Research In Motion's Big Upcoming Catalyst

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Brendan Byrnes: Hey Fools, I'm Brendan Byrnes, joined today by Andrew Tonner, our tech and telecom editor and analyst for Fool.com.

Andrew, let's talk Research In Motion. They have a huge event coming up on Jan. 30, with the introduction of BlackBerry 10. Is this company a short before then?

Andrew Tonner: I think you've seen a huge run-up with the stock. It's up around 50% over the last three months so my thinking was, "This is going to be a huge event. The stock's going to move in a big way." After this run-up, especially given my bearish stance on the company going into this, I think it's an interesting question.

I probably wouldn't say it's time to short. I think that might be a little aggressive. We're seeing this stock so volatile in its current state; it's really being driven by traders, but I think the long-term fundamentals are still against, or bearish, for Research In Motion.

Keep in mind, this company was the dominant player in smartphones as recently as 2008 or 2009. Now it's fallen. Its most recent quarterly market share numbers, they had 4.2% of the global market share. This company truly has been mismanaged. It's done literally everything wrong over the last three years.

Now that we see the long-awaited new, next-generation mobile operating system coming out, can they recover? I'm not necessarily sure. We're seeing a lot of the data we see coming out about smart devices that, especially when you're hooked on an ecosystem and happy with an ecosystem, it leads to repeat purchase, especially as far as Apple's iPhone.

You see around 90% of iPhone users saying they will buy another iPhone when they replace their device. There are just dynamics like that, where now you have people being locked into these ecosystems that are acquiring multiple devices. Some of these companies are preparing to move into the living room as well, it seems.

Is this the context or landscape where Research In Motion is going to come back and disrupt? It doesn't really seem like it to me.

And there's the thing about financial performance as well. The financials, even if BlackBerry 10 does gain meaningful traction -- which, again, I think is highly suspect -- the revenue and actual financial benefit is still pushed out a ways.

Keep in mind, the Jan. 30 launch date is only the global unveiling of this operating system. It won't be at least until, people say maybe around March but well into the second quarter of 2013, when they'll actually have a device to sell to consumers.

You think about that, and you think about, now we saw in their most recent quarter as well, their secure messaging platform being under threat, which was, again really their bread and butter and a huge, huge driver of their profitability.

You think about all these things in total, and put that in the context of the company having popped basically 50%... I can see how there's probably more downside potential than upside potential, over the long term. That's my caveat.

I think in the short term you're going to see a lot of volatility because you have traders and things moving in. I would say, sit on the sidelines, but if you had to ask me heads or tails, I think it's probably more likely to be down, say, three years from now, which is what we like to think of as long-term, versus up.

Brendan: Yup, I totally agree with that. Thank you, Andrew, for your insight. Make sure you head to Fool.com for more analysis.


Read/Post Comments (8) | Recommend This Article (1)

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  • Report this Comment On January 09, 2013, at 7:29 PM, TimKnows wrote:

    "....... because you have traders and things moving in" ............. maybe Tonner could tell us what those "things" are moving in, like your Aunt or a Cousin or termites or something?? WOW, is this guy stupid.

  • Report this Comment On January 09, 2013, at 8:39 PM, Arthur1111 wrote:

    RIMM is coming up with the most innovative phone in 3-4 weeks. Apple is now focusing its attention on cheap Iphones for 2013.

    RIMM has outperformed Apple by more than 115% since September. No wonder why the motley fools are going nuts.

    Go RIMM

  • Report this Comment On January 09, 2013, at 8:40 PM, jwjsprenger wrote:

    Another foolish RIMM basing article by the Motley Fools. Backward looking and no substance. iPhone is old and overused and Android is just basically boring. Consumers want something different and do not want to be like everyone else. This will give RIM an up if they can successfully launch with a good product. If these fools think they can predict consumer habits by looking in the review mirror they are even bigger fools.

  • Report this Comment On January 09, 2013, at 9:16 PM, mmayenschein wrote:

    Andrew,

    I think there is a huge upward movement for Rimm after January 30th.

    See the link below if you have not already seen it.

    Buy and buy more

    http://finance.yahoo.com/news/three-top-u-wireless-carriers-...

  • Report this Comment On January 10, 2013, at 1:12 AM, goog2013 wrote:

    Some RIMM longs are even more insane than RIMM shorts.

    To be fair:

    1. RIMM is worth ~$12 no matter how BB10 works.

    2. BB10 will fail eventually no matter how good it is. RIMM just does not have the eco system like Apple/Google/Msft do in the long run.

    3. RIMM could even sell it for 20ish at the right time.

    But anyone thinks RIMM could take back market share is just insane.

  • Report this Comment On January 10, 2013, at 7:14 AM, UncommonSense65 wrote:

    InfoThatHelp... your comments are silly and spiteful. RIM had a great product, they lost their focus, and Thorstein Heins is bringing clarity and focus to the company once again. They have the best security hands-down, their download bit volumes are a fraction of the competitors, the web browser is the fastest anywhere, developers are engaged with the new OS, the ecosystem for personal and corporations alike is superb, and BB10 has some seriously wonderful tech built in the software, they added 4 million subscribers in the past 6 months (75M to 78M to 80M then 79M), and African nations, European teens, ALL of Indonesia, and a boatload of other countries think BBM is the cat's meow. So lighten up... will you really feel better when you go to bed if RIM fails? If so, that is sad. I've never owned a BB phone before, but I have a Playbook and iPad 2; and I use the Playbook every time. It's a superb experience. I will be grabbing the BB10 as soon as it is available - chalk up one new subscriber for RIM.

  • Report this Comment On January 10, 2013, at 11:26 AM, infektu wrote:

    Statement:

    "It won't be at_least_until, _people_say_maybe_around March but well into the second quarter of 2013, when they'll actually have a device to sell to consumers."

    Wow, that's some cool hand-waving.

    The devices have been in certification starting Oct.2012, that means by Jan30th they should be available,

    As for the quantities, it remains to be seen how fast can they ramp-up, (assuming they did not repeat the PB blunder and have manufactured one gabazillion units).

    Regardless, as the sell-through was consistently superior to the shipments since June 2012, I think we shall see at least some channel re-fill during Feb.-March 2013.

    As little as 7M BB10 units and 6M BB7 units will be enough to send this baby through the roof.

  • Report this Comment On January 10, 2013, at 8:33 PM, digitally404 wrote:

    RIMM > AAPL for 2013.

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