Foolish Forecast: Pop the Research In Motion Bubble

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On Thursday night, we'll get a third-quarter report from north of the border, as Ontario-based Research In Motion (Nasdaq: RIMM) shares the BlackBerry juice. Squeeze the last drops out of last quarter's results, and season with some salty numbers. You can even check out a very recent Foolish Duel over the company. Then come back here for a second helping.

What Fools say:
Here's how RIM's CAPS scoring rates against some of its peers and competitors:

	Market Cap (millions)	Trailing P/E Ratio	CAPS Rating (out of 5)
Apple (Nasdaq: AAPL)	$161,730	46.9	****
Nokia (NYSE: NOK)	$141,840	15.4	*****
Research In Motion	$59,150	66.8	**
Motorola (NYSE: MOT)	$36,570	79.7	**
Palm (Nasdaq: PALM)	$582	14.8	*

Data taken from Motley Fool CAPS on Dec. 20.

Our player community is divided on this stock, to say the least. Some bulls proclaim price targets like $120 per share, or $160, or $200, while the bears grumble about shorting it. Some think that the bad news about Palm's disappointing sales spells doom for RIM as well; others believe the BlackBerry's stealing Palm's market share. We need a referee in that ring, stat!

What management says:
In the latest earnings call, co-CEO Jim Balsillie chanted copacetically about his company's biggest opportunities: "We are confident that our hardware and software product portfolio, together with the expansion of our distribution channels and growing carrier support around the world, will enable us to continue to grow the number of BlackBerry smartphone users across multiple segments." The holiday season on the horizon looked good, and Jim could imagine plenty of flat packages under the Christmas trees this year.

What management does:
Recent results have been nothing short of stellar. I'll let the numbers speak for themselves.

Margins	6/2006	9/2006	12/2006	3/2007	6/2007	9/2007
Gross	55.2%	55.5%	55.1%	54.6%	53.6%	52.5%
Operating	28.7%	28.0%	27.1%	26.6%	26.5%	27.1%
Net	16.7%	16.9%	17.2%	20.8%	20.7%	20.7%
FCF/Revenue	(3.5%)	(0.5%)	1.3%	15.9%	16.7%	13.0%

Growth (YOY)	6/2006	9/2006	12/2006	3/2007	6/2007	9/2007
Revenue	45.0%	39.6%	39.7%	47.0%	57.6%	76.3%
Earnings	32.3%	25.9%	31.2%	68.6%	94.9%	116.5%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
So if everything is so great, how on Earth could I take the bearish position in the Duel with a straight face? I'll keep it short here, because you can always get the whole story in the Foolish fight itself. But the answer is twofold: an overvalued stock price, and a disappearing moat around the business. You simply shouldn't overpay for a stock that looks likely to crash and burn when the party-hearty conga line runs into an army of stern competitors, armed to the teeth with devices that can do everything a BlackBerry does.

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