Probably same fate looms.

Related? It is due to inventory or not… but related means a lot of things beside some devices or components on shelves. Was it related to some new tablets in production (other formats?) that didn’t make it through Christmas because completely “has been” or not compatible with what is coming next? Did the company faced major problems with the development of QNX and had to write-off some expenses related to that?

Not sure we’ll get more details next week but for sure, this “big” number is hiding something else and this can be only bad news for RIM and its strategy.

Minus 73% in 12 months for the stock reflects strictly the success RIM had with its transformation… let’s see if they can deliver more successful products before they spend the last 27%. Time and money is running out fast… too fast for this management I’m afraid.

T

(And Apple had to pay Nokia a rumored 800M€ plus royalties)

For all we know, only a fraction of the writeoff has anything to do with the actual inventory markdown, right? Or was this the whole point you were trying to imply?

The sad part is that the assorted departments at RIM *aren’t* staffed by monkeys, they are full of smart and creative people. The problem with RIM is that smart and creative ideas get crushed at the management level. The minds at the very top of the company are 100% sure that their way is the best way, all of RIM’s products are best of breed, and the CUSTOMERS are the part of the equation that is out of whack. So why change course? People will come back to their senses and buy products just because they say Blackberry on them Any Day Now. Soon. Really. Have another glass of Flav-R-Aid and sit tight.

Surprise – 2 year commitments to something variously thought to have a 3-9 month “state-of-the-art” status … have been just a tad disappointing.

Many of us lived through Enron, the dot-com bubble, Madoff, etc. I think you almost HAVE TO look for “skullduggery” before a $10B-plus company (of course, the number is even higher if you walk back some number of months) heads toward the pink sheets. I have no idea whether Canada’s version of the S.E.C. is as pathetic as our own, but it’s clear that RIM either incorporated in Delaware or there’s a Canadian equivalent, where Boards can be drinking buddies, being paid who knows what for doing who knows what. Wait – on the latter – I know what! – they do squat!

Anyhow, it’s sad (but not, probably, rising to a winning lawsuit) how cavalier the RIM execs have been in their estimates. You’d think that having said that Apple’s products posed no threat to someone who “knew the business world inside out and backwards,” they’d be just the tiniest bit humble and/or cautious.

But they haven’t, … and it sounds like they’re setting up to do it again on Thursday – looking for the next quarter to fall a little short of the present one sounds like the biggest case of “wishful thinking” I’ve ever heard.

And it’s clear that analysts have – many of them – accepted their predictions, hence those 10% “haircut” days when mgt. fesses up that they were a trifle overly optimistic.

That’s what – I think – REALLY queers an acquisition of RIM – since the company’s “leaders” have demonstrated that they don’t know which end is up, any potential acquiror as to wonder how bad the “rot” is, … and they’re probably wary of under-estimating it, given HP’s experience with Palm.

If design, marketing, etc. look like they’re staffed with monkeys, are you sure the best legal minds took appropriate care of RIM’s IP? Neither of us KNOWS, but acquisitions of a company whose leadership is surely among the 3 contenders for WORST strike me as unlikely. If stock options allow you to hang onto some genuine talent, how do you think RIM is doing in that category?! … People who think that they have “security” on their side must have missed that one-week outage. Looks like an empty box to me, and if that draws a $10 Billion offer, it must be 1999 again. I know it isn’t, and it’s obvious that most people posting here can also tell time!

2. The cost of a PlayBook isn’t precisely known, nor is the mix of configurations. I’ve used a published estimate a little above $200, not the Fire, the second number I referred to in the MN. Another estimate is $297. Let’s say $300. That would still make more than 1.6M tablets written down to zero. Not sure it makes sense.
3. Inventory valuation at $500/tablet? No. that’s not permitted. The rule says the lowest of (manufacturing) cost or (current) market price. The later market price is now significantly below $500. If the “street price” goes down to $99, for example, if the cost was $299, you need to take a $200 write-down per unit.

1. Revenue Recognition rules demand you do _not_ count as revenue the portion of your sales that are subject to some merchandise return agreement. In other words, if RIM runs regular books, they have a not counted as revenue whatever was subject to “unsold” returns. But they haven’t mentioned any of that. Perhaps they will on Dec 15th when they discuss the quarter just ended.
If you reserve the right amount, nothing happens to your revenue when the retailer returns the product. But your inventory may or may not increase, depending upon the way you accounted for the “at risk” product. Generally, you move a number from the reserve account, now depleted, to the inventory, now larger. There are many other permutations such as keeping title to the machines you ship, they are still yours, in your inventory, but “on consignement” with the retailer. And so on…

Is it possible that RIM signed up retail partners to purchase a set quantity of Playbooks with the contract stipulating that if enough of that purchase by the retail partner did not sell through to customers that the retail partner could sell back (or return) the Playbooks to RIM? This would allow RIM to claim the Playbooks as sold for accounting purposes and also give the retail partners an easy out if stock levels remained high. What I’m not clear on is whether this is the normal tactic employed in manufacturer/retail operations when an item is considered shipped as opposed to sold.

You also do not consider the different PlayBook models with a range of storage capacities: 16GB, 32GB, and 64GB. All three greater than the Fire, and surely more expensive.

You point out that when the value of an item in inventory falls from $500 to $100, the company has to take a write-off of $400.

Doesn’t that mean that this $485m write-off is not related to production costs of the playbooks, only to what they previously declared as the value of the inventory compared to how they now value it?

If they write down the value of their inventory of playbooks from an average of $600, let’s say, to $100, they’d only have to have 900k playbooks in inventory to warrant the write-off.

It also probably means they’re losing much less than $485 million.

After that incorrect assumption, everything else just falls apart.

I agree that there is no future for RIM. The stock is a different matter though — someone might buy RIM tomorrow — patents, BES licenses, corporate customer base — might be worth something. AFAIK the RIMs market value is low enough that you could buy it, sell off the scraps and turn a profit. Granted, it is just as possible that RIM will slide into bankruptcy before anyone buys it.

Is it possible that RIMM sold 700K units and less than 1 in 7 of those was sold in the US? Sure, anything is possible. Is it even remotely likely? No, not a chance. If NPD’s numbers are even close to accurate, there is no way that RIMM broke 300K in sales. No way at all.

Re:”Write down to zero”. No doubt the writedown includes accessories and a likely penalty is due to the manufacturer based on minimum contracted production run.

Maybe they signed contracts to make or buy parts for millions more Playbooks and now can’t weasel out of them.

Maybe they expect additional costs, say, for the warehousing of the hardware they cannot sell.

Maybe there are software licenses that they pre-paid X for that have recently lowered their price to X/10.

Maybe the figure includes a completely unknown product that they built and killed after they’d made a whole bunch and won’t own up to.

To me this points to a contractual screw-up driven by believing that low sales were an impossibility.