Is It Time to Short Research In Motion?

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

Andrew, let's talk about Research In Motion, a stock that a lot of us are pretty bearish on. It had recently a pretty big run-up here, kind of been up and down a little bit since. What do you think about this stock? Is it time to short Research In Motion?

Andrew Tonner: Well, it's up about 50% over the last three months. I think now, when you look at the company, yeah there might be a little more to gain on the downside versus the upside. I'm not sure I'm going to say, "Go ahead and short it right now," but I definitely would say it's at least a hold in my book.

You see the recent rise sparked by the announcement that BB10 is finally going to come to market. The global launch event is scheduled for Jan. 30, but at the same time it also is a little shortsighted, in that even once they have this launch ceremony it doesn't mean that there will be any direct or immediate revenue benefit for them.

They still don't have devices coming on market until around, people say, at the earliest March for a touchscreen model, and then maybe sometime in early summer for a keyboard model.

At the same time you see them having crumbling dynamics. Their earnings this most recent quarter were brutal, and now we see -- which is what has been the Holy Grail of this company, one of the things people said in bankruptcy would be one of the most valuable assets -- their secure messaging franchise, potentially facing some headwinds as well.

I don't necessarily see the bullish case, especially in the short term. The fact that BB10 is launching, after the two-year delays and every headache and embarrassment investors had seen from this stock... it's definitely a positive, but at the same time if you look at this company in the context of, say, a three- to five-year period, they basically had the booming smartphone market under lock and key, and they've been completely side-swept and decimated by the likes of an Apple and a Google now, who basically own the U.S. market and are having huge successes internationally as well.

You look at a company like that, versus maybe a better rebound play, a sustainable rebound play, like a Nokia because they are, again, so deeply ingrained into Microsoft, and Microsoft really needs them to help launch their Windows 8 phone platform.

Research In Motion, they're a stand-alone business. They have enough cash to keep paying the bills, but at the same time A, with their long-term track record of ineptitude and not delivering, and then B, that some of that revenue -- even if BlackBerry 10 is a hit, which is not a given -- is quite extended, out into next year, at least into the second quarter of next year.

I'm not that excited about the stock.

Brendan: Yeah, I agree. I think it's a hold at best. One of the reasons I thumbed it down in CAPS recently. Andrew, thank you for your insight. Make sure you head over to Fool.com for more analysis.


Read/Post Comments (15) | Recommend This Article (2)

Comments from our Foolish Readers

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

    Billionaire Prem Watsa recently accumulated 9.9% of RIMM at average prices higher than today's, making it one of his largest holdings, and joined its board. He has an enviable investment record. You folks really ought to try to learn from people like him.

  • Report this Comment On January 10, 2013, at 8:22 PM, jwjsprenger wrote:

    Once again the Motley fools are making projections by looking in the rear view mirror.

  • Report this Comment On January 10, 2013, at 8:39 PM, gordonthebull wrote:

    Andrew Tonner.....I don't think you know what you are talking about or fail to ignore how BB10 is going to be great for RIMM. If you look at the writeups and demos on the new BB10 you will realize that it is what everyone is looking for in a smartphone. There will be more than 70,000 apps in the ecosystem (who cares if there are 700,000 in Android's ecosystem when 400,000 apps haven't even been downloaded once!). I believe that as long as 90% of the popular apps are in the BB10 ecosystem there will be many IOS/Droid users switching over to the new BB10. All you have to look at are comments from others saying that IOS 6 is now boring and they will get a BB10 once it comes out.

    What do you have to say about this? Stop being a pessimist unless you are being paid by someone to bash RIMM?

  • Report this Comment On January 10, 2013, at 9:29 PM, Chippy55 wrote:

    First off I didn't watch the vdeo, just read the transcript but I get the feeling that SOMEONE HAS SHORTED RIMM, unless he's made a FULL DISCLOSURE on the video (me, I'm long and I already made 99.6% in 2 1/2 months, sold, and waited for the pullback and am now back in) because I have learned long ago to NOT TRUST ANALYSTS (if he is indeed one) who don't make full disclosure. That's one good thing about seeking alpha, they usually state in the first or last sentence whether they have a position.

    I also read recently, either here or seeking alpha, of what Thorsten Heins had done for RIMM since becoming CEO back on January 22, 2012 and by any metric he's turned the company around. Businesses don't "turn on a dime", nor should they be expected to. As for those who continue to compare phone companies to Apple, it's unfair because Apple is on a different planet and some people find it a tad expensive, but Apple will never have a 10:1 split in order to allow a typical investor to get in because, well, because it's Apple. Back to RIMM.

    I was first made aware of it because places like TMZ thought it was front page news when celebtards like Paris Hilton kept "losing" their Blackberrys and that of course leads to water cooler talk of "who's in her phone book" and of course are there any nekked photos of her or X rated videos because as we all know America had an insatiable appetite for all things Paris (not moi) especially when it concerns her purse being searched and the cops finding "someone else's coke" wink wink in it. Back to RIMM.

    For the past 10 months I heard Stuart Varney putting RIMM on "death watch" and even after the stock bottomed out at around $6.50 in September Varney would continue to refer to the "death watch" but in the past tense. Maybe he's finally a Heins cheerleader. If Tonner wants to short it (notice how he's still hedging, and wait, I just came to the conclusion that he's a tardo) by saying something about making RIMM a "hold". Folks, no one cares about your opinion if you are saying a stock is a "hold", is that right? What I mean is if you buy a stock, and you check the charts like I do, and it is performing well, wouldn't you be more inclined to be accumulating it? Or do you just buy 100 shares and cross your fingers and hope? I originally purchased 1,000 RIMM at $6.90 andWANTED like crazy to purchase more as it went to $8, $10, $12 except it was near the end of the year and I had other stocks that I purchased after I felt they had been unfairly beaten down due to stock-loss selling or just plain oversold.

    RIMM doesn't go down much on days when the DOW is down all day, for instance a couple of weeks ago when the DOW lost for 3 days in a row, RIMM didn't do bad at all. I'm happy where it is and how it performs on news, I just don't have the overblown (IMHO) glee that Apple investors and customers have when Apple makes an announcement like "Hey kids! We just created our 700,000th App! This one will tell you the last time you tied your shoes!" I may get back into Apple if it comes down a bit more but remember this: upside potential vs downsized risk. How much of either is there with RIMM vs Apple.

  • Report this Comment On January 10, 2013, at 10:03 PM, cougarlike wrote:

    "They still don't have devices coming on market until around, people say, at the earliest March for a touchscreen model, and then maybe sometime in early summer for a keyboard model"

    You should really do your homework before you make comments such as above. "People say" Wow! If you had seen Heins on CNBC Dec 21st the morning after the Q3 release, you would have heard him state the following:

    one more question i know becky wants to jump in here. on blackberry 10 devices it seems like you said that those will ship in the current quarter in your fiscal q4. will they be shipping in volume to the key markets in north america in q4 or might we have to wait one more quarter to see them come in volume?

    "as i always said, and i maintain that position and i have good line of sight to this nowadays is we will ship in significant volume in our fiscal quarter 4 into the u.s., and into all global markets. okay"

    He also went on to say that the QWERTY keyboard version would ship about 3 weeks after the Z10. This would lead me to believe that Z10 phones will be available within one week of the January 30th launch date as their Q4 ends in February. RIM is back and there is plenty of room for 4 or 5 big players in the Smartphone market as it grows across the world. People that think there can only be 2 are idiots.

  • Report this Comment On January 10, 2013, at 11:23 PM, TimKnows wrote:

    InfoThatSucks

  • Report this Comment On January 11, 2013, at 2:48 AM, TimKnows wrote:

    You can see the fear in these rejects (from the media/investment world) eyes, as their over hyped Apple continues to fail, sad really.

  • Report this Comment On January 11, 2013, at 5:49 AM, Arthur1111 wrote:

    4 RIMM bashing videos in 2 days? from the same kid? Nothing but garbage.

    While RIMM is investing in innovative products, aPPLE is investing in cheap products: Ipad mini, cheap iphone. What is next? Buy one iphone get 2 FREE?

  • Report this Comment On January 11, 2013, at 8:41 AM, BR14 wrote:

    @InfoThatHelp "Rim's production planning will only begin to input the market reaction after January 31"

    Here we have someone who has no clue about how manufacturing works.

    The phones will already be manufactured and either on their way by ship, or stored in warehouse awaiting delivery.

    You can't just turn on a tap and generate a few million phones.

    I expect there to be massive early take up of the phones (mine's on order) as long time BlackBerry users who cannot do without BBM and other features are chomping at the bit for the new devices.

    Enterprises that have held off updating their smartphone assets will also have orders for early delivery (e.g. SAP recently announced they're into BB10 early).

    So I'd guess RIM will ship many millions of phones in the first quarter. And if the phones are as good as they appear to be they'll generate additional consumer demand which could see the company rocket.

    The only risk is on execution. Any major outage or other impact on BlackBerry service and fragile good will could be lost.

  • Report this Comment On January 11, 2013, at 9:31 AM, Arthur1111 wrote:

    BR14: You are correct. the phones are already made. See link.

    http://crackberry.com/purported-blackberry-z10-advertising-i...

  • Report this Comment On January 11, 2013, at 10:08 AM, magnaman1969 wrote:

    I don't take investment advice from Frat boys.....

  • Report this Comment On January 11, 2013, at 10:09 AM, magnaman1969 wrote:

    Check out the QNX bentley at CES....tied in to a BB10 phone.

    very badass!!!

  • Report this Comment On January 11, 2013, at 1:53 PM, polishpirate wrote:

    Shorts losing their shirts today!

  • Report this Comment On January 11, 2013, at 4:36 PM, magnaman1969 wrote:

    Nice video kids...and great insight for your followers.....stock up 13 percent...lol.

    idiots.

  • Report this Comment On January 20, 2013, at 3:32 PM, anstin wrote:
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