The most severe BlackBerry service disruption in the history of Research In Motion Ltd has cost the mobile device maker more than $100-million in lost revenues.
The financial impact of the three-day outage affected RIM because the charges on wireless carriers on each active BlackBerry user had dropped drastically.
While acknowledging a large margin of error in his estimates as the specifics of carrier agreements, analysts are convinced that RIM will have to give at least some of those fees back.
Wireless carriers around the world last Thursday promised to compensate their BlackBerry-using customers for the days they spent without access to email, BlackBerry Messenger and other core RIM services.
Chief Technology officer, David Yach, explained that the culprit behind the outage was a malfunctioning data centre in the United Kingdom which spread all over the country.
Yach said RIM had compensated its carrier partners for network outages in the past, but those were all too small to warrant a separate disclosure.
“This is the worst outage the company has experienced so we believe there is a decent chance the compensation will be larger,” said Mr. Papageorgiou of RIM
“We estimate the worst case scenario is that RIM refunds a month’s worth of BlackBerry fees to its carrier partners for half of its subscriber base.”
With the global BlackBerry nation currently topping 70 million people, about 35 million refunds would be the high end of his estimate.
Taking average user fees, gross margins and corporate tax rates into account, and Papageorgiou arrived at an estimate of $117.7-million or roughly 22¢ in losses per share for RIM shareholders.
“We believe the company will have the situation under control before the weekend and that, as a result, it should not sustain any serious long-term damage to its brand or service,” he said.
“However, we advise investors to hold off until the situation is resolved before taking any drastic action.”
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