2-Star Stocks Poised to Plunge: Research In Motion?

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, BlackBerry maker Research In Motion (Nasdaq: RIMM  ) has received a distressing two-star ranking.

With that in mind, let's take a closer look at RIM's business and see what CAPS investors are saying about the stock right now.

RIM facts

Headquarters (Founded) Waterloo, Canada (1984)
Market Cap $25.7 billion
Industry Communications equipment
Trailing-12-Month Revenue $16.86 billion
Management

Co-CEO James Balsillie

Co-Founder/Co-CEO Michael Lazaridis

Return on Capital (Average Past 3 Years) 35%
Year-to-Date Return (27%)
Competitors

Apple (Nasdaq: AAPL  )

Nokia (NYSE: NOK  )

Google (Nasdaq: GOOG  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 17% of the 5,367 members who have rated RIM believe the stock will underperform the S&P 500 going forward. These bears include All-Star elkwingcaddis, who is ranked in the top 10% of our community, and rpgizzle.

Earlier this month, elkwingcaddis touched on the obvious concern facing RIM: "Competition from iPhone, iPad, and Android phones will put significant pressure on the Blackberry in coming years. [RIM] will lose significant market share in the corporate mobile market resulting in downward pressure on their stock price."

Naturally, ever-increasing smartphone competition continues to worry Fools about RIM's long-term prospects. While the BlackBerry is still North America's smartphone to beat, RIM's lead is quickly being eroded by the iPhone and, particularly, Google Android-based phones. According to CAPS member rpgizzle, RIM just isn't strong enough to reverse that bearish trend:

It's clearly obvious that RIM can't compete with Apple and Google. Although the Apple devices are superior in form factor, the main difference is the software. Blackberry just doesn't provide enough value and a quality user experience. Even the new 6.0 Blackberry O/S is lacking. Its cumbersome and slow to respond compared to the Iphone 4. ...

The technical specs of the phones are impressive, but the software experience is just not there. For this reason, Blackberry will slowly fade into the background like Nokia and Motorola (NYSE: MOT  ) (although they are trying for a big comeback).

With the Torch, Blackberry had the opportunity to make a leap forward, however, the phone does not even exceed the capabilities or ease of use of current market offerings. That is disappointing. The general trend is that the newest phone should be the best. When you miss the mark, it shows that management hasn't properly benchmarked the competition, rushed the product to market, or didn't spend enough on R&D. In RIM's case, it's likely a combination of all three of these issues.

What do you think about RIM, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Google and Nokia are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor selection. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (15) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 25, 2010, at 9:54 AM, Gonzhouse wrote:

    Destined to be the next Microsoft: won't disappear quickly but just gradually fade into the background. It will be generating cash on the way out.

  • Report this Comment On October 25, 2010, at 10:02 AM, thegozz wrote:

    Ummm - I thought RIM invented the smart phone space, and was a pioneer in email access devices.

    Perhaps it might be a tad early to dismiss them as not being able to compete.

    Tunnel vision

  • Report this Comment On October 25, 2010, at 10:09 AM, jjfine7867 wrote:

    motley fool you guys suck,,, theres been 2 months of silence and now you start it up again

  • Report this Comment On October 25, 2010, at 10:16 AM, DykkeDi wrote:

    In response to "thegozz",

    Unfortunately I think it's true. RIM's strengths have been in their hardware and security but they've traditionally been very week in software. Now their hardware has been surpassed, their security is being emulated and their software remains DOA.

    I see them continuing to bleed market share for a few years as they fade into the background. Perhaps they will eventually be incorporated into a larger competitor.

    They'll have their ups and downs for now but in the long run it's going to be a downward slant.

  • Report this Comment On October 25, 2010, at 11:04 AM, witom1 wrote:

    your cutting on rimm is not news. it maybe justified in your mind as you cannot see past others you regard as more glamerous and hold in higher regard. that's ok, i've noticed that many follow writers have dismissed them as redundant.

    i suppose you have a clearcut explanation as to how they achieved their top positon in world markets. i suppose too you'll be ready with your usual "sorry 'bout that" a couple years down the road when the stock is 100% higher and those that sold will be weeping and gnashing their teeth.

    sometimes the best work a pundit can do is keep their keyboard locked.

    i know you won't recant. get the whole box of apology cards ready. you're huting some really nice people.

  • Report this Comment On October 25, 2010, at 11:28 AM, sk8ertor wrote:

    Wow, this site is terrible. Do they have nothing else to write about? The only FOOL here is the author of this article. Terrible. Go back and look at their last earning announcement and tell me how RIMM is going to plunge.

  • Report this Comment On October 25, 2010, at 11:34 AM, Aeoran wrote:

    The Motley Fool missed RIM's meteoric ascent for 12 years, including watching two obvious 100-bagger opportunities go by.

    One would have figured that an investment site that values discovery and non-mainstream thinking would be more active in figuring out all of the aspects of a business that's grown from nothing to a still-respectable $25B in market cap, and which basically fought and beat all a whole bunch of giants (Nokia, Microsoft, Palm, Motorola, Siemens, Sony-Ericsson, etc.) head-on in order to do so.

    It's highly unlikely that they'll be able to see value in RIM until long after that value has already been realized. They've missed 12 years. They'll most likely continue to miss on RIM.

  • Report this Comment On October 25, 2010, at 11:58 AM, infektu wrote:

    @DykkeDi

    as the only permanent thing is change, a phrase like "Now their hardware has been surpassed" reeks personal grudge; too many people project human-like treats to companies, thus distributing them in familiar roles "the young/old/smart guy", "the innovator", etc. heck, even "the ugly dad that I can bash now";

    back to this type of "thinking" the world should be a huge status-quo; remember apple's hardware in the mid '90s ?

    @Aeoran

    spot on!

    their are just too much self-serving pieces of "strategy" out there; this one goes like this:

    we imagined 5 years ago that this company will not do well (serving customers, or shipping product, or against competition, etc.); heck, every year out of the 5 we have been proven wrong; but wait, what we were talking about were fundamentals, so they have to show up sooner or later, well ... errr, later;

    I wonder what you will say after the next quarter, and the one after that... RIM is here to stay, it produces more per employee than any of the high street darlings and 35% growth for a 25B company (which is worth 50) is nothing to smirk at, fools.

    Oh, btw, RIM does not compete with Google, not even in dreams on hash. They make handsets, so their competitors are Nokia, Samsung, LG, Apple.

    And 15 years ago RIM had fewer employees than Motorola pager division had executive secretaries. So if you don't like a handset go ahead, buy an xbox and use it for phone calls and secure email, just don't spread this nonsense about who inovates and doesn't.

  • Report this Comment On October 25, 2010, at 1:11 PM, rrspsrme wrote:

    RIMM's hardware is a balance of reliability and efficiency. They as everyone else can load the phone with all the high end components you want, however all you are let with is a power pig. A phone that doesn't operate because the battery is dead. What a concept...lets make a phone that actually works all day. The push technology is more efficient and reliable and COSTS less for every user and is easier on all data systems. Look at you monthly bill when using your Iphone or Droid phone. You probably went over and had to pay extra. The same browsing would cost less on a BB phone. Eventually functionality and efficiency will win over the critics. Most students/teens can't afford a costly data plan.

    RIMM's software issue has been addressed with the new OS from QNX and it is nice. State of the art and better than the rest because all of the above. This OS has raised the bar while maintaining the efficiency of the BB.

    Another Point to make...IT departments are not looking to readily switch to a less secure more costly data plan for their employees. Liability in the US is huge...lets wait for the first case to appear in your courts. Wonder how much the settlement will be? Anyone venture a guess?

    You may question the number 1 status of BB but it is going to storm past the competition again.

  • Report this Comment On October 25, 2010, at 2:15 PM, jonboy13 wrote:

    I guess I've been confused for awhile. It's always seemed to me that when over 80% of the proven top 20% of a sample as large as Motley Fools' suggests a stock will outperform the market, anyone with an opposing viewpoint would be better served by NOT mentioning that statistic. We all know nothing lies like statistics, but in this case attempting to make a 17% portion sound like a majority is just idiotic.

  • Report this Comment On October 25, 2010, at 3:23 PM, rrspsrme wrote:

    Didn't catch the 17% part...lol. That's funny. Then again this report is just perception which can turn on a dime once the markets sentiment changes and a few upgrades hit the wire.

  • Report this Comment On October 25, 2010, at 5:11 PM, witom1 wrote:

    full many a gem of purest ray serene

    the ocean's dark untathomed caves do bear.

    full many a flower is born to blush unseen

    and waste its sweetness on the desert air.

    not alway however! sometimes the jewels drop off the tree into your wallet.

    draw a downtrend line on a 4-5 year chart. you have just witnessed a breakout of significant proportion.

    stay the course!

  • Report this Comment On October 26, 2010, at 9:57 AM, jonboy13 wrote:

    @rrspsrme Although you appear well read and we agree on the stock covered here, I'm surprised that you didn't read carefully enough to see the first sentence under the facts "box". Seemed fairly clear to me.

  • Report this Comment On October 26, 2010, at 10:05 AM, jonboy13 wrote:

    Mr. Pacampara, After seeing the way RIMM is moving this morning, it appears your article did seem to have an affect on investors. More please!

  • Report this Comment On October 26, 2010, at 12:49 PM, rrspsrme wrote:

    Guess the simple point you brought up didn't seem to hit home with me. Why write an article focusing in on the 17% which have a negative view. I would have thought a focus on the majority would have made more sense. With the market action on RIMM right now could be a finger point at just how wrong this 17% are. Media love to focus on the negatives..Strange. Guess it get more time or creates the uncertainty these professionals rely on.

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