Research in Motion’s misery

Is the Apple juggernaut strong enough to kill off even its biggest rival? That is the question that senior executives and investors in BlackBerry maker Research in Motion as asking themselves after the company released another disastrous set of results on Friday evening in North America.

The company’s shares plunged 20% after it announced net profit fell to $US329 million in the second quarter of its fiscal year from $US797 million a year ago.

Revenue fell from $US4.6 billion to $US4.2 billion in the quarter, but most disappointing were the company’s actual shipments.

Analysts were expecting RIM to shift 11.9 million BlackBerry units, but RIM shipped 10.6 million. The company’s new tablet product, the PlayBook, was tipped to shift 700,000 units but 200,000 were shipped.

One analyst described the PlayBook shipments as “pathetic” and RIM has been forced to respond to the poor sales by slashing $US50 off the price of most models in the range.

RIM’s share price has now more than halved since the start of the year, which has left the company’s co-chief executives Jim Balsillie and Mike Lazaridis a lot worse off.

According to Bloomberg, the pair, who both own a 5% stake, have now seen the value of their shares fall from $US1.9 billion in February to just $US640 million at the end of trade on Friday.

Exactly how long the company will last in its present state is not clear – investors are baying for blood.

In June, billionaire Stephen Jarislowsky called for the co-CEO role of Jim Balsillie and Mike Lazaridis to be split – both men are also co-chairman.

On Friday, RIM investors Vic Alboini of Jaguar Financial Corp. called for the company to consider its strategic options and sell either business units or some of its patents.

The problem for RIM is that arresting the downwards spiral in sales looks to be near impossible. While an all new BlackBerry model is on the way early next year, the hype that will be created by a new iPhone model – rumoured to be announced on October 5, with a release in the weeks after that – may well drown out RIM’s next move.

Remarkably, the company still thinks it can meet its third-quarter guidance of revenue of $US5.3 billion to $US5.6 billion. It does have an updated BlackBerry in the market right now, but this does suggest an incredible sales turnaround that investors are well within their rights to question.

Remember that RIM’s share of the global phone market has fallen from 19% to 12% in the last 12 months. Apple’s has risen from 14% to 18% over the same period.

Rightly or wrongly, RIM looms as the biggest casualty of Apple’s iPhone revolution. Since 2007 when the company launched, Balsillie and Lazaridis have failed to respond to the threat posed by Apple and get ahead of the market.

Over the weekend, Business Insider put together some key quotes from the pair which demonstrate how much they underestimated the Apple threat.

First Balsillie dismissed the iPhone when it was launched: “It’s kind of one more entrant into an already very busy space with lots of choice for consumers… But in terms of a sort of a sea-change for BlackBerry, I would think that’s overstating it.”

Then as late as April 2010 he dismissed the iPad: “So the question you have to ask yourself is when it comes to tablet, what market or what opportunities is it solving, what problem is it solving, and is it just a replacement laptop? I think that’s a difficult one to judge.”

Of course, RIM has tried to catch up with Apple in both markets. Now it appears too far behind to matter.