Behind the Week’s Headlines: What’s up with Research In Motion?

Research In Motion (RIM) is Canada’s technology darling, nestled in the homey confines of Waterloo, Ont. It has a visionary leader, breakthrough products, and it just signed a deal with Nokia, which made RIM’s Nasdaq-listed stock jump 20 per cent to a high of $25.99 Canadian, (that was on Friday, Nov.

8).

And now come the layoffs, profit warnings and cost slashing.

Actually the profit warnings out of RIM aren’t that new. It has cut revenue estimates a number of times. Last month it cut sales estimates for the year from $360-million to $310-million.

Now here’s something really amazing and it’s this kind of thing that baffles all of us about how business can be done these days: RIM has yet to make a profit. Losses were up 84 per cent, to $25 million, in the first six months of 2002. RIM is well into its second year of working with negative operating cash flow.

RIM’s strategy is to recoup that $25 million loss by cutting 10 per cent of its workforce, about 220 jobs. Well at least investors are happy. The shares have almost doubled since September. (Insert look of disbelief here).

One of RIM’s biggest challenges has been to expand the number of Blackberry users. And to add to its woes the handheld market gets more competitive every day and here comes Dell with its entry and Dell says it’s going to be a very big deal. Who knows what Dell’s technology will look like? The fact is Dell gives good marketing.

Now RIM has signed on with Finland’s Nokia, which has more than 40 per cent of the global cellphone business and, again, stockholders are pleased but details of the deal are vague.

It’s based on what’s called parallel licensing, which involves licensing hardware and software to other companies including the competition. RIM also made such deals recently with Palm and Handspring. In the case of Nokia nothing has been specified concerning what parts of RIM’s software was included. Observers expect that it covers BlackBerry’s two-way e-mail ability.

The agreements with Palm and Handspring allow those companies access to BlackBerry’s thumb keyboard technology.

But whatever doom and gloom is out their, Mike Lazaridis, co-CEO of Research

In Motion and father of the Blackberry doesn’t appear panicky. In fact he never appears panicky. Last summer he was voted top Nation Builder of 2002 in an on-line poll. He beat out Wayne Gretzky.

(But that was before the Olympics).

Everything you read or hear about Lazaridis seems to tell you that he is the genuine article when it comes to good men. The Perimeter Institute he founded at the University of Waterloo will house the world’s largest physics institute. In fact he has given away millions yet there is not one large building with his name on it.

So in all likelihood, RIM will be around for awhile. Maybe it’s just all about living right.

James Buchok is a former editor of Computer Dealer News. jbuchok@mts.net.

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