BlackBerry outage hits RIM shares

BlackBerry outage hits RIM shares

Published on Friday September 21, 2012 Luanne LaSalle The Canadian Press
Shares in Research In Motion approached their lowest level in a year on Friday after the smartphone maker experienced an embarrassing BlackBerry outage on the same day the new iPhone 5 launched in stores.
The outage affected email and text users in Europe, the Middle East and Africa for a maximum of three hours, RIM chief executive Thorsten Heins said in a statement.
“I want to apologize to those BlackBerry customers in Europe and Africa who experienced an impact in their quality of service earlier this morning,” Heins said.
Heins, who noted no data or messages were lost, said RIM was looking into the problem and would report the results of its investigation.
Up to six per cent of RIM’s user base may have been impacted, Heins estimated.
“Preliminary analysis suggests that those customers may have experienced a maximum delay of three hours in the delivery and reception of their messages,” he said.
RIM announced the BlackBerry outage in postings on Facebook and Twitter before the business day got fully under way in North America.
Shares in RIM (TSX: RIM) fell more almost six per cent and as low as $6.35 on Friday, coming within a few cents of a 52-week low of $6.24 set on Sept. 6.
The stock has taken a beating as RIM’s product lineup falls behind rival products, particularly the iPhones from Apple and Galaxy devices from Samsung.
The outage also brought up unpleasant memories of troubles with email and chat messages last year that left millions of users globally without service for three days. At that time, RIM was criticized for being slow to respond publicly to the outage.
William Blair & Co. telecom analyst Anil Doradla said timing of the outage couldn’t have been worse with iPhone 5 sales starting Friday.
“Oh, the irony of that,” said Doradla, who’s based in Chicago.
“This is not a piece of news that they can afford, they need or they want at this time,” Doradla said.
In the hyper-competitive smartphone industry, companies need to have new phones out and RIM won’t have any until it launches the Blackberry 10 line early next year, he said.
“With every passing quarter that they delay the launch of the new product, they continue to lose market share,” he said.
Doradla said the new BlackBerry smartphones won’t surpass the new iPhone 5 or smartphones running Google’s Android operating system.
“If it catches up to what is out there, I will be impressed.”
He also said RIM could experience further outages because the company routes all of the traffic through its servers, which are getting more and more taxed with data.
“It is a bottleneck,” Doradla said.
“This will continue happening, I think. The issue is with their lack of dollars, their lack of money, can they continue investing in this infrastructure. That’s the bigger problem.”

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