Will RIM Die or Thrive in 2013?

In the video below, Fool tech and telecom analyst Eric Bleeker discusses the prospects for handset maker Research In Motion (NASDAQ: BBRY  ) in 2013.

The rapid pace of technological innovation can cut both ways for companies involved. A onetime industry leader in mobile, RIM now finds itself struggling. All hope may not be lost, but no company operating in mobile has ever recovered from running negative operating profits, Eric says.

One key concern for RIM is its collection of fees for services like BlackBerry Messenger. The company collects about $5 per handset in these fees, and they are making up an increasingly large percentage of its revenues. It now makes up some 35% of sales.

But with the new BB10 operating system, these fees become variable. That's potentially game-changing. It means many of its users may not have to pay these fees at all. That's reason for concern for Eric, who says he'd either avoid RIM altogether or even consider shorting the stock.

While RIMM has fallen behind in the mobile market, Apple, a longtime pick of Motley Fool superinvestor David Gardner, has soared 219.2% since he recommended it in January of 2008. David specializes in identifying game-changing companies like this long before others are keen to their disruptive potential. He helps like-minded investors profit while Wall Street catches up. I invite you to learn more about how he picks his winners with a free, personal tour of his flagship service: Supernova. Inside you'll discover the science behind his market-trouncing returns. Just click here now for instant access.


Read/Post Comments (17) | Recommend This Article (2)

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 January 07, 2013, at 7:19 PM, TimKnows wrote:

    You blew it Eric!! Totally off-base and useless video. You don't have a clue about services revenue, not the tiniest bit of knowledge and yet you bash the company. You should be looking at the revenues from services as something that can grow the business but you blew it miserably. If you are getting paid by Apple just admit it and move on but don't post such a back stabbing video as this when you clearly don't know what you are talking about.

  • Report this Comment On January 07, 2013, at 7:38 PM, dd27 wrote:

    Everything I have read from the Fool (or is it fool?) over the last few months has been unremittingly negative and backward looking.

    Are you all incapable of seeing the potential in the new BB10 (reports from carriers, developers, and companies who are testing the product)? Or the fact that QNX is already in several miilion cars? Or just the creativity of Hub, Peek, Flow etc?

    I suggest you not bother to write until you do some digging -- and you have a lot to do.

  • Report this Comment On January 07, 2013, at 8:31 PM, TimmyBee123 wrote:

    Regarding RIM, I would look at the service fees as additional to what other companies get. So if they lower, it is not that big a deal since the ASP will increase with the new hardware and OS/ecosystem.

    Also, RIM might also get additional service fees for other services which have been announced but not mentioned, like their handling of Canadian carriers' secure element processing for electronic wallet transactions.

    Any idea how much that will bring in?

  • Report this Comment On January 08, 2013, at 10:13 AM, CZZZZZZ wrote:

    The Motley Fool is starting to remind me of the psycho's who predicited the mayan calendar meant the world would in in December 2012, after December they had a few excuses and made another dommsday prediction, much like your predictions of RIMM you have been painfully wrong and still keep trying to fan the flames of their impending disaster.

  • Report this Comment On January 08, 2013, at 10:13 AM, CZZZZZZ wrote:

    The Motley Fool is starting to remind me of the psycho's who predicited the mayan calendar meant the world would in in December 2012, after December they had a few excuses and made another dommsday prediction, much like your predictions of RIMM you have been painfully wrong and still keep trying to fan the flames of their impending disaster.

  • Report this Comment On January 08, 2013, at 10:17 AM, jwjsprenger wrote:

    Only a FOOL would short RIM now.

  • Report this Comment On January 08, 2013, at 10:31 AM, InaFord wrote:

    Nokia will be more likely the third horse in the race.

  • Report this Comment On January 08, 2013, at 10:32 AM, InaFord wrote:

    Nokia has a brighter future than RIM

    1) BB10 is a bit late!

    2) RIM has been strong in enterprise business, but now RIM will face

    more than tough competition. For example, In China China Mobile sells the Nokia Lumia 920T for 4599 yuan with free wireless charging pad or other accessories, which means the phone costs only 4000 yuan. The phone is very much cheaper than iPhone 5 or Galaxy Note 2.

    In addition, the Lumia 920T has premium malware virus protection hardware built in.

    Therefore, will RIM´s highest end BB10 phone able to compete the price with this Lumia 920T? I really doubt that. And with a 2-year contract, China Mobile offers the Lumia 920T with only 1 yuan!

    3) RIM´s loyal fans will still support BB10 phones, but will that be enough?

    4) Beside Apple and Samsung, RIM will have to compete also with Nokia.

    Now, Nokia with WP8 is in quite a big step ahead of RIM with BB10.

    Nokia has low price point Asha phones and also high-end Lumia phones,

    so can RIM do the same?

    5) RIM will still need to use a lot of money in R&D and marketing in the future, while Nokia

    is saving money in R&D and marketing, because MS shares the expenses.

  • Report this Comment On January 08, 2013, at 10:33 AM, InaFord wrote:

    When now, both China Mobile and China Unicom are subsidizing the Lumia 920 heavily, the 2-year or 3-year contract is starting from

    0 or 1 yuan, and considering only less than 1/5 of Chinese people are using highest-end smartphones, now even middle class Chinese people have a chance to use a highest-end smartphone because of China Mobile´s and China Unicom´s Lumia 920 deals.

    This will result into a huge number of 2-year or 3-year contract users for Nokia in China! Besides, 3G penetration in China is still very low, there is a huge opportunity there.

    Additionally, among the highest end phones, Nokia Lumia 920 is significantly much cheaper than for example iPhone 5 and Galaxy Note II. Nokia has an advantage in both the price competition and the biggest carriers´ backing in China!

  • Report this Comment On January 08, 2013, at 10:34 AM, InaFord wrote:

    Because now RIM still has negative EPS, and

    Nokia´s EPS in last quarter was -0.07 euro per share any more, and if Nokia´s EPS breaks even this quarter or becomes positive, then the markets will no doubt choose Nokia as the certain third horse in the race. That will show a huge surge in the stock price, because for example short sellers will have to buy back.

    The reasons are quite simple, because when RIM still need to use money to launch BB10, it means WP8 is already making money.

    And during 1Q13 when RIM gets BB10 phones out, Nokia will have already a lot more to come at MWC. Additionally, that “a lot of interesting things with Virizon” that Stephen Elop mentioned, will already take place step by step.

    The conclusion is, Nokia and WP8 are in a significantly bigger step ahead of RIM and BB10.

  • Report this Comment On January 08, 2013, at 10:42 AM, verces wrote:

    I would like to think that Nokia will be a competition as an investor this company is also in my Radar but to no avail the co was not telling us much abt how prospective their WP8 is.

    On the other hand the conviction with Eric Bleeker is absolutey correct...that's really pretty bad accusations - please be mindful as publishing a very biased story is a short live and will always results to a regrets. People will not believe with anything you say next time - all of them.

  • Report this Comment On January 08, 2013, at 10:46 AM, Chippy55 wrote:

    I didn't bother to take the time to watch his video for 3 reasons: I have shoes older than him, something about him "recommending" Apple back in 2008 (duh, I've followed Apple since 1984), and lastly his assertion - whether true or not I don't know - that no company has ever recovered from negative operating profits. Here's three counterpoints: Thorsten Heins is at the helm, I wouldn't bet against him. Period. Not a week goes by that I don't read of RIMM as being a potential takeover target. Lastly, the security features are the best from what I've read. By the way, did he say whether he is in fact shorting the stock? I don't have time to watch the video as I have an old pair of black and white wingtip spectator shoes to polish.

  • Report this Comment On January 08, 2013, at 10:47 AM, InaFord wrote:

    Steve Ballmer said at CES WP phones have been sold 5 times more than last year.

    Beside Lumia 920, China Mobile is already taking pre-orders for Lumia 620.

    India launches Lumia 920 and Lumia 820 next week.

  • Report this Comment On January 08, 2013, at 10:57 AM, Arthur1111 wrote:

    Why is this kid recording videos during the day? Shouldn't he be in school?

    He looks like he is reading from a screen. LOL.

  • Report this Comment On January 08, 2013, at 11:18 AM, HelloGuvna wrote:

    Interesting video. Aren't you supposed to short when you stocks are overvalued? I believe it would be best to have shorted this over 100. Conversely, you are supposed to buy when stocks are low. Looks like RIM is low now.

    From your video you probably believe you are smarter than Prem Watsa or Donald Yacktman. Don't worry, I can assure you, you aren't.

  • Report this Comment On January 08, 2013, at 11:46 AM, verces wrote:

    Not only that this blog was posted yesterday and has been taken out to post it again today?????

    Motley Fool - come on....we want better than that. please go to CES and just tell us the next big thing for your SuperNova.

  • Report this Comment On January 08, 2013, at 12:19 PM, TimKnows wrote:

    Terrible video, useless in every way, the only thing I gleaned out of this is to short Apple.

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