Yahoo Finance RIM faces $1B inventory backlog
Research in Motion Inc.'s stockpile of older smartphones and tablets has increased by two-thirds in the past year, a troubling development that could see the BlackBerry maker have to write the devices off as sunk costs.
Bloomberg reported Tuesday that the company's internal inventory of its own devices swelled by 18 per cent in the last quarter, a rate much faster than that seen at its technology rivals. The news agency now says RIM has more than $1 billion worth of devices gathering dust in warehouses, up from $618 million a year ago.
That figure only counts BlackBerries and PlayBooks in RIM warehouses, not those being held in stock at retail stores across the globe.
After pioneering the smartphone space, RIM has seen its share of the market dwindle in recent years as consumers have opted for Apple iPhones or other devices that run on Google's Android operating system. Research company IDC estimates RIM now has about seven per cent of the global smartphone market, down from in excess of 30 per cent several years ago.
Worldwide shipments of BlackBerries slipped 29.7 per cent last year, IDC says. Those slowing sales have caused RIM's inventory to creep higher because it's still making the same number of phones but just not selling them. It's a trend unlikely to change any time soon as consumers appear to be holding out for the BlackBerry 10 to come out — which would render those older BlackBerries obsolete in many consumers' eyes.
Initially expected in early 2012, BB10 is RIM's most ambitious attempt to re-invent itself with consumers. The company is currently targeting a release in September 2012, but there are signs of more delays in the offing.
"If they have to meet a September deadline for BB10 phones then they should have been sending them now," Northern Securities analyst Sameet Kanade told CBC News "There's no product, there's still [just a] prototype."
"If it's not happening in September you miss a key deadline so probably [it's] next calendar year," Kanade says.
RIM shares were trading hands at $11.39 on the TSX at mid-afternoon on Tuesday, unchanged on the day. The company has lost 75 per cent of its value in the past year.
