RIM’s Soaring Inventory Could Lead To Further Accounting Writedowns
Sometimes, cups that runneth over can be a bad thing. Research In Motion’s plummeting market share has caused its inventory to skyrocket by over two-thirds in the past year, Bloomberg reports, and all those BlackBerrys and PlayBooks gathering dust on stockroom shelves could force RIM to take its third major financial writedown in less than six months.
A writedown is when a company declares that the value of its assets is no longer worth as much as previously accounted for. Former BlackBerry customers have been fleeing to Apple and Android in droves, and RIM is gearing up for the launch of its upcoming BlackBerry 10 OS sometime in the future. Bloomberg says “the transition makes its current models even less appealing.”
RIM already took a $485 million writedown for unsold PlayBook tablets in December, followed by a $287 million charge for its BlackBerry phone inventory in March. The company still has over $1 billion dollars in inventory on the books.
The rocky financial road has taken its toll on RIM. Several of its top executives have left in recent months, including former co-CEOs Jim Balsillie and Mike Laziridis. RIM was also forced to lay off 2,000 employees in July of last year. A Reuters report claims that the company is preparing to lay off another 2,000 to 6,000 workers in the coming weeks.