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Behind RIM’s $485M Write-off
- kabdib 15y agoSide note: I had no idea that Jean-Louis Gassée was writing financial stuff like this. I always wondered what he wound up doing after Apple and Be.
- purephase 15y agoInteresting. I didn't notice that at first. Thanks for pointing it out.
- Turing_Machine 15y agoHe was also one of the leading forces behind the Apple Newton, so he knows a bit about Tablet Fail.
- ConstantineXVI 15y agoSlightly different fail in the Newton's case. The tablet/PDA/smartphone/MID/palmtop market was niche at best and effectively non-existent at worst when the Newton came out; it simply was in too small of a market to go anywhere. The PlayBook, OTOH, showed up in a crowded, relatively well-established market, and so far has almost totally failed to get traction with either developers or customers.
- wmf 15y agoIIRC the Palm Pilot outsold Newton by a large factor during the same years, so Newton was a failure even relative to the size of the market.
- mikeash 15y agoThe Newton was supposedly profitable for Apple. It was killed not because it lost money, but because it was overall not a good use of resources for Apple despite making a modest amount of money.
- protomyth 15y agoI have heard that if you factor in the development costs, it was not profitable.
- kabdib 15y agoWell, so do I (since I worked on the Newton). :-)
- raganwald 15y agoThis contains a very disturbing question about RIM’s accounting practices. Jean-Louis is being careful to insulate himself from lawsuits by phrasing his suggestion as a question, but the implication is that either he is mistaken about what RIM have claimed or that their numbers—especially previous revenues—don’t add up. If RIM has been super-aggressive about their numbers in the past, this could be the crack in the dam that leads to a complete collapse. A one-mighty company with declining prospects that engages in questionable accounting practices to delay the revelation of exactly how poorly they are doing... This is an oft-repeated tale in the public markets, and it always transitions from drama through horror to pathos.
- guyzero 15y agoIt would be sad to see another Canadian tech giant brought down by accounting issues.
- latch 15y agoWhen the dust settles, you don't really think that the problem with RIM, or Nortel, are "accounting issues", do you? I spent 30 years in Ontario. RIM and Nortel confirm my own thoughts on the matter: the talent pool in Ontario (possibly Canada) isn't even close to making local tech companies globally competitive.
- jarek 15y agoThe pay isn't close to making a competitive talent pool happen either. Chicken, egg...
- ultrasaurus 15y agoI'm from Waterloo (RIM's hometown) so I'm biased, but there is a significant flow of Ontarians to Silicon Valley, Redmond and NY whereas there's no corresponding flow from the US to Ontario. So I'm tempted to call it a shortage of jobs rather than people.
- redthrowaway 15y agoOn the plus side for Canadian startups: It looks like there will be a glut of highly-competent engineers on the market in the next year or two as RIM sheds staff. Waterloo is looking like a lucrative place to launch a startup.
- wavephorm 15y agoFacebook is opening an office literally right down the street in Kitchener, in anticipation of RIM's collapse. http://www.techvibes.com/blog/facebook-expanding-its-canadian-operations-to-waterloo-2011-11-26 http://www.techvibes.com/blog/facebook-expanding-its-canadia...
- chollida1 15y ago> in anticipation of RIM's collapse. Is this really a stated reason? I would have thought it was to get Waterloo grads. Waterloo is literally one of the top CS and engineering schools in the world.
- wavephorm 15y agoThat's speculation on my part and others, a reporter normally would not publish something like that.
- chollida1 15y agoAh, ok, then I strongly suspect the main reason is the University of Waterloo and Facebook's decision has very little to do with RIM.
- a3camero 15y agoI'm a Waterloo graduate. A Microsoft recruiter told me of any school they hire the most from Waterloo. There were endless tech company visits when I was there. RIM isn't the only company in Waterloo either: Sandvine, Sybase, etc.
- latch 15y ago
- tici_88 15y agoI am not sure where the scandal is here. Playbooks were selling for $499 in Q1 and Q2, and that was for the basic model. Now they get marked down to $199, so the $485M writedown represents about 1.5-1.6 million Playbooks written down by $300 a piece. This is an inventory writedown so probably RIM ordered from the manufacturer way more Playbooks than they actually ended up selling (no news here) and whatever inventory was in the "warehouses" so to speak got written down.
- wmf 15y agoAs the article says, Accounting rules say inventories are to be valued at the “lowest of cost or market”, not price. The scandal is that any company would have over one year of inventory in the modern just-in-time manufacturing age.
- njloof 15y agoI wonder if they had a minimum commitment to the manufacturer.
- jammur 15y agoPart of the "scandal" the article mentions is the possibility that a portions of RIM's recorded revenue does not quality as such, since it could have been for Playbook's that could be returned to RIM.
- bane 15y ago"Still, RIM only reported a total of 700,000 tablets “sold” for the Q1 and Q2, they can’t have all been returned and massive returns would have been disclosed previously, one hopes." Reading the reviews about the lack of basic functionality, like email, it's possible they could almost all be returned. The bigger question is, and it's been posed here for more than a year, is why is the same leadership there? That this is now just being discussed in analyst assessments in mind boggling. It's also possible that the 2.4-4.8 million figure makes sense in MBA land. 2.4 million could have been the minimum order number to get the per-unit build cost down to ~$200 which would have provided enough head room for whatever the going rate is for one of these things. I've seen crazier justifications for ridiculous business strategies put forth.
- losethos 15y agoI picked 500Meg Ram because I wanted to guarentee 3rd party apps can function... and because I made disk cache and ram disk on default install. You can get rid of ram disk and disk cache if you recompile. 500Meg is nothing on a 64-bit or better system... except VMWare, which I kinda don't like. God says... C:\LoseThos\www.losethos.com\text\PLATO.TXT owledge which presides over it, wisdom, and that which at any time impairs this condition, he will call unjust action, and the opinion which presides over it ignorance. You have said the exact truth, Socrates. Very good; and if we were to affirm that we had discovered the just man and the just State, and the nature of justice in each of them, we should not be telling a falsehood? Most certainly not. May we say so, then? Let us say so. And now, I said, injustice has to be considered.