Research In Motion Limited (NASDAQ/RIMM), otherwise known as RIM, is begging for patience from its shareholders and analysts…and that’s an understatement!
The stock price is down 95% over the last four years after trading at over $140.00 in May 2008, so my stock analysis is indicating that lots of patience is required, which could be just too much to expect from investors at this time.
RIM’s management is lucky we live in a sane and lawful society; otherwise, the company’s executives might be dragged out into the streets, and well, I will let you imagine.
The story behind RIM was impressive. Powered by the visions of co-founders Mike Lazaridis and Jim Balsillie, this small Canadian technology company developed an innovative real-time e-mail system that operated via an early smartphone called the “BlackBerry.” There was nothing like it. Wall Street and corporations loved the idea of having real-time access to e-mails. So popular was the personal digital assistant (PDA) and e-mail system that users began to term the BlackBerry a “CrackBerry” due to its addictive qualities.
But once it became the market leader, RIM became the target of all its rivals.
At first, my stock analysis was that there was no matching RIM due to the BlackBerry’s e-mail function, but as phones became smarter (hence the term “smartphone”), RIM’s initial rivals, such as Nokia Corporation (NYSE/NOK) and Samsung, began to develop innovative phones that raised the bar.
RIM was able to fend off the competition, but on June 29, 2007, Apple Inc. (NASDAQ/AAPL) launched the “iPhone” in the U.S., which was a “killer” phone according to my stock analysis.
In five years, my stock analysis indicates that the Apple iPhone has become the top smartphone in the world. RIM, on the other hand, is not dead yet, but there could be funeral plans in the works unless something miraculous happens, based on my stock analysis.
Thorsten Heins, RIM’s CEO, is probably secretly praying for a miracle and is betting on the phone’s new “BlackBerry 10” operating software, which will incorporate a touchscreen.
But, based on stock analysis and general observations, users are not happy, as this next-generation BlackBerry has been delayed several times, driving up the release date to sometime in the first quarter of 2013 (a year late); thereby missing the critical back-to-school and holiday shopping seasons.
Not a great move, especially given that sales of the current BlackBerry were down around 41% in the second quarter. RIM is also struggling with its “PlayBook” in the tablet market, where Apple is king. (See “Tablet Market Gaining Altitude.”)
Management says the delays are so the company can release a problem-free BlackBerry, but the company has alienated loyal BlackBerry users, Wall Street, and investors. Moreover, according to my stock analysis, RIM will need to convince users to buy the BlackBerry over the iPhone and “Android” devices, which will not be an easy task and could likely take a miracle to achieve.
Becoming a “lean, mean, hunting machine” is the goal of Heins after a shareholders meeting on Tuesday. The company, however, announced the new BlackBerry will be delayed again—nothing new here, but investors were not pleased.
And with about $1.9 billion in cash, RIM will need to generate more cash to drive sales of its new products in 2013, according to stock analysis. By comparison, Apple has over $28.0 billion in cash.
RIM has warned investors to expect some rough company earnings over the next few quarters.
Based on my overall stock analysis, RIM is wagering its future as a company on the success of the BlackBerry 10 operating system and its associated products.
This is a huge gamble, given the “iPhone 5” is set to be launched sometime in the fall. There is also the strong push by Android phones and the new “Jelly Bean” Android platform from Google Inc. (NASDAQ/GOOG) to consider. The competition will be tough for RIM.
At the end of the day, RIM is betting the house, so it had better be right.