You read the stories and then look at the charts. Then you ask yourself, should I buy Research in Motion (RIMM) ? Is it cheap enough? Or you ask yourself, time to short Research in Motion?
No and yes.
No, there is no value there going forward. And yes, the chart says there is more room to run downhill.
RIMM ($9 billion) is a dying company. It is being killed by the iPhone (Apple (AAPL) , market cap $365 billion) and Android phones (Google (GOOG) , market cap $202 billion). RIMM’s phones lose market share by the minute, its tablet is such a disaster the company wrote down half a billion in inventory – more than 5% of its market cap.
RIMM tried to enter the tablet wars. The result? A product that was the equivalent of a three-and-half humped camel it could not sell and resulted in a half-billion-dollar writeoff in November.
RIMM: Too late for new management
RIMM refuses to change management that is moving at glacial speed. I love visiting Canada; it has the nicest people you will ever meet. It’s time for RIMM to import some nasty people from the U.S., from Europe, from Mars. Two years ago it would have been best if the company brought in new management; it may have given it a fighting chance to survive. Too late now. That ship has passed.
The smart phone market now has two players: Apple and the Android ecosystem. The tablet market now has two players: Apple and Amazon.com (AMZN). The dominance in market share in consumer markets if these duopolies is now pushing corporate users into the Apple, Android and over time, a bit to the Amazon.com world. There is no room for RIMM.
Abandoning RIMM’s Blackberrys for iPhone
This conclusion is borne out by a series of surveys by ChangeWave Research, part of the 451 Group. A survey done of new iPhone 4GS purchasers showed 45% had moved to the phone from another brand and one-third of those gave up their Blackberrys. Pretty much says it all.
It gets worse when you look at 2012. You can now get an iPhone for free–the older 3G–with a contract. Many Android phones are free or close to it. Every day more corporations are opening their e-mail and other servers to Android and iPhone access by employees–the key market for the Blackberry and the danger the Street continues to ignore as we enter the New Year. For example, I know a foundation, a Blackberry shop, that bought iPads for its board members to eliminate paper presentations. How long will it take for them to allow iPhones and eventually replace Blackberrys with iPhones? Not to mention RIMM blew the opportunity to create a competitive tablet, the next great wave in computing.
Many analysts believe RIMM will be bought out. They thought the same about Palm when it was selling north of $25, and then it was bought out for less than $10. If RIMM is bought out, it will be for between $5 and $10. The stock is $16 and change. Time to sell, time to avoid it, time to short it . . . puts, limit your liability.