Shares closed down 61 percent to $9.63 apiece by 1:39 in the afternoon in New York, marking the lowest price officially since December of 2003. That means that the stock has gone down a whopping 93 percent altogether from its mid-2008 high of US$147.55.
Reaction has been harsh after RIM announced plans to report a quarterly loss for the three months ending June 2. The operating loss will be the first such loss since 2004.
The real trouble here is not the historic low but the precedent it sets. Many analysts are stating that there’s little doubt that things will get even worse for the company, which means that we could be looking at some record lows for RIM shares in the not-so-distant future.
According to Pacific Crest analyst James Faucette, RIM sales dipped even lower in May and that could have lasting impact on the share value. “Our checks indicate that U.S. BlackBerry sales likely declined further in May, while inventory remained relatively stable,” he said in a note to clients on Sunday. According to Faucette, telecommunications carriers are holding about six to eight weeks of inventory – three to four times normal levels.
Fiscal first quarter results are due on June 28 and that could present some make-or-break opportunities for the company. It’s not expected to be a very good day around Waterloo, that’s for sure, and many are wondering what it will take for the RIM to be able to turn things around. Sales in Europe are currently driven by lower-end Curve products, which means that high-end items are having trouble moving off shelves. And with market share continually eaten up by Apple and Android products in other key areas, RIM’s once reasonably solid market foothold has all but disappeared.
With major job cuts in the wind and things being “way worse” than anyone anticipated, the book on RIM seems to be nearing its end. All that appears to remain is what can be done to potentially reverse matters or at least salvage some parts of what was once a proud name in Canadian technology sector. A lot is being placed on the shoulders of the upcoming BlackBerry 10, but it’s hard to imagine any operating system strong enough to save this sinking ship.