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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.