BlackBerry-maker, Research In Motion (RIM), has announced plans to repurchase $1.2 billion in stock in order to compensate shareholders for the company’s slowing rate of growth.
RIM forecast its sales would slow down in its third quarter to deliver numbers shy of analyst projections, which Bloomberg terms as a sign it may have to reduce product prices to take in the iPhone.
The company isn’t too concerned at the cost of the stock buyback, saying that it would be able to continue to work on company growth, because it has plenty of cash in the bank and steady cash flow models for the coming quarters.
It intends repurchasing c.3.6% of its outstanding stock, around 21 million shares.
This news emerges as market chatter continues to speculate on a Microsoft takeover of the Canadian smartphone maker, with Cannacord analyst Peter Misek predicting such a deal last year, saying Redmond would offer $50 per share in such an acquisition.
However, such rumours have been in circulation for a long time now, and whether RIM would benefit from a tie-up with Microsoft (Remember Sidekick and Danger?) is questionable.
A deal such as that would benefit Microsoft, whose Windows Mobile offering was recently side-lined by long-time WinMob partner, HTC, which now also produces devices that use Google’s Android OS.
At present, Nokia leads the smartphone race, though recent Canalsys data reveals it has fallen from 45 to 40 percent of global smartphone shipments.
iPhone market share climbed four per cent to 18 percent, putting Apple in third place behind RIM, which achieved 21 percent market share. HTC sits in fourth place with five percent of the market.
WinMob has under nine percent of the market, while Android already holds four percent, the research revealed.
Canalsys also observed that in Western Europe, 54% of people want their next phone to be a touchscreen device, but just 47 percent of those who already have a touchscreen gadget say they will stick with touch for their next handset.
For the most part, users of Apple or HTC devices will happily take touchscreens next time they choose a phone, but only 27% of those with Sony Ericsson handsets plan to.
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You are a cell phone
You are a cell phone manufacturer. You're looking at which OS to use. Given these rumors, are you really going to put your eggs in the WinMob basket? Because if MS buys BB, what are the chances that MS kills the floundering WinMob?
And if they do that, what is the impact to your product line?
No wonder HTC is giving up WinMob. It is at risk of being another Betamax. Jump onto VHS before the bottom falls out.
iPhone impact
The iPhone is not the main reason for RIMM's assesment that growth will slow. The biggest impact is the economic slowdown. Businesses will not be expanding for about a year, and many small businesses will evaporate as well. Smartphone growth in the business sector will be down, which is where their revenue cash cow is located. If RIMM comes out with more consumer friendly phones then they will be a force to be rekoned with.
I suspect the major growth will be smart phones that utilize Android OS, due to the support that is already being thrown behind it. The consumer market on smart phones will be dominated by Android within a couple of years.
The other reason for stock
The other reason for stock buyback is that you aren't as beholden to your idiot shareholders that don't care about the long term success of the company, but just want a short-term payday so they can cash out and move on to another company.
Yes Microsoft, please buy them!
Yes, I really like the idea of Microsoft buying RIM so they bring them down like they do with every company or product they buy. Microsoft has the "Midas" touch just backwards lol
Microsoft took advantage of a hole long time ago and they get to position Microsoft Office and Windows very well, and tey are surviving with that, but they don't have anything sustentable out side that.
Android will be king ... of the LOW END market
Android is FREE OS tool from Google so of course, the handset manufactures\rs are willing to jump onboard to co-opt the Google name but once the 50 telcos and 100 manufacturers all selling DIFFERENT flavors of Androids with unique features and offerings or non-offerings, how will these 50x100 companies compete in the Android marketplace? BY PRICE. So, marketshare, yes, profits? No. While Apple will blightly go on skimming the cream of the market - making $600-$700 per phone (with subsidies) - probably grab 60% of the market with RIM taking the other 25% of "full priced" phones while the others duke it out in the $49 to $99 arena and once the Andreod phone reaches $49 in about 7 months, consumers will wonder and reject any Android phone costing much more ... and just as they do now claiming it's got a touchscreen and plays movies ... a feature is the UI of Apple ...
Already, we are seeing the splintering of the Android feature set as Verizon has locked in BING SEARCH as the ONLY search option ...
Andrdoid is Symbian with better marketing for now but soon, with 100 companies pumping out marketing messages, it will all get diluted and confused so consumers will either choose Apple for world class UI, hardware & software & apps or Blackberry for the keyboard ... and yes, palm is dead or as relevant as Nokia in this arena. Well, if you consider 4% dead.
The killer - no one else has iTunes. That is the deal breaker.
BTW, whiel Apple makes $700 x 100 million iphones - Google makes ZERO directly from each phone sale. Eventually they hope to sell ads but for now, ZERO.
The world of Android is as good as its going to get right now because it has the promise of everything but reality will set in 6 months.
So, yea, if you count overall market share, Android might be king but like being king of netbooks, it means your margins are 2% of $49 while Apple makes 35-40% on $700 ...
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