Research In Motion Ltd. 's new chief executive officer's meeting with financial analysts on Thursday did little to dispel gloomy outlooks on Bay Street about the smartphone giant's long-term prospects.
Instead, the one-hour meeting – in which Thorsten Heins elaborated on his strategy as he takes over from RIM's long-time co-CEOs Mike Lazaridis and Jim Balsillie – prompted at least one downgrade and several pessimistic research notes to investors.
Analysts were disheartened that Mr. Heins seemed less than firm on pursuing licensing agreements to place RIM's upcoming BlackBerry 10 (BB10) software on handset rivals' phones, a strategy that could bring in revenues while adding scale to a platform that has struggled to attract app developers over the past year.
"RIM wants to prove to the world that BB10 will be a success before approaching (original equipment manufacturer) partners," wrote Kris Thompson of National Bank Financial. "RIM does not appear to be conducting a dual-track program of investigating the licensing of its software to potential partners. This may be a mistake if BB10 is not successful."
Analysts said they feared that Mr. Heins's plan to ramp up marketing efforts in the United States is unlikely to stem market share losses there, as the company tries to push devices running its current BlackBerry 7 software to a market that has been largely unreceptive. At the same time, RIM's phenomenal overseas growth may be at risk, analysts suggested, as the looming BlackBerry 10 devices may be too expensive to continue fuelling emerging market momentum.
In previous interviews, former executives have credited Mr. Heins with executing RIM's international strategy, including overseeing the expansion of its device portfolio to include BlackBerrys at prices that allowed the company to penetrate new markets without forgoing profit margins. Regardless, Mr. Thompson said: "We expect market-share erosion in many international regions to follow the U.S. trend," where the company's share of the smartphone market has fallen to around 5 per cent, according to research firm Nielsen, under pressure from Apple Inc.'s iPhone and phones with Google Inc.'s Android software.
UBS Investment Research analyst Phillip Huang said Mr. Heins's attempt to engage the Street was "refreshing," a word also used by Byron Capital Markets Ltd. analyst Tom Astle to describe the meeting. However, enthusiasm did not extend to RIM's near-term financial prospects. "We remain of the opinion the next two to three quarters could remain challenging for RIM with no new compelling product platform until BB10 and ongoing competitive threats," Mr. Huang wrote in a note to clients.
After the meeting and his own checks, Jeffries analyst Peter Misek downgraded RIM to "underperform," in a note subtitled, "We Want to Believe … But Just Can't Yet."