Research In Motion Ltd. 's stock has dropped roughly 15 per cent since the unveiling of its crucial BlackBerry 10 software on Tuesday, and hit an eight-year low Thursday on the Toronto Stock Exchange.
Thorsten Heins, who took over as RIM's chief executive officer in late January, showed off the device at the company's BlackBerry World conference in Orlando, Fla., on Tuesday. Despite the prototype's sleek new software and enhanced functionality, RIM's stock dropped roughly 6 per cent that date, and kept falling as the conference continued.
In 2008, RIM was worth more than the Royal Bank of Canada’s with a share price peaking around $148, but the gloom surrounding the Waterloo, Ont.-based company and the intense volatility in its shares have left it with a shrivelled market capitalization of $6.25-billion.
After RIM announced the delay of the BlackBerry 10 in December, the company’s new management has hyped the next-generation software and a fresh lineup of smartphones, which are due out later this year, as a key component of the company's turnaround strategy.
After several reports of failed talks between RIM and potential buyers of the company, National Bank Financial analyst Kris Thompson suggested the reason for the recent drop off in its stock could be that RIM is now being judged on its deteriorating metrics. Many expect RIM's next couple of fiscal quarters to be bad as well.
“It could be that the stock is starting to trade on fundamentals and not takeover, break-up and partnership speculation,” Mr. Thompson said. “The May and August quarters are going to be ugly either in terms of volume shipments and/or gross margin.”
RIM is trying to sell its current crop of weak-selling BlackBerry 7 smartphones while it is attempting to ramp up expectations for a late summer or early fall release of the BlackBerry 10 platform.
When the company reported its fourth-quarter earnings on March 29, it said it sold only 11.1 million BlackBerrys, down 21 per cent from the previous quarter and from 14.9 million BlackBerrys in the same period a year earlier.
RIM is in the middle of a marked transition since the departure of previous co-CEOS Mike Lazaridis and Jim Balsillie, who resigned in January. Mr. Heins said this week that he has rallied the company behind BlackBerry 10, and has a “laser focus” on executing the project.
The demonstration on Tuesday was the first people have seen of the new platform, which is modelled on the operating system that currently runs RIM’s PlayBook tablet. Third-party software developers that build apps for smartphones began to abandon RIM's platform as the BlackBerry's popularity waned. But reaction from developers at the Orlando conference has generally been positive.
Even so, new BlackBerry 10 devices will not be available for months, which will be difficult for the company as it orchestrates Mr. Heins’s turnaround strategy.
“It’s not surprising,” said Ron Gruia, an analyst with Frost & Sullivan in Toronto, of the sharp drop in RIM’s stock price, which closed down 5.75 per cent on Thursday.
“Despite the momentum of the conference and some of the sneak previews … the market, overall, is looking at the fact that there’s not going to be any short-term catalyst. With BlackBerry 10 devices launching this fall, fundamentals will still be challenging.”