Research in Motion Ltd. saw its shares extending a year long slide as the stocks further plummeted by 10 percent following the warning of a difficult competitive market and the announcement of hiring outside advisers for assessing the business options for the firm.
The stocks were down to a staggering $10.39 after seeing a 52-week low of $10.01 in the day following the resoundingly negative reaction by the analysts on the latest update by the maker of BlackBerry.
On Tuesday, Thorsten Heins the CEO of RIM , had said that the firm would most likely be reporting operating losses for the fiscal quarter with the highly competitive environment having drastic impacts on its business through lower volumes and pricing dynamics also being largely competitive.
Heins also gave indications that there could be heavy reductions both in spending and head counts throughout the year. There was no announcement of revenue or earnings forecast for the ongoing quarter, although there was an announcement of hiring RBC Capital Markets and JP Morgan Securities for assisting the firm over strategic review of the business and financial health. Heins was particularly upbeat over the upcoming launch of the blackberry 10 operating system and the fact that subscriber base over the last quarter grew to 78 million. However, analysts continued to remain glum over the prospects of the firm. Even though the firm’s management is hoping that the new OS will give a turn around and provide a solution to its problem, analysts are forecasting a permanent and sustained declines in units and over mounting losses from device business in the longer term. The stock currently has a neutral rating and a target price of $9.10 by the investors.
The prospects of Rim have been battered by the likes of iPhone and Android devices running on Google’s OS. The stocks of RIM have seen a decline of 31 % this year and 77 % in the last 52 weeks. Some analysts believe that the hiring of outside advisers increases the prospect of RIM being sold. There is a prevailing risk that it could become a take-under candidate and get acquired for a little premium or even below its current trading price. The valuation of the firm is difficult given the future of its assets is unclear and while its competitors like Apple and Google are having limitless capital. Some analysts are even not putting a neutral rating and not even putting a price rating on the stock. JMP securities although, said that the latest updates were no surprise and raise the rating for Rim from underperforming to neutral.