Research In Motion is looking to make amends to millions of BlackBerry users affected by a global service outage by offering them a selection of premium software apps for free, but the outage could cost the Canadian company at least $26 million in quarterly earnings, estimates one analyst.
BMO Capital Markets analyst Tim Long estimated that were RIM were to compensate all carriers and customers for the down time of the BlackBerry network, its earnings would be negatively affected by three to five cents per share in the current quarter.
The calculation is based on about 524 million RIM shares outstanding.
"While we believe the immediate financial impact from the outage is minimal, the risk to future service revenues, and maybe Blackberry shipments, has increased," Long said in a research note.
The company's stock price has been beaten down steadily for months to around the low $20s as RIM contends with a host of long-term factors, including the competition.
On Monday morning, RIM shares (TSX:RIM) fell another four per cent after the company said it would offer Blackberry subscribers a credit of $100 towards selected premium apps to help make amends for the outage.
The Waterloo, Ont.-based company's stock dropped $1.16, or almost five per cent, to $23.10 in late morning trading on the Toronto Stock Exchange.
Estimates on how big a hit the BlackBerry-maker's earnings could take due to the outage have varied dramatically over the past few days.
Scotia Capital analyst Gus Papageorgiou has predicted that RIM could take a US$182.3-million hit, or 22 cents per share, on its earnings if the company compensates carriers with one month of fees, and assuming that half of RIM's 70 million subscribers were affected.
One challenge analysts face is in determining how many of the company's existing challenges are already priced into RIM's badly beaten stock price. RIM may also be asked to compensate corporate users, which would also add to its costs.
BlackBerry has been struggling to compete with numerous other smartphones that have entered the market, including Apple Inc.'s iPhone and several Android devices.
The olive branch of app offerings that RIM extended to its customers on Monday wasn't yet complete, but the list provided with the announcement included iSpeech Translator, which converts words spoken or typed into the phone into multiple languages.
A variety of other popular mobile phone games were also listed, including versions of the Sims, Bejeweled, Texas Hold'em Poker and Bubble Bash.
The apps will be made available over the coming weeks on BlackBerry App World and will continue to be available until Dec. 31.
RIM also says its enterprise customers will be offered one month of free technical support.
Outages for RIM email, texting and Internet services began last Monday in Europe and spread to the Middle East, Africa and North and South America for varying lengths of time before services were fully restored on Thursday.
RIM co-CEO Mike Lazaridis said in the announcement Monday that the company is grateful to its loyal BlackBerry customers for their patience.
"We have apologized to our customers and we will work tirelessly to restore their confidence. We are taking immediate and aggressive steps to help prevent something like this from happening again," he said.
A similar peace offering was made to Sony consumers earlier this year after its PlayStation Network was compromised by hackers that stole personal information from its users. The company gave PlayStation owners a package of free video games to download, and other services.
RIM says the BlackBerry outage lasted three days in Europe, the Middle East, India and Africa, one and a half days in Latin America and Canada, and one day in the United States.
Technology analyst Troy Crandall said RIM's free apps may appeal to some consumers but not necessarily to business users.
"On the enterprise side, the guy that's been mobile for three days with no email, I don't know if that $100 of free apps makes it up for him," said Crandall of Montreal-based MacDougall, MacDougall & MacTier.
It's more difficult to compensate business users with "free games and playthings," Crandall said.
"But on the consumer side, generally they like free things so that could help," Crandall said.
He said he's not sure if BlackBerry users will be interested in all of RIM's offerings, but noted the pre-selected apps lower the costs for RIM because the rates that app developers would be paid would already have been negotiated.
"So it makes it a lot cheaper having the prenegotiated apps available, rather than just giving a $100 credit to let people download whatever they want."
RIM hasn't said if it will compensate wireless carriers around the world that were affected or affected business customers.
"No doubt there's going to be some kind of costs associated with this," Crandall said, adding it's still early to try to tally them up.