RIM Must Shed 90% of Employees to Survive, says Analyst

RIM Must Shed 90% of Employees to Survive, says Analyst

Analyst’s predictions are a dime a dozen, but often times they offer up healthy discussions. Morgan Stanley analyst Ehud Gelblum has suggested that Research In Motion will see fiscal year 2014 revenue of about $7 billion, well short of the $12 billion Wall Street currently expects.

Currently, Gelblum downgraded RIM to underweight on the notion that RIM won’t be able to hold book value. Here’s what Gelblum said in his research note:

[quote]RIM is likely to significantly miss estimates in its FQ2’13 August quarter as it gets hit with the triple whammy of a quickly aging legacy portfolio of BB7 devices, the standard pause in unit shipments ahead of the launch of its new BB10 phone and the overall swoon in the smartphone market caused by the pause ahead of the anticipated October iPhone 5 launch. Market share loss accelerates in FY14 as risks we have flagged earlier intensify, namely 1) competition increases in emerging markets due to increased availability and lower price points of Android smartphones and 2) BB10 misses back to school and the product flops, particularly because it has no keyboard which we believe is a key feature of Blackberries that is keeping the existing Blackberry faithful strong.[/quote]

While Gelblum makes some valid points as “competition increases in emerging markets due to increased availability and lower price points of Android smartphones”, he misses the point of the first BlackBerry 10 device. The reason RIM is in this slump is due to their poor reaction and solution to the iPhone. Now RIM finally has a viable all-touch product and it becomes a travesty because there won’t be a physical keyboard version at first.

Nevertheless, Gelblum sees RIM reviving itself by drastically cutting its workforce. Gelblum says RIM will likely deliver 10 million to 20 million devices in the future. To break even on that volume, RIM will need to cut 90 percent of its 16,500 employees to wind up with 2,000 workers. In this scenario, RIM will be a niche device maker focused on high-security markets.

What do you think RIM should do? We’ve already heard they plan to cut roughly 12% of jobs, but is 90% overkill? Sound off in the comments!

via CNET

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1 Comment On "RIM Must Shed 90% of Employees to Survive, says Analyst"


Pjews
6 months 9 days ago

Analysts are a dime a dozen. The word says it self. Analysing to the best of their capability and nothing more. I personally don’t have much faith in what they are predicting. My investments are usually done on own research.
BlackBerry will survive. The company have a stern leader and a great product and service to bring them foreward. The only missing link is an effective marketing effort. But in due time that will happen.

 

@UberLucas

Founder of N4BB.com for the latest in mobile and tech news, leaks, reviews, videos, and much more.


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