Research In Motion CEO Thorsten Heins publicly denies the BlackBerry maker is in a "death spiral" as it explores sell-off options, patches up management and refashions its losing smartphone in a massive gamble.
With its stock up more than 200% since September, a lot is riding on him.
Corporate turnarounds are an exotic U.S. business dance: IBM, Cisco Systems, Ford Motor and Apple staged dramatic reversals of fortune. Others -- like Palm Computing and Kodak -- serve as cautionary tales. Which path will the BlackBerry maker follow?
RIM, based in Waterloo, Ontario, is getting closer to answering that question. The smartphone pioneer today launches its revamped smartphone line after years of drubbings in the market it helped define. A lot depends on the BlackBerry 10: the entire company.
"Sadly, I expect this company to go the way of Kodak -- a victim of a market it helped to create," says Vivek Wadhwa, a fellow at Stanford Law School. Kodak filed for bankruptcy protection in 2012.
Before Apple's iPhone, RIM's BlackBerry was the No. 1 smartphone. The runaway popularity of touch-screens changed all that. But instead of quickly adapting, former RIM co-CEOs Jim Balsillie and Mike Lazaridis refused to see the writing on the wall. A year ago, after investor outrage, they were booted.
RIM declined to make Heins, who took over last January, available for comment.
Adding another thread of turmoil to the narrative, a pack of star engineers bolted for the exit amid the uncertainty, says a former employee who spoke on the condition of confidentiality, complicating RIM's biggest-ever product launch. This comes after it slashed 5,000 jobs last year and its CIO of six years, Robin Bienfait, left at the end of 2012.
RIM had to delay the BlackBerry 10 launch despite clockwork advances from Apple and Samsung that pushed them deeper into sales of devices and digital media.
RIM's last stand?
RIM's launch of BlackBerry 10 devices and a new operating system called QNX represent the company's last stand, experts say. The software has garnered rave reviews in alpha versions for user interface advances, but it is criticized for a lacking app- and media-store presence.
"They need very strong market reception," says Forrester analyst Charles Golvin.
To its credit, RIM has signed media services from Rovi to provide a market for movies and TV to the new device when it launches, according to sources familiar with the new BlackBerry rollout. RIM declined to comment.
Clawing away Apple and Android loyalists could be difficult. Nonetheless, RIM's stock has been snapped up in anticipation of a splashy RIM entry -- a proposition that could burn investors if sales fizzle.
"It's low odds" for success, says Deutsche Bank Securities analyst Brian Modoff. "You have two well-developed ecosystems and another already banging on the door" from Microsoft. Microsoft has an edge over RIM in sheer size, spanning PCs and tablets, and a jump-start with Windows Phone 8.
RIM reported that it lost about 1 million subscribers, falling to 79 million, in the third quarter. Heins also said RIM will revamp the service fees -- about a third of its revenue base -- charged to customers for using its network. A hit could be felt this year. But the company sits on more than $2.9 billion in cash. "That gives them a little bit of breathing room," Modoff says.
