation – to provide a return to shareholders. But so far no buyer has emerged.

Keep calm and carry on?

Arguably this is the position that RIM has been clinging to for months now – bar the change in chief executive and a few less than glittering product launches.

High-profile flops such as the Playbook, RIM's failed answer to iPad, keep chipping away at its brand equity. Only diehard fans are hopeful the BlackBerry 10 can change things.

"The delay in getting it to market is a major drawback for the company," says Mr Thillien.

Even then "the example of Nokia and the Lumia show that launching a good device is not enough in today's market, but that any new device needs to be compelling and offer the right ecosystem alongside the hardware", he said.

The worst-case scenario is that RIM's woes persist. Mr Thillien added: "Competitors may wait for the company to go under and acquire its most compelling assets at a knock-down price, as happened with fellow Canadian company Nortel."

Start your day with The Independent, sign up for daily news emails
News
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own