Emerging markets keep BlackBerry afloat – for now

The shares surged 18% after its results were announced; they showed losses that were less and handset shipments that were greater than analysts had forecast.

Alas, as Benedict Evans of Enders Analysis pointed out on September 28, the share ramp instead looked like a classic "short and squeeze" pattern, according to which those who had short-sold the shares in expectation of dire results were forced back into the market to buy and minimise their own losses when the numbers were only awful.

RIM's problems are far from over. Its market share has collapsed in the United States; it has just suffered its third successive quarter of losses (and forecast at least one more); average selling prices for its handsets are down; the 7.4-million handset shipments are 30% down in a rapidly expanding market; and its PlayBook tablet shipped just 130 000 units, whereas Apple's iPad shipped more every day of the second quarter.

The only area showing success is emerging markets such as Indonesia, where the combination of cheap handsets and its BBM (BlackBerry Messenger) service – which does not need a data contract to function – appeals to a broad demographic.

The other area is enterprises, which have not yet abandoned BlackBerrys because of their security and email functionality.

"Many new products are coming in so the market is going to get tougher, more challenging," chief executive Thorsten Heins told analysts in a conference call, adding that this would most likely force RIM to cut prices further.

That is going to hurt profits even more. RIM's US revenues have been collapsing since mid-2010 – although, fortunately for its survival, revenues from other geographical regions have grown to make up some of the difference.

But the general trend is downward, with revenues falling 31% to $2.87-billion – the fifth successive quarterly drop – and operating losses hitting $363-million, the third straight quarter of losses that, in total, are nudging $900-milllion.

RIM's problem is that it is ill-equipped to compete at the cheaper end of the cellphone market – but that is where the huge success of Apple and Samsung, which between them control half of that sector, have relegated it.

"Although RIM delivered marginally better results, we believe it is still too early to get constructive," said Phillip Huang of UBS Investment Research.

The crucial question will be how effective BB10, the upcoming version of its operating system, can be.

Promising carriers
Although Heins wowed developers earlier this week by showing off BB10 handsets and promising carriers would start testing them in October, there will still be a huge delay before the new products go on sale, probably in March 2013.

By that time it would face renewed pressure in the low-end markets from Finland's Nokia, as well as Chinese handset makers offering cheap Android phones, said Francisco Jeronimo, cellphones ­analyst at researchers IDC.

"They're still relying on a very strong brand – that's what has been supporting them," said Jeronimo.

"People in those markets can't afford high-end phones like the iPhone. But if BB10 isn't as good as they have been promising, then there will be problems. Let's see what happens in the next quarter."

He thinks that will add extra pressure as RIM comes under fire from rivals.

Colin Gillis, an analyst with BGC Financial, was more blunt.

"It does give them more time. The talk of bankruptcy has probably dissipated right now," Gillis said.

"These are all the right moves, but does it change that their position is still bleak?" – © Guardian News & Media 2012

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Charles Arthur
Charles Arthur works from Tranquility Base Hotel & Casino. Journalist, speaker, moderator. The Guardian’s Technology editor 2009-14. Coming May ‘18: Cyber Wars, on hacking. Prev: Digital Wars: Apple v Google v Microsoft Charles Arthur has over 74656 followers on Twitter.

Related stories

Muscular dollar awes the rest

South Africa is less likely to suffer but investors will look for the elusive factor — growth

Reserve Bank decides to hold repo rate at 7% and prime lending rate at 10.5%

As was widely anticipated, the South African Reserve Bank’s monetary policy committee has decided to hold interest rates.

Brexit referendum day finally arrives after months of division

Voting begins today, after months of continuous campaigning from the 'Remain' and the 'Leave' sides, and the results should be in on Friday morning.

BlackBerry pursues Greatness: The sequel

BlackBerry may be yesterday's smartphone but at its annual Security Summit in New York, it was looking a lot like tomorrow’s mobile security leader.

Smart options for new arrivals of high-end phones

Arthur Goldstuck considers the various formats and price tags of the new high-end phones that have arrived in South Africa in the past few months.

The flaw in factory resets

A new service allows users to sell old phones and tablets, but deleting information before selling a device does not wipe your slate clean.

Subscribers only

Toxic power struggle hits public works

With infighting and allegations of corruption and poor planning, the department’s top management looks like a scene from ‘Survivor’

Free State branches gun for Ace

Parts of the provincial ANC will target their former premier, Magashule, and the Free State PEC in a rolling mass action campaign

More top stories

Vitamin therapy is for drips

It may be marketed by influencers, but intravenous vitamin therapy is not necessary and probably not worth the hype, experts say

Facebook, Instagram indiscriminately flag #EndSars posts as fake news

Fact-checking is appropriate but the platforms’ scattershot approach has resulted in genuine information and messages about Nigerians’ protest against police brutality being silenced

Murder of anti-mining activist emboldens KZN community

Mam’Ntshangase was described as a fierce critic of mining and ambassador for land rights.

Unite with Nigeria’s ‘Speak Up’ generation protesting against police brutality

Photos of citizens draped in the bloodied flag have spread around the world in the month the country should be celebrating 60 years of independence

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday