Research In Motion CEO challenges perception that RIM is in ‘a death spiral’

Research In Motion chief executive Thorsten Heins was on the defensive Tuesday insisting “there’s nothing wrong with the company as it exists right now,” and that he’s confident the BlackBerry maker will get past its current challenges.

Heins led the march of several executives who fanned out to media outlets in an effort cast a positive glow on the company, which has been facing an increasing amount of negativity over its seemingly endless problems.

Last week, RIM shocked the market with another delay to its crucial BlackBerry 10 operating system which has been considered by many as a last-ditch effort to save the company. But that was only part of the bad news.

RIM also said it would layoff about 5,000 employees as it slashes costs across the organization to contend with faltering sales of its BlackBerry smartphones and a quickly eroding stock price.

In morning trading on Tuesday, RIM’s stock was down seven cents to $7.47 on the Toronto Stock Exchange.

Heins acknowledged the company faces a challenge to regain market share in the United States, but insisted RIM isn’t in a “death spiral.”

“There’s nothing wrong with the company as it exists right now,” Heins said on CBC’s Metro Morning radio show.

“I’m not talking about the company as I, kind of, took it over six months ago. I’m talking about the company (in the) state it’s in right now.”

Heins said the major changes RIM has made to its management and business objectives since he became CEO in January are part of a massive transition to a whole new technology platform.

He said sales in other parts of the world remain strong and argued the transition to the BlackBerry 10 will be more than a product launch, it will be a completely different way for RIM to address mobile computing.

But before that launch sometime early next year, RIM needs to survive the rest of 2012. Many analysts expect that will be particularly challenging considering the company will be marketing old smartphones to savvy North American users who could easily switch to brand new Android phones or the new Apple iPhone expected sometime this fall.

So, in many ways, RIM is turning to its global customer base in hopes that’ll keep the company’s sales float in the meantime. Some of its older phones are still relatively new in some regions.

“Many of the international markets continue to provide a great deal of strength for us, and so we expect to drive that as hard as humanly possible,” said Rick Costanzo, executive vice-president of global sales in an interview.

Those assurances are being increasingly ignored by analysts, and many have been downgrading their expectations for the company over the past several days.

On Tuesday, Barclays lowered its expectations, pointing towards RIM’s “ebbing competitive position” which puts earnings estimates “at risk.”

“We model a loss of $1.04 versus a consensus of a three-cent gain in full-year 2014,” wrote analyst Jeff Kvaal in a note.

“We find a possible floor or takeover valuations very risky.”

At least one analyst questioned how RIM could successfully execute the release of its new phones amid mass layoffs.

“We think execution risks will continue,” Jefferies analyst Peter Misek said in a note to clients last week.

“We believe the BB10 pushout decision was recent and leaves RIM with inferior products in an increasingly competitive and saturated smartphone market.”

Costanzo challenged the predictions, noting that their projects for sales over the past three years have often been notably offbase with the actual results. At one time, RIM’s earnings consistently beat analyst expectations.

“Estimates are exactly that — they’re estimates,” he said.

“We have a different view in terms of what we expect to be able to do with our existing portfolio.”

“We’re not delusional,” he added.

“We know that we’ve got some big challenges ahead of us, but at the same time we remain optimistic about our short term prospects.”

 

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