RIM, Playbook Might Be in Trouble: Announces Layoffs, Dismal Numbers
In a much anticipated announcement, BlackBerry maker Research in Motion gave some grim news and cagey information about its financial situation and their new Playbook tablet. According to them, their net income for this past quarter was $695 million. This might seem like a lot, but it’s pretty dismal compared to a net income of $934 million in the previous quarter, and $769 million in the same quarter last year.
On top of the lousy financials, the company announced that it had shipped 13.2 million BlackBerry phones and 500,000 Playbook tablets. The fact that these are shipping and not sales numbers is particularly significant; RIM can ship as many units as it wants, but it won’t matter if those tablets are sitting in packing crates or in retailer’s stock rooms.
The lack of sales numbers on the new Playbook tablets, which were released in April, and lower-than-average income would seem to suggest that the Playbook is a flop. Many have speculated that Apple has defined a tablet computer product as “an iPad” instead of “a tablet,” similar to their domination of the portable music player market. RIM needed to prove that it could leverage its success with the BlackBerry to be a real contender against Apple in the tablet market. I am a stranger to the cat-and-mouse game of the business world, but it seems to me that if RIM had even half-way decent sales numbers for the Playbook they’d be shouting them from the mountain tops to make up for announcing cruddy income.
The icing on this frown-cake was the announcement that RIM would be making unspecified layoffs in order to reduce costs. No matter how RIM tries to spin the numbers, impending layoffs don’t bode well for the company that once defined smartphones. Of course, bad news doesn’t mean the end of a company — they still hold a huge following in the corporate and government markets. But considering that RIM built its BlackBerry fortunes on the ashes of the once-mighty Palm, this news does give one pause.