Success Driven by Leadership:
RIM vs. Apple
Wednesday, January 25th, 2012
By George Leong, B.Comm. for Profit Confidential
There has been a change in leadership at Research In Motion Limited (NASDAQ/RIMM) after the resignation of the company’s co-founders Mike Lazaridis and Jim Balsillie.
And, while the investment community was pleased to see a change at the top and was hoping for a visionary to turn around the ailing “BlackBerry” in its life and death battle against the Apple Inc. (NASDAQ/AAPL) and “Android” devices, there was no extended search for a new leader. Instead, the new CEO, Thorsten Heins, who is also the former COO, has been given the daunting task of reversing the company’s fortunes, but his appointment is not drawing rave reviews on Wall Street. The future clearly is cloudy, as the company really needs a visionary and “go to” guy and I’m not convinced that an operations specialist will be able to right the ship.
The reality is that Heins may be better than the Research In Motion (RIM) co-founders who appeared to be caught off guard by the rise of Apple, but he is likely not like the late Steve Jobs or Richard Branson of Virgin Media, Inc. (NASDAQ/VMED). However, only time will tell if Heins can offer something different. The reaction by investors indicates pessimism with selling in the stock.
So, while Apple is moving along with innovation and creative products, the BlackBerry is vulnerable to being crushed in the wake of not only Apple, but also a host of Android and “Windows”-powered smartphones and devices.
As an investor, I would stick with Apple—the best of breed. The company is the largest company in the world, with an astounding market cap in excess of $394 billion, which would rank it 27th on the International Monetary Fund GDP rankings for 2010, between Iran and Austria. By comparison, RIM’s market cap of $7.64 billion is tiny. In fact, Apple has $25.95 billion in cash and no debt, so it could easily take out RIM if it wanted to. But Apple doesn’t have to do this, as its “iPhone” and “iPad” have garnered worldwide acclaim and are seen as sexy products, while RIM’s BlackBerry may be dying a slow death and its “PlayBook” tablet is essentially dead in the water, with no chance of competing against the iPad.
Apple has made many investors rich. I added a position in Apple for my Daily Profits online trading service at $87.00 in November 2008, with the stock up 387% since. That’s not that bad, but I was somewhat late the game in catching Apple before it began to move higher.
Investors recognizing this great opportunity in 1997 when Apple was trading at around $3.56 would have made nearly 120 times their money. An investment of about $13,000 in Apple in 1997 would make you a millionaire. A $100,000 investment is worth nearly $12.0 million!
Given this, I kind of wonder if I should have used the $100,000 I put down on a house in 1997 and instead bought shares of Apple. That’s what makes trading exciting.
We have seen an impressive start for stocks to begin the year, specifically the technology sector, with the NASDAQ up nearly seven percent. Read what I have to say in Technology Stocks: Invest in Them or Run for the Hills?
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George is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. His trading advice on stocks and options is also found on his daily trading site, Daily Profits. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services.
