Analysts skeptical about RIM's turnaround potential

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Research In Motion's (NASDAQ:RIMM) confirmation that it hired JP Morgan Chase & Co. and RBC Capital Markets to advise it on strategic options has also fanned the worries of analysts and investors who see few options for the struggling BlackBerry maker.

RIM warned that it will likely post an operating loss for its fiscal first quarter, which ends June 2, giving the company its second straight quarterly loss. Analysts and investors warn that even as RIM speeds toward the launch of its BlackBerry 10 platform later this year, time is running out as sales drop and its stock falls. And analysts are skeptical RIM can mount a successful turnaround.

"This is a train that's left the station," says Mike Abramsky, a former RBC Capital Markets analyst who covered RIM for years, told Fortune. "You just can't put that genie back in the bottle."

The warned operating loss came amid reports that RIM may slash 2,000 jobs, and perhaps more, as it attempts to trim costs. RIM's share of the U.S. smartphone market slumped to 12 percent in the first quarter, according to comScore. RIM's BlackBerry 10 platform, introduced earlier this month, was well received by analysts and the tech press, but will not be available on commercial devices until later this year.

RIM has mentioned licensing BlackBerry 10 or its patent portfolio as possible strategic options. However, investors are getting anxious, and see Microsoft (NASDAQ:MSFT) or other tech heavyweights as potential white knights. "We would like to see a sale of the company or a breakup, and if a breakup, the sale of each of the parts," Vic Alboini, chairman of the Toronto-based investment firm Jaguar Financial, told Bloomberg. "We're pushing and cajoling RIM to get to the promised land of a sale or breakup."

Although RIM has hired Kristian Tear as its new COO and Frank Boulben as its CMO, there has been a massive executive exodus over the past few months. "There are a bunch of people [within RIM] that still don't understand how dire the situation is," an unnamed source close to the company told the Wall Street Journal.

RIM CEO Thorsten Heins has said the focus is on turning around the company and launching BlackBerry 10 on time later this year. RIM hopes the platform, which relies heavily on HTML5, will become the basis for a new generation of smartphones and revitalize its market share, which has steadily shrunk over the past few years amid heavy competition, including in the enterprise, from Apple's (NASDAQ:AAPL) iPhone and devices running Google's (NASDAQ:GOOG) Android platform.  A massive multi-day BlackBerry network outage last fall also dented the firm's sterling reputation for reliability.

Still, RIM is soldiering on. A RIM spokeswoman told the Journal that RIM employees "understand the vital importance of launching BlackBerry 10 on time at a quality that exceeds the expectations of our users."

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
- see this Fortune article

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