Research In Motion Ltd (RIMM)

Research in Motion (RIMM) Interesting Beginning

June 1st, 2012 Posted by Company Updates No Comment yet

Research in Motion featured picture of a man with the umbrella struggling against the New York City snow storm back in February of 2010.  This could almost describe what has been happening with recent events at Research In Motion Limited ( RIMM)  they were caught ill-prepared for a storm of their own back on October 10, 2011.

RIMM Company Research

In the mid-90’s when I was still working in Manhattan I remembered having to work with RIMM.  Everyone in the company had a Blackberry.  The problem was we couldn’t open MS Word with the Blackberry. I was asked to help coordinate.  I don’t remember the outcome but I remember the team with Blackberry was nice, polite and professional.  They sat with our IT department, on our problem.  No wonder they dominated the business market for years.

Who started the company and why?

Research In Motion (RIMM), is a global leader in wireless innovation founded by Mike Lazaridis and Jim Balsillie in 1984. RIMM worked with RAM Mobile Data and Ericsson to turn the Ericsson-developed Mobitex wireless data network into a two-way paging and wireless e-mail network. Mobitex is an Open System Interconnection (OSI) based, national public access wireless packet switched data network. Developed by Swedish Televerket Radio in the beginning of 1980s.

RIMM started in a one-room office; the founders were a twenty-three-year-old college dropout.  RIMM was a company with a difference. Mike and Doug were practical and visionary at the same time, and the pair turned out to be superb engineers. The company was financed by family and a $15,000 government loan.

RIMM’s first big job was a $600,000 contract making networked LCD screens for the General Motors Canada assembly line. Based in Waterloo, Ontario, RIMM operates in North America, Europe, Asia-Pacific and Latin America.

What is the background of the company? its history and development?

Now, let’s focus on the storytelling. The company’s background, history and development followed by the nature of business.

·    The company incorporated under the Business Corporations Act (Ontario) (“OBCA”) on March 7, 1984.
·    Early development financed by Canadian Institutional and Venture Capital Investors in 1995.
·    Was funded C$30,000,000 before initial public offering on the Toronto Stock Exchange in January 1998 under the symbol RIM.
·    In August 1998, RIMM began shipping Inter@ctive pager 950.
·    Introduced BlackBerry® solution in 1999.
·    Company’s last amalgamation with its wholly owned subsidiaries happened on February 24, 2003.
·    On 2006, Research In Motion and Information Appliance Associates have a licensing agreement in which RIMM would offer a version of PocketMac for BlackBerry to Macintosh users for free.
·    On October 2008, RIMM became one of “Canada’s Top 100 Employers” by Mediacorp Canada Inc., and was featured in Maclean’s magazine.

More historical events

·    RIMM announced in February 2009 that they were expanding their global operations by opening an office and training facility in North Sydney, New South Wales, Australia.
·    On June 2009, RIMM announced the purchase of Dash Navigation.
·    On August 2009, RIMM bought Torch Mobile.
·    On August 18, 2009, Fortune Magazine named RIMM the fastest growing company in the world.
·    As of May 2010, RIMM OS held 10.4 percent of the smartphone operating system market.
·    On March 26, 2010, the company announced the acquisition of BlackBerry applications developer Viigo, a Toronto-based company.
·    RIMM agreed with Harman International on April 12, 2010, to buy QNX Software Systems.
·    On September 27, 2010, RIMM announced BlackBerry PlayBook tablet computer.

From 2011

·    On March 25, 2011, RIMM bought 100 percent of a company whose technology is being incorporated into the company’s developer tools.
·    The BlackBerry PlayBook was released to the US and Canadian consumers on April 19, 2011.
·    On April 26, 2011, the company bought assets and incorporated into the Company’s products.
·    On June 2011, the company acquired Scoreloop.
·    On June 2011, RIMM bought Nortel patent portfolio.
·    On June 30, 2011, an investor push for the company to split its dual-CEO structure was unexpectedly withdrawn after an agreement was made with RIMM.
·    On July 21, 2011, the BlackBerry PlayBook tablet received Federal Information Processing Standard 140-2 certification.
·    On September 2011, RIMM decided to build assembly factory (hardware) in Malaysia, instead of in Indonesia.
·    On October 10, 2011, RIMM experienced one of the worst service outages in the company’s history.
·    Service was restored when the outrage ended on October 13, 2011.

From 2012

·    During fiscal 2012, the company launched the wireless fidelity Wi-Fi-enabled BlackBerry PlayBook tablet in 44 markets around the world.
·    On January 22, 2012, RIMM new CEO Thorsten Heins.
·    On February 21, 2012, it released the BlackBerry PlayBook OS 2.0 software.
·    On March 2012 it was announced that RIMM awarded a patent for placing fuel cell behind mobile phone keyboards.
·    On March 8, 2012, the company acquired Paratek Microwave Inc.
·    During the fiscal year ended March 3, 2012 (fiscal 2012), the company bought 100 percent interests of a company whose technology will provide a multiplatform BlackBerry Enterprise Solution for managing and securing mobile devices for enterprises and government organizations.
·    On March 29, 2012, RIMM announced a strategic review of its future business strategy; a plan to refocus on the enterprise business and leverage on its leading position in the enterprise space.

What is the nature of Research in Motion Limited (USA) business?

Research in Motion Ltd is a manufacturer, distributor, marketer, product, and service oriented company. RIMM is a global leader in wireless innovation and developed mobile industry with the introduction of BlackBerry. The company is a designer, manufacturer, and marketer of wireless solutions.

According to Karla, “Blackberry is a line of mobile email and smartphone devices designed to function as personal digital assistants, portable media players, Internet browsers, gaming devices and much more.” She said, “BlackBerry is known for their ability to send and receive (push) email and instant messages while maintaining a high level of security through on-device message encryption.” BlackBerry support a large variety of instant messaging features, including BlackBerry Messenger.

RIMM offers platforms and solutions for seamless access to information, including e-mail, voice, instant messaging, short message service (SMS), the Internet and Intranet-based applications and browsing. BlackBerry Balance, as one of its products and technology, provide enterprise users access to both work and personal information in a convenient and centralized way while keeping the content separate and secure.

Who is running the company and their background?

Who is running the company and their background? Let us learn about the key people. On January 2012, Thorsten Heins was named President and CEO.  He was Chief Operating Officer, Product Engineering, in charge of overseeing BlackBerry smartphone portfolio worldwide. He joined RIMM in 2007 and has a global reputation for delivering on their commitments with his 27 years of broad experience in wireless networks and consumer electronics devices. He has a master’s degree in Science and Physics from the University of Hannover in Germany. He is married to Petra, a mathematician, and physicist. They have a  21-year-old son and a 23-year-old daughter.

“Physics is also called the fundamental science because it’s the basis for all branches of natural science.  Used in engineering and medicine. Applied physicist uses physics to develop new technologies or solve a problem.” Said Nelly, part of our Stories team.

Since December 17, 2009, Brian Bidulka is the Chief Financial Officer of RIMM.  He is working with Jim Rowan in overseeing the Cost Optimization Program.  He joined the company in 2005. He received an Honors Bachelor of Commerce degree from McMaster University and he received his Chartered Accountant’s designation in 1989.

Who is directing the company? How are the committees structured?

Who is directing the company then? How are the committees formed? Research in Motion Ltd has five committees: Audit and Risk Management Committee, Compensation Committee, Nominating and Corporate Governance Committee, Innovation Committee, and Strategic Planning Committee. Committees have a respective chairman and members composed of directors and independent directors.

Barbara Stymiest is a director since March 2007 and Chairman of the Board. She is Chairman of Audit and Risk Management Committee. John D. Wetmore is an independent director since March 2007. He held various finance positions and a graduate of Bachelor of Mathematics. He is the current Chairman of Compensation, Nomination and Governance Committee. Michael Lazarid is at 50, an independent director and co-founder of RIMM. He’s been with the company since 1984. He is known in the global wireless community and current Chairman of Innovation Committee.

How do they make money?

The primary source of revenue is from BlackBerry smartphone and tablet, service and software. BlackBerry wireless solution has various support levels to cater to customers. The company sells hardware to carriers and distributors.  RIMM has been developing integrated services offering that leverages on BBM, security and manageability, to increase revenues. The software is the programs and data storage; cannot be touched.

How do they fit into the industry they operate in?

Despite competitive pressures, RIMM remains a leader in enterprise mobility. BlackBerry smartphones, with the BlackBerry Enterprise Server, set the standard in the mobile enterprise for secure, reliable and manageable mobile access to enterprise resources and applications.

The company outsourced the most of its manufacturing to specialized global Electronic Manufacturing Services (“EMS”). They working with many businesses, some are direct competitors with one another and others are current or potential competitors of RIMM include Apple Inc. (IOS), Google Inc. (Android), Microsoft Inc. (Windows Phone), and Nokia Corporation (Symbian).  I still don’t understand this type of competitive relationship.

The company pioneered the sophisticated multimode centralized architecture responsible for the routing messages; their competitive edge. This propelled RIMM to rapid growth in Thailand, Indonesia, Spain, Latin America, and other consumer segments. RIMM intends to maintain leadership in the global wireless community with the Blackberry.

Who are their suppliers and customers?

The products are in line with customer’s network and equipment. They use third-party applications to deliver confidential information. Third-party software is the key to customer growth. The company depends on third-party network infrastructure developers, software platform vendors, and service platform vendors. RIMM wants developers to further integrate and enhance the user experience between smartphones and vehicle audio and information systems.

What is their workforce like?

Just got home from work, I wonder what would I be if I am one of the employees of RIMM; what is the working atmosphere looked like? Research in Motion provides an individual the opportunity to grow, contribute and succeed whether it’s a career in software development, product management, corporate or any other department.

RIMM is a refreshing and energy driven environment. People are competitive, hard worker and inspire one another to succeed. RIMM’s success depends on adapting changes in the board of directors and management. The company continues to invest in highly qualified employees and focused on realigning the organizational structure and as of March 3, 2012, the company has 16,500 full-time employees.

How do they treat their employees? What are the pay and working condition like?

Research in Motion rewarded and recognized the contributions of both team and individual in every step of the way. The company believes in empowering people, investing in their people and their futures. The incentive program is available to all permanent employees and is based on performance. Benefits are available to all full-time employees and it is competitive in the local market.

Employee assistance plan, gym and fitness center membership subsidy and worldwide travel and medical emergency assistance program (Global Travel Program). The company supports employee training and development to promote employee personal and professional development.  Employee enjoys social activities such as holiday parties, summer picnics, and team building sessions and employee giveaways.  A free BlackBerry® smartphone for your use while you’re employed with the company. Also, RIMM offers the Healthy@RIM program and supports to give back to communities through Proud2Be programs.

RIMM Value Investing

Balance Sheet


The main purpose of balance sheet analysis is to determine a company’s financial strength and efficiency. Financial ratios look at liquidity and solvency.  Liquidity refers to the company’s ability to meet its current obligations. Solvency, on the other hand, has to do with the ability to meet the interest costs and repayment schedules associated with its long-term obligations.

Working capital, current ratios and quick ratios of RIMM from 2007 to 2011:

  • Current ratio in percent was 3.51, 2.36, 2.29, 2.39 and 2.06. Average of 2.52, which means that current assets were more than double the current liabilities, on average, $2.52 of current assets for every $1 of current liabilities.   The quick ratio in percent was 3.04, 2.09, 1.97, 2.12 and 1.89. Average of 1.01, which tells us that, excluding inventory, current assets, on average dropped to 1.01 from 2.52 for $1 of current liabilities.
  • Working capital was $1372.69, 2002.92, 2726.24, 3381 and 3858, with an average of $2,668.17. The increasing trend, with the exception of2011; the company can meet current obligations.

Does the company has sufficient resources to stay in business in the short term? Have they the ability to service their long-term debts? RIMM has sufficient resources to stay in the business in the short term shown in the current ratio analysis.  Current assets were greater than the current liabilities at the ratio of 2.52 to 1 average, while quick ratios average 1.01. Working capital showed a yearly increase during its five years of operation, the company could meet its current obligations.

Cash Conversion Period

Cash conversion period is the time for cash to complete the operating cycle. Calculated by adding the inventory conversion period and the receivable conversion period, then, deducts the payable conversion period.  RIMM has an average conversion period of 81 days for the last five years of operation.

Further interpretation for cash conversion cycle:

Particulars    2007    2008    2009    2010    2011    Ave.
Inventory conversion period    68    49    42    29    20    42
Average collection period    69    71    70    63    73    69
Payable conversion period    34    34    27    27    27    30
Cash conversion period    102    87    84    65    65    81

Inventory turnover ratio is used evaluate the size of the inventory. It varies greatly with the nature of the business. It is calculated to show how many times the company’s inventory turns over a period, likewise,  shows if assets are tied up in inventory. Inventory conversion period of RIMM takes on average of 42 days.

The receivable turnover ratio was 5 times average during the five years and its receivables take 69 days average to be collected. Days receivables can be related to the credit terms offered by the company and should not exceed 1 1/3 times the regular payment period. Payable is 30 days.

What kind of assets does the company primary hold? How efficient is the company’s overall process of converting products or services into cash? Current assets include cash, inventory, and receivables. cash conversion cycle shows that RIMM was efficient enough, with an average of 81 days conversion period for the past five years in operation.

Who controls the business; creditors, bondholders or stockholders? Current liabilities to total assets show the creditors claim, long-term liabilities to total assets show bondholders’ claim, while, stockholders equity to total assets show stockholders claim on the business. Creditors have 25 percent, while stockholders have 74 percent claim on total assets.


What kind of leverage does the company used in normal business? Large fix assets, working capital provided by suppliers? RIMM used working capital and current assets to finance its normal business operation.  Financial leverage ratios from 2007 to 2011:

  • Debt ratio was .20, .29, .27, .25 and .31, average of .26, which means the total liabilities of RIMM was 26 percent, on average, of total assets.
  • Debt to equity ratio was .24, .40, .38, .34 and .44. Average of .36.
  • Solvency ratio was 1.17, .89, .94, 1.06 and .98. Average of 1.01. Solvency ratio was 117 percent, 89, 94, 106 and 98 or has an average of 101 percent of income against total debt.
  • Current liabilities to total assets ratio was .18, .27, .26, .24 and .28. Average of .25.
  • Stockholders’ equity to total asset was .80, .71, .73, .75 and .69. Average of .74.

How productive is the company use of funds and total resources?  RIMM averaged 23.4 percent for the five years. The return on equity was 32.2 percent. The firm is capable and productive in using funds and total resources.  Profitability ratios of RIMM from 2007 to 2011:

  • Return on asset, for every $1 worth of the asset, RIMM generates 20.4 percent, 23.5, 23.4, 24.1 and 26.5 of revenue or an average of 23.4 in five years period.
  • Return on equity was 25.4 percent, 32.9, 32.2, 32.3 and 38.2, average of 32.2.

RIMM has sufficient resources to stay in the business in the short term and could meet current obligations, as shown by the  current ratio analysis; current assets were greater than the current liabilities, 2.52 is to 1, on average, while quick ratio was 1.01 is to 1, on average.  Working capital showed increases during five years of operation.

The company holds cash, inventory, and receivables. RIMM is efficient in turning resources into cash, with an average of 81 days cash conversion period for the past five years in operation.

Income Statement

The income statement reports earnings over a specific period. The company could generate sufficient revenue for daily operation.  Gross margin ratio deteriorated by 5 percent but was stable at 44 percent during the last two years. Operating profit averaged 25 percent.  Net income was stable at 18.6 percent during five years of operation.


Revenue growth increased at 98 percent, 84, 35 and 33 from 2008. Gross margin was 86 percent, 65, 29 and 34 from 2008. Operating profit was 115 percent, 57, 19 and 44. The pretax margin was also stable at 25.8 percent.  The growth was at 111 percent, 55, 17 and 42 from 2008. Net income increased by 104 percent, 46, 30 and 39 from 2008. Additional data on the income statement for 2007 to 2011:

  • Total revenue was 3037.1, 6009.4, 11065.19, 14953.22 and 19907. Total revenue grew over time by 97.87 percent, 84, 35 and 33 from 2008. The operation of the business is generating income and has been improving consistently.
  • Gross profit margin was 54.59, 51.26, 46.07, 44.03 and 44.33. The ratio deteriorated by 3.33 percent, 5.19, 2.04 and 0.3 from 2008.
  • Operating profit to sales was 26.57 percent, 28.80, 24.60, 21.65 and 23.37. This ratio moved erratically up and down; increased 2.23 percent, decreased by 4.2.
  • Net profit margin (Pretax) was 28.28 percent, 30.13, 25.31, 21.84 and 23.33. RIMM has sufficient income from operation.
  • Net profit margin was 20.80 percent, 21.53, 17.10, 16.43 and 17.13. The ratio deteriorated by less than 1 percent except in 2009 in which it decreased by 4.43 percent. The company makes $0.20, 0.22, 0.17, 0.16 and 0.17 for every $1 in revenue.


Three important categories of expenses under the income statement. How does the company handle expenses? Is the company efficient in handling the revenue? The cost of revenue was 52 percent, 14 percent goes to operating expenses; it is the selling, general and administrative expenses. Research and development make up 7 percent. Depreciation was 2 percent. Income tax was 7 percent, on average. The total was 82 percent.  The remaining 18 percent was net income.  The details of the expenses 2007 to 2011:

  • The cost of revenues was 45.42, 48.73, 53.93, 55.97 and 55.67. This is the direct expense incurred in generating sales. More than half the total revenue was the direct cost.
  • Operating expenses were 17.71, 14.67, 13.46, 12.37 and 12.02. These are the selling, general and administrative expenses.
  • Income tax was 7.49, 8.6, 8.2, 5.41 and 6.19. Average 7.18.


Most often the gross profit margin (GPM) is calculated and interpreted in the measurement of the company’s efficiency. Most investors thought that high GPM is profitable. However, we cannot just gauge a company’s profitability based on GPM.The company is making money in the operation of its business with an average of 19 percent of revenue. The management performance is up.

Profitability ratio for the year 2007 to 2011:

  • Return on asset was 20.4, 23.5, 23.4, 24.1 and 26.5. The company can turn a profit from an asset.
  • Return on equity was 25.4, 32.9, 32.2, 32.3 and 38.2. This company could return 25 percent, 33, 32, 32 and 38 for every $1 of equity.

RIMM Cash Flow Statement

Cash flow analysis is a method of analyzing the financing, investing and operating activities of the company. It summarizes the cash generated during a period. Cash flow measures the money flowing into, or out of, a company.

Cash Flow from Operating Activities

Cash flow from operation (CFO) signifies the ability of the management to generate a cash flow from the business. RIMM was able and effective in generating cash flow with an increased trend of 100 percent and 30 percent. Cris wrote, “I calculated the ratio of CF from operation over net income [for 2007 to 2011] and the result was 116, 122, 77, 124 and 118.” She continues, “I calculate the ratio between CFO and capital expenditure, the results indicates that the company can invest for the future and is also able to fund capital expenditures out of CFO.”

Cash flow from operating activities from 2007 to 2011:

  • Cash flow from operating activities was 735.67, 1576.76, 1451.85, 3034.87 and 4009.00. It shows an increasing trend from its five years operation.
  • Net income was 631.57, 1293.87, 1892.62, 2457.14 and 3411. These figures were favorably up.
  • Depreciation was 126.36, 177.37, 327.9, 615.62 and 927. These figures were added back to the net income because depreciation is not a cash item.
  • Changes in working capital were -142.58, 130.79, -769.11, -160.71 and 496. These were added or deducted to the balance; it constituted changes in accounts receivable, accounts payable and other current assets accounts.
  • Deferred tax in was 101.58, -67.24, -36.62, 51.36 and 92.
  • Non-cash item was -142.58, 130.79, -769.11, -160.71 and 496.

Cash Flow from Financing Activities

Cash from financing activities reports the issuance and payment of bonds and stocks and payments of dividends. The company has a transaction of the retirement of stocks; the contributing element in the negative balance. This doesn’t mean that the company has no cash fund this category in CFS only involves the activities about financing.  The company has cash ending balance in its cash flow.  Cash from financing activities from 2007 to 2011:

  • Total cash inflow was 128.31, which represents 1 percent of the ending balance.
  • Total cash outflow was 3106.60, which represents 99 percent of the ending balance.
  • Cash from financing activities was -153.66, 80.40, 25.37, -843.38 and -2087. The result shows a negative balance due to its cash outflows greater than the inflows. What contributed to higher outflows is the retirement of stocks?

Cash Flow from Investing Activities

Cash flow from investing activities reports the purchase and sale of long-term investments and purchase of fixed assets.  Under cash from investing activities, what contributed to its negative balance is the purchased of fixed assets; half the total outflow and the capital expenditures; 44 percent.  These were the expenses involved in the operation of the business involving current resources. The company has cash fund balance in its cash flow.   Cash flow from investing activities from 2007 to 2011:

Facts and Explanation

  • Total cash inflow was 6,208.79. This is the sale of the investment.
  • Total cash outflow was -12,322.14.  It represented:
    a.    Capital expenditure of $5588.63, which represented 44 percent.
    b.    Acquisition of business in $808.20, which represents 6 percent.
    c.    Purchase of fixed assets in $6322.14, which represents 50 percent.
  • Cash flow from investing activities was -364.58, -1153.94, -1823.52, -1470.13 and -1698. Ending balance resulted in a negative amount due to its cash outflow was greater than the cash inflow.  This doesn’t mean that the company has no cash funds available for investing activities. This report involves only the activities in investing activities.

    Net Cash

    The net cash ending balance shows an increasing trend except in 2009 where It deteriorates by 29 percent. This company can generate sufficient revenue for operations and could generate a cash flow to be used for future reinvesting, payments of dividends and future business expansions.

    Cash balance from 2007 to 2011 are as follows:

    • Net cash beginning balance was 459.54, 677.14, 1184.40, 835.55 and 1551.0
    • Net cash ending balance was 677.14, 1184.40, 835.55, 1550.86 and 1791.
    • Changes in cash balance were 217.60, 507.26, -348.85, 715.31 and 240.
    • Changes in percentage were 47, 75, -29, 86 and 15.

    The company could generate a positive cash flow from operating activities. Income was sufficient for its working expenses. It has money left over for future expansions, investing and for payments of dividends. In financing activities, the company paid for the retirement of stocks, which was 99 percent of the financing activities.  Cash from investing activities, the outflows is greater than its inflow.  The outflow was for capital expenditure, acquisition of business and purchase of fixed assets. The company is effective in generating cash flows and is profitable.

    Written by: Rio, Cris, Nelly, Janice, Meriam, Karla

    Edited by Cris


    Who started the company and why?

    What is the background of the company? its History & Development?

    What is the nature of the business?

    Who is running the company and their background?



    Who is directing the company? How are the committees structured?>

    How do they make money?

    How do they fit into the industry they operate in?

    Who are their suppliers and customers?

    What is their workforce like?

    How do they treat their employees; what is the pay and working condition like?


    Interested to learn more about the company? Here’s company research to know more of it’s background and history; value investing guide for the financial status; and investment valuation for the pricing.


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