RIM shares slumped 10.26 percent to $56.08 on the Toronto Stock Exchange Friday after the Canadian wireless company Thursday forecast disappointing earnings for the current quarter.
With RIM smart phone sales posting negative growth in the past four quarters and its market share slipping to 22 percent from 40 percent, an analyst Friday said the BlackBerry maker might be a lost cause, with its best days behind it. Pierre Ferragu, a research analyst with Sanford C. Bernstein Ltd, termed BlackBerry a "broken brand" because of its declining sales in the booming smart phone market which posted 50 percent growth over the previous year.
"BlackBerry is a broken brand. In North America, sales are now well established on a declining trend, which wouldn't necessarily be a problem: growth shifting from mature to newer markets makes sense. But the reality is that North America isn't a mature market at all for smartphones,'' he said Friday in his note.
Predicting RIM stock to slip as low as $45, he added, "In the context of the US market, BlackBerry isn't competitive anymore. Going forward, we expect consumer awareness of the superiority of Apple and Android phones to grow very fast in the rest of the world. "We also expect these very same competitors to expand fast in lower price points. In such a context we would expect RIM's trajectory in international markets to get closer to the one observed so far in North America.''The National Post also quoted Brian Modoff, analyst with Deutsche Bank in San Francisco, as downgrading RIM to "sell," cutting his price target to $50 from $60.
In his note Friday, Modoff was quoted as saying, "We have remained neutral on the stock, in part, on the view that their new QNX OS could prove to be a viable competitor. We no longer see it this way. "RIM will fragment itself as they support multiple run-times. The company also looks set to see meaningful margin compression as gross margins for the PlayBook dilute corporate averages and they grow operating expenditures to support the new products.''
With no QNX on BlackBerry smart phones until 2012, Modoff said RIM would continue to lose market share to Android smart phones. Blaming RIM co-CEOs Mike Lazaridis and Jim Balsillie for the company's troubles, Modoff wrote, "We can think of few examples of companies with co-CEOs that have fared well.We believe the multiple-choice approach to OS is a symptom of conflicting strategies internally. Moreover, it appears that the company is building duplicate working groups in many areas. This is not only expensive, but is likely to hamper their ability to take decisive action."