Independent analyst Horace Dediu on Friday noted in a post on his Asymco blog that RIM's share of the worldwide smartphone market may have finally fallen into the single-digit range this past quarter. The vendor shipped only 10.6 million handsets in its fiscal second quarter, missing its own forecast of between 11 million and 12.5 million units, and missing even some of the most conservative analyst estimates as well.
“In terms of the competition, 10.6 million units is less than half what Apple or Samsung sold in its prior quarter,” Dediu wrote in a blog post on Friday. “It's also less than what HTC sold. RIM's volume rank will likely go to fifth place as a smartphone vendor.”
Though RIM's BlackBerry subscriber count surpassed 70 million during its August quarter to reach an all-time high, BlackBerry handset shipments in the fiscal second quarter were down 11% compared to the same quarter in 2010, and down 18% sequentially. “In terms of market share, we'll have to wait for the competitor data over the next six weeks but the market has been growing at an average of 77% for four quarters so any continuation of this trend would imply RIM's share dropping to single digits,” Dediu noted.
According to recent data from market research firm Gartner, RIM's BlackBerry platform represented 11.7% of the global smartphone market in the second calendar quarter of 2011.
Market share woes aside, the analyst calls RIM's sharp decline in profitability the “biggest shock” among the bad news from yesterday's earnings report. “It seems that operating margin dropped from 21% to 13%,” wrote Dediu in his post. “The company did incur some one-time charges for recent layoffs, but even without that charge, the margins would be around 16%.
“This is most alarming. The reason for such drops is that as volumes decrease fixed costs don't decrease as rapidly or at all,” the analyst noted. “The company still needs to keep sales, administration and engineering staff around and they become a larger part of the operating expenses (vs. the component costs which vary with volume of goods sold).”
source:Boy Genius Report
