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Analyst sees RIM selling assets or company, or being ‘niche’ supplier Add to ...

These are stories Report on Business is following Monday, May 6, 2013.

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Analyst sees big change coming at RIM
CanaccordGenuity believes Research In Motion Ltd. may yet divest pieces of the business, sell the company outright, or become just a “smaller niche supplier” as the launch of its new BlackBerry 10 models plays out.

Analyst Michael Walkley bases that call on what he says are store surveys showing slowing sales of the touchscreen Z10 BlackBerry models at major U.S. carriers, and the “limited supply” Q10 keyboard version.

“Given the weaker Z10 sales levels combined with more limited initial supply of the Q10 than our expectations, we are lowering our BB10 sell-in estimates for the May quarter from 3.3 million to 2.8 million units,” he said in a new report.

“While we anticipate stronger near-term results for BlackBerry as higher margin BB10 smartphones sell into the channel, we do not believe BlackBerry can achieve sell-through market share levels to return to sustained profit levels.”

The BB10 models have met with strong reviews, and chief executive officer Thorsten Heins has cited their strong showing.

In its latest quarter, posted at the end of March, RIM rebounded to a profit with sales of six million BlackBerrys, including one million of the new BB10s.

“With the launch of BlackBerry 10, we have introduced the newest and what we believe to be the most innovative mobile computing platform in the market today,” Mr. Heins said as he unveiled the fourth-quarter results.

“Customers love the device and the user experience, and our teams and partners are now focused on getting those devices into the hands of BlackBerry consumer and enterprise customers.”

Canaccord’s Mr. Walkley warns that the new devices face heightened “high-end” competition from the likes of Samsung’s Galaxy S4 and the HTC One, and, thus, sales of Z10s could weaken further.

“Given our belief BB10 smartphones will struggle to gain sustainable traction in the highly competitive smartphone market, we believe BlackBerry may eventually sell assets, sell the entire company, or materially change its business model to a smaller niche supplier,” Mr. Walkley said.

“Further, we believe BlackBerry will struggle to generate sustained positive earnings with its current business model and investors will mainly focus on a sum of the parts analysis.”

That analysis values RIM, which has rebranded itself as BlackBerry, at about $4.9-billion (U.S.), and a price target on the stock of $9.

IMF slams Greece
The International Monetary fund today praised Greece for some of its economic measures, but slammed the government for failing on several fronts, notably in fighting tax evasion.

The IMF also noted that the country’s achievements have been on the back of “unprecedented” bailout support from its international lenders, to the tune of €173-billion ($230-billion Canadian).

In the report on its consultations with Athens, the IMF warned that “insufficient structural reforms have meant that the adjustment has been achieved primarily through recessionary channels,” and the pain in the embattled country has not been shared by all.

Its three key points:

1. “Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earnings a salary or a pension.”

2. Labour reforms are pushing down wages, but prices have not dropped as quickly “because of a failure to liberalize closed professions and more generally open up to competition.” This, too, has taken its toll on wage earners and those on fixed incomes.

3. Jobless levels are surging in the private sector, notably among youth, but “the over-staffed public sector has been spared, because of a taboo against dismissals.”

The IMF called for decisive action, adding there is “no more room” for tax hikes and spending cuts.

“A strong recovery will need to be built primarily on deepening structural reforms,” the IMF said.

“The focus should be on invigorating Greece’s export and import competing industries,” it added in the report.

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