RIM Posts First Loss in Seven Years: Now What?RIM Posts First Loss in Seven Years: Now What?

RIM isn't going away, but its halcyon days are definitely over. An acquisition is becoming likelier than ever.

In its fourth quarter results released last week, BlackBerry maker Research In Motion (RIM) posted its first quarterly loss in 7-years. Ironically, in my session on UC Mobile Devices at Enterprise Connect on Tuesday, I asked the audience what they thought RIM's losses amounted to. It was a trick question, because while most casual observers in the mobility space thought that RIM was long past dead, that was the last day we could honestly say the company was "profitable".

For the current quarter, RIM saw sales drop 25% to $4.19 billion from the same period last year, and income dropped from $934 to a loss of $125 million. It also took a write-off for $267 million of unsold BlackBerry 7 devices, the ones using its newest operating system. The company shipped 11.1 million BlackBerries, down 21% from the previous quarter. By comparison, Apple saw its iPhone sales jump 73% in the three months ending December 2012. According to Gartner, worldwide smartphone sales increased 47.5% in 2011.

On a positive note, new CEO Thorsten Heins may finally be getting over his predilection for swimming in rivers in Egypt ("De-Nile"), and is finally taking some steps to put his company back on track. You will recall that on his appointment last January, Mr. Heins famously commented that he did not see any need for "seismic" change at the company; the company’s stock closed down about 8.5% that day.

Now at least we're getting some action. Long time co-CEO and the man at the helm for RIM's precipitous decline, Jim Balsillie, is leaving for good (you might say "better"). COO Jim Rowan and CTO David Yach will be following him out the door. In the meantime, the job of CMO that has been vacant since last March remains unfilled, though we are encouraged to learn that the search for a high-powered CMO is "going well".

The big question remains, "Is it all over for RIM?" My answer would be "absolutely not", though its days as an independent entity are likely coming to a close. The company can still claim 77 million users worldwide, a strong patent portfolio, an iconic brand, and $2.1 billion in cash, cash equivalents, short-term and long-term investments on a $7.81 billion market cap.

A number of potential buyers have been identified including Microsoft and Nokia. I can't see Microsoft buying into a hardware company, particularly one that competes with its own Windows Phone franchise. Nokia has gone all-in on building for Windows Phone, but a RIM investment (if they could scratch the cash together) would give them a two-prong attack on the enterprise market. However, Nokia has its hands full transitioning the company from Symbian to Windows Phone and would likely be wary of taking on a "problem child".

Dell and HP, both of whom have dropped out of the smartphone market, may want to take a crack (HP if they can manage to get out of their own way), but my money would be on Google. Google spent $12.5 billion to buy Motorola Mobility last August, primarily to acquire its patent assets. RIM's patent portfolio, along with its cash and brand recognition, make it a good acquisition candidate. Ironically, in an article I wrote back in 2009, I suggested that RIM should buy Motorola Mobility simply to hedge their bets on the BlackBerry line and get a play in the burgeoning Android market. Knowing what we do now about the value of Motorola's patent portfolio, that would have been an even smarter move than I recognized.

One significant obstacle to any RIM takeover will be the Canadian government, who sees RIM as a national technology treasure. Despite that, Apple just passed RIM in smartphone sales in Canada. Still smarting from the demise of Nortel, the government may try any number of strategies to delay the inevitable, however, RIM had more than enough "delay" under Messrs Lazaridis and Balsillie, and that’s the last thing it needs right now.

The one thing that is clear is that RIM's role in the consumer wireless market in most developed countries is over for the foreseeable future. There are still pockets of RIM faithful in the enterprise segment, though with the accelerating trend to bring your own device (BYOD), "bringing your own BlackBerry" doesn’t seem to be a likely scenario.

I did talk to some of my RIM contacts at Enterprise Connect and they tell me that they're getting some good interest in BlackBerry Fusion, the new addition to the Blackberry Enterprise Server (BES) that allows it to manage Apple iOS and Android devices along with BlackBerries. Clearly, enterprise customers still prize BlackBerry for its security and management capabilities, and given that none of the 60 or so MDM suppliers has emerged as a clear market leader, this could be a good opportunity. Unfortunately, BES represents less than 5% of revenues so RIM still needs device sales to stay relevant.

So to the dozens of folks at Enterprise Connect who asked me if RIM is going away, the answer is "No". The likelihood of their returning to the halcyon days is equally remote. However, there is still a place for BlackBerry in the evolving mobile market place, and there is certainly a place for the thousands of exceptionally talented people that RIM has brought together.