Grim on RIM: Stock plunges amid questions of survival

RIM shares are tanking today, down about 19 percent to $7.40 as of this post, the day after the BlackBerry maker’s results missed estimates; it announced 5,000 job cuts, nearly a third of its workforce; and said its next BlackBerry would not be ready till next year.

The Canadian company’s week started off on a rotten note, its shares plunging to a nine-year low after Morgan Stanley downgraded its stock Monday. Thursday, RIM reported a higher-than-expected $518 million loss for the first quarter. Now Research in Motion — which is eating the dust of Apple‘s iOS and Google‘s Android in the smartphone wars — is ending the week with more downgrades from analysts, some of whom are saying the company needs to be sold.

“The delay in BB10 is absolutely catastrophic. It was all their hopes and dreams, and now they’re going to miss Christmas,” Jefferies analyst Peter Misek told the Toronto Star. The Star also included a quote from National Bank analyst Kris Thompson, who said: “At this point there is a chance that we may never see a BB10 handset given RIM’s track record.”

And even if the next version of the BlackBerry does come out next year, analysts are saying there’s no guarantee it will be given a chance by consumers who already would have had their choice of a new iPhone, updated versions of Android smartphones and Windows phones. A couple of analysts mentioned the word “ecosystem” in their pessimism about the company, saying RIM’s has no chance of catching up to the others.

RIM CEO Thorsten Heins, who took the helm at the beginning of the year in place of the company’s longtime co-CEOs, acknowledged the company’s rivals during Thursday’s earnings call. “There’s a lot of competition coming, that’s the nature of the consumer electronics business. We’re not afraid of it,” he said, according to the New York Times, which points out that the company has more than $2 billion in cash and no debt. Heins suggested the delay would help the company release a better product.

But many are already looking beyond the BB10 and are focused on whether RIM can survive. Reuters reports that Microsoft has approached the company about a partnership similar to the one it has with Nokia. Nokia, another once-high-flying smartphone maker that is now struggling, dumped its own mobile operating system in favor of Windows. But even something like that may not be enough for RIM.

“While the stock remains cheap, only the potential for an outright sale of the company or a breakup keeps us at a neutral,” Credit Suisse reportedly said.


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