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Research In Motion: A Year in Review, and a Look Ahead

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The words "good riddance" couldn't be more applicable than when they were directed toward Research In Motion (NASDAQ: BBRY  ) founders, Jim Balsillie and Mike Lazaridis, to kick off 2012. The two leaders, did their darmnedest to run RIM into the ground, trying desperately to make the Blackberry obsolete in the exploding mobile industry. They almost succeeded.

Thankfully, RIM's world began to look better on Jan . 23; that was the day it announced that Thorsten Heins was taking over as CEO. Even Heins, though, who has since reinvigorated both RIM and its share price, got off to a shaky start.

Oops, did I say that?
Heins' auspicious beginning began on his very first conference call as RIM CEO. After RIM's share price initially spiked upon news that Balsillie and Lazaridis were out, Heins sucked the air from the room when he stated, "I don't think that there is some drastic change needed." RIM stock proceeded to drop 8%. Clearly, drastic change was needed and, thankfully for RIM shareholders, it was coming.

While the hardest of RIM's hardcore fans wouldn't admit it, Balsillie's and Lazaridis' refusal to move into the 21st century made their departure an absolute necessity. When Balsillie finally resigned his board seat in March, the sigh of relief was audible. Heins did an about face, too, when he retracted his "no change is needed" at RIM comment, and replaced it with , "significant change is needed." That's more like it.

The "significant change" at RIM really began when Heins finally got his team focused on what it does best -- provide outstanding flexibility, security, and reliability to mobile business and public industry customers. Targeting Blackberry sales to its core market is the only way RIM is going to rejuvenate sales.

The notion of being all things to all people is, at least in part, what got RIM into trouble in the first place. Balsillie and Lazaridis refused to acknowledge the obvious, and continued to vigorously go after the retail market. Problem is, those choices put RIM directly in the path of several oncoming trains -- Apple (NASDAQ: AAPL  ) and its iPhone line of smartphones was growing market share almost exponentially, and Samsung would soon take over the top spot in mobile phone sales from longtime leader, Nokia (NYSE: NOK  ) .

Add the successful Nexus smartphone from Google (NASDAQ: GOOGL  ) into the mix, not to mention its Android OS, and the already hyper-competitive retail mobile market has gotten even tougher. Though most of the retail smartphone alternatives are able to connect with a company's IT systems in their own way, none can match the reputation in the business and government community of RIM.

Nokia finds itself in a similar position as RIM, in that both are hinging growth and, in a very real sense, their respective futures, on making a splash with new products. The difference is that Nokia is working at gaining market share in the world of Apple's iPhone 5, Samsung's Galaxy, and Google's Nexus -- a tall order, to say the least, and one that RIM is wise to merely dabble in.

Looking ahead
Monday, Nov. 12, was a red-letter day for RIM shareholders. The much anticipated release of the BB10 OS, and a couple of new phones to go along with it, was finally announced. At the time of RIM's press release, its stock was hovering in the $8.50 range. After today's slight bump, RIM is now over $14 a share, and nearing its 52-week high; what a turnaround. Even a recent lawsuit filed by Nokia claiming that RIM infringed on its patents, couldn't slow down RIM's BB10-fueled momentum.

So, what's the big deal about BB10?

The new BlackBerry 10 has "a large catalog of the leading applications from across the globe and across all categories," according to the RIM press release. No definitive specs, as yet, but it certainly sounds like users won't have to wait for the apps to catch up with their phones, something Microsoft's Windows 8 OS is struggling with. For navigation, BlackBerry 10 will use RIM's new "Flow" to navigate in and out of the BlackBerry Hub.

With at least one eye on the retail market, the new BlackBerry Balance gives users a way to seamlessly bounce back and forth between work and personal data, maintaining all-important security for the business side of things. There's also the BB10  Keyboard. The app "learns" how a user types, and then automatically adapts itself to the idiosyncrasies of each user.

To its credit, even as year-over-year quarterly sales have steadily declined, RIM has continued to add to its strong balance sheet. With just over $2 billion in cash, and zero long-term debt, RIM has bought itself time for the commercial world to adopt BB10. But here's the thing -- a bet on RIM is a bet on BB10, period. If, by some chance, BB10 disappoints, 2013 will be much like the start of 2012: painful.

Like RIM, Nokia's been struggling in a world of Apple and Android smartphone dominance. Nokia has banked its future on the next iteration of its Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia, to help investors decide if the company is a buy or a sell. To get started, simply click here now.

Read/Post Comments (5) | Recommend This Article (3)

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 December 15, 2012, at 9:49 AM, mirra88888 wrote:

    It is refreshing to see that at least one analyst from Motley's fool has done their research about the future of Rim and BB10 before they start trashing the company for it's past performance!!!

    For ones I read something about BB10 and did not grind my teeth for being mad of how analysts push their own agenda. I was really giving up hope!

    I agree with you that BB10 is a completely a new phone and Rim has to prove themselves once again.

    As an individual who user her phone for business purposes mainly, I must tell you that I am very excited about BB10. Security and reliability are the most important thing for my business and all the new functions BB10 has to offer are absolutely incredible to me.

    I have a small company with number of employees who have access to private information of my clients on the cell phones I provide to them. I am so glad that BB10 will allow me to have more control if an employee does not work for my company any longer.

    Regarding the stock prices, I think Rim had gotten way too cheap according to their book value even if they had not come up with BB10 yet. They have come up a lot when they announced a more solid date for BB10. A few months ago, everyone thought they are going out of business. Now that people have done some research they realize that BB10 could be a great and competitive phone.

    I agree that they took a little too long to create something new. That is how they lost all customers including me to Apple or Google.

    I do not agree that we could rely on what a company does in the past for their future performance when it comes to technology. Apple for example went dead and came alive after producing better products. So did Rim, Google and any other big company.

    When it comes to technology, past performance does not guarantee a bright future, neither does it warrant a future failure.

  • Report this Comment On December 15, 2012, at 10:16 AM, digitally404 wrote:

    Thank you for this fair, unbiased, article of RIM. It's so hard to find one!

    I was also very glad to hear early in the year when the two CEOs were dropped, especially Balsillie.

    The internal promotion of Heins was a good call, whom I find currently maintains a very realistic perspective of the challenges that RIM faces.

    The entire management shakeup has put people with experience in reviving companies at the executive level, which bodes very well for RIM now and should continue in the future.

    I think RIM will do well in selling their new BB10 platform, especially at professionals and people who want a next generation communication tool

  • Report this Comment On December 15, 2012, at 11:49 AM, timbrugger wrote:


    Excellent points, all; and thanks for the kind words, too!

    That's a great call happypoordays, re: the astronomical short positions. Not surprising, given RIM's run of late, but when it comes time to cover (assuming RIM is able to maintain current levels), another boost in share price will be the result. Short term thinking, of course, but you're spot on.

    Thanks for the posts, Tim.

  • Report this Comment On December 16, 2012, at 9:54 AM, CZZZZZZ wrote:

    re: Balsillie and Lazaridis were out

    These two were instrumental in the complete re-invention of RIMM. They made the decision to create an entirely new OS, purchased QNX and the design firm TAT, they laid the foundation for BB10.

    They left just to please ignorant investors and media analysts that have the attention span of a flea and think long term planning is 6 months. Balsillie and Lazaridis have re-invented the company and positioned it well for the next 10 years, no two people deserve more credit for this, Heins is great but he's really just executing the plan that was laid out for him.

  • Report this Comment On December 16, 2012, at 9:41 PM, HilaryChan wrote:

    This morning, black Lumia 920T hit number 2, just behind a budget Huawei phone at Amazon China, way ahead of Galaxy Note II and iPhone 5.

    Business men and women like the Lumia 920T in China, because of Office, good maps and location data City Lens and GPS, and good virus protection firmware built in the phone.

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