Maybe There's Something to This RIM Thing

With Research In Motion's (NASDAQ: BBRY  ) upgraded BB10 OS and a couple of new phones on the horizon, it isn't surprising that RIM shareholders are a bit giddy. With a share price that's more than doubled the past three months, RIM's given its long-suffering fans a lot to be excited about.

What should give RIM fans a real shot in the arm, however, goes beyond its stellar stock performance of late. With the much-anticipated release of its new OS still a week away, RIM isn't just running on momentum anymore. There's some substance behind its performance.

RIM is getting more interesting
When CEO Thorsten Heins announced that RIM's new BB10 OS will be here Jan. 30, the excitement was palpable. The only problem was that other than a whole bunch of beta testers, much of the good tidings surrounding BB10 is based on hope -- not an ideal basis for investing your hard-earned money. Sure, with more than 1,600 corporate entities playing with a pre-release version of the new BB10, along with more than 100 government agencies, the test sample is a big one. But it's just that: a test sample.

The reliance of RIM's improving stock price on acceptance of its new OS, even before the general public has had a chance to take it through the paces, has kept me cautiously optimistic toward RIM; unknown quantities always make me uncomfortable. But now there's a lot more for investors to hold on to, in addition to what has been positive feedback from the BB10 beta testers.

The recent upgrade of RIM by a Jefferies analyst, increasing RIM's target price to $19.50 a share from $13, is significant, in and of itself. What gives the upgrade substance, however, is the reason behind the change of heart: RIM is expected to make its new BlackBerry email available to Apple's (NASDAQ: AAPL  ) iPhone and Google's (NASDAQ: GOOGL  ) Android OS users.

As more and more businesses get comfortable with the "bring your phone to work" concept, there are opportunities for OS providers to benefit, beyond supplying the hardware. Even before BB10, many saw RIM's secure operating system as the commercial standard, and now Heins and team are exploring ways to use RIM's OS and secure email service across multiple devices? The possibilities for RIM are intriguing, to say the least.

And speaking of any and all mobile devices, RIM recently announced that Visa has blessed its BB10 wireless payment solution, Secure Element Manager. Though RIM will hardly be the only mobile payment provider around -- MasterCard and Google are testing a mobile payment solution, and Groupon introduced a low-cost alternative recently, not to mention a host of other players already in the market -- the payment service and Visa endorsement opens new doors for RIM.

But wait -- there's more
While the security of RIM's proprietary OS is well known, the flip side has been the lack of apps, and the ability of third-party IT developers to create them. But with thousands of new apps from other OS platforms already developed, BB10 smartphones could hit the shelves packed with more goodies than ever before.

Though not necessarily surprising, confirmation from domestic wireless carriers that they intend to carry the new BlackBerry 10 phones also provided a boost for RIM. And, strange as it sounds, good news from Nokia (NYSE: NOK  ) last week gave RIM aficionados more fuel for their fire. When Nokia CEO Stephen Elop announced sales of 4.4 million Windows 8 smartphones, it wasn't only Nokia shareholders who breathed a sigh of relief -- RIM fans were also feeling pretty good.

For much of the past year, RIM and Nokia have often been mentioned in the same breath. Both onetime highflying smartphone makers are undergoing major transitions; Nokia's going all in with its Windows 8 OS Lumia phones, and RIM is doing the same with BB10. For RIM shareholders, Nokia's sales news is confirmation that Apple and Google can be had. Google recently unseated Apple's iPads in December as the No. 1 seller of tablets in Japan, and if estimates are correct, Samsung will handily outsell iPhones in Q4 -- both demonstrating that Apple's iron-like grip on the mobile industry is slipping, leaving room for players such as RIM and Nokia.

Staunch RIM shareholders have long held on to the company's outstanding balance sheet and cutting-edge technology as reasons the company is worth more than its stock price. Then, when the introduction of BB10 was announced, RIM investors really went ballistic, starting an epic run on its stock price. I wasn't nearly as enamored. Why? Because investing in a stock based on conjecture -- which is what BB10 remains at this point -- leaves the door open for a big disappointment.

Then, RIM announces its email will be available on multiple devices, BB10 includes a secure wireless payment solution already rubber-stamped by Visa, IT geeks have developed thousands of new apps for its pending smartphones, and Nokia proves you don't need to be Apple or Google to succeed in the smartphone market. RIM has finally given investors something tangible to hold on to, and you'd better hold on tight: This thing is getting interesting.

Like Research In Motion, Nokia's been struggling in a world of Apple and Android smartphone dominance. 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 sell. To get started, simply click here now.


Read/Post Comments (10) | Recommend This Article (5)

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 21, 2013, at 1:26 PM, voytekp wrote:

    BB10 will be a success and I have no doubts about that, but hardware revenue will not be their bread and butter. Honestly, if anyone thinks that mobile hardware for RIM is going to be their main revenue stream within the next 2 years, they are completely wrong!

    RIM is already talking about licencing their platform and or selling off their hardware. If RIM sells their hardware division, licences their platform to as many OEM's they can (and they have already been approached by many companies) they have an enormous chance to re-gain a much bigger market share. Additionally, their resources will be allocated to expansion of their back end which is very lucrative and have a tremendous potential for growth.

    They are already positioned for managing all mobile platforms using their redeveloped security backbone including VISA approved secure payment system (worth billions within the next 5-10 years), auto-industry based on their QNX platform, integration of their QNX mobile technology with everything that runs QNX (and there is a lot) and more...

    The mobile hardware is already becoming a "cut throat" industry were only Koreans and Chinese manufacturers will be able to make some money. RIM is heading towards service based approach. Look what has become of IBM? They are now a serviced based company with enormous profits. This were RIM is going and they have positioned themselves better than any mobile competitor out there.

    Long RIM since $7/share. Go RIM! GO!

  • Report this Comment On January 21, 2013, at 1:42 PM, jelp2 wrote:

    @infothatdoesnthelp

    You should consider writing fiction novels...you seem pretty good at it.

    RIM is back, and there are only a few of you bashers left. You should just bow out quietly now and you may be able to save your online presence.

    RIM is getting way too many stellar reviews for anyone to think twice about the drivel you write.

  • Report this Comment On January 21, 2013, at 2:17 PM, magnaman1969 wrote:

    Info that helps....

    Wow,,,you really are that pissed off ex rim employee aren't you.

    RIM is up to 18.50 today on toronto....giddy up!

  • Report this Comment On January 21, 2013, at 2:18 PM, magnaman1969 wrote:

    lol at RIM shorts....the pain is palpable.

  • Report this Comment On January 21, 2013, at 2:37 PM, m008 wrote:

    RIM is considering selling Hardware after BB10. That almost means BB10 will be a failure of device and even RIM is hopeless on BB10.

    Will any manufacture buy the license of BB10 OS? Definitely no, either Samsung or Nokia, no one will take BB10 OS. It’s a big risk/cost to produce any new BB10 OS device because the market is almost taken by Android/IOS. Few people will buy the new BB10 OS device. It’s no way to compete with Android devices /iPhone both in US/EU/Canada and emerging market.

  • Report this Comment On January 21, 2013, at 2:43 PM, myeerah wrote:

    Your info does not help

    Why don't you get your thoughts together and just submit one comment? You seem angry and obsessive with your thoughts on RIMM.

  • Report this Comment On January 21, 2013, at 2:50 PM, russkr wrote:

    With all due respect to the savvy investors who are going through the RIMM data with a fine toothed comb, there is more to the story. The mobile customer base is very conscious of the brand they are buying. Check Facebook or Twitter for the arguments that break out over friends' criticism of the type of phone that someone else bought. That's right - the phone that someone else bought, which won't affect anyone besides that user, will spark outrage by someone else who will debate whether it should have been an Apple or a Droid. No one ever says "you shoulda got a Blackberry." Despite the fundamentals of their stock, they will never regain the market share that they lost due to being labeled the boring, business-person's phone.

  • Report this Comment On January 21, 2013, at 2:53 PM, voytekp wrote:

    @ InfoThatHelp, I have been observing and reading your comments for some time now and this is the only time ever that I will address your comment as I find you very arrogant.

    You are correct on the providers support aspect when referring to older platforms, but you are dead wrong about the provider support for the new BB10 platform.

    Recently I have had an opportunity to discuss BB10 with a college of mine who is a sales representative for Bell ( I can't say for which region to protect her identity) and this is what she had to say:

    1. "Tremendous response to BB10 through the early registration process and we are talking thousands of customers... "

    Thousands of people have registered to get their hands on BB10 before it's even released!!!

    2. "BB10 phones are already in the pipeline, warehouses etc... and the inventory has been building up based on increasing number of early register-ants."

    This is excellent news proving the following:

    - BB10 will be available for purchase right after the January 30th announcement.

    - Since distribution channels are being pre-filled before the unveiling of BB10, it only means that BB10 does not seem to have any component constraints, there won't be any delay in sales and/or missed opportunities.

    3. "RIM has been approached by several companies (OEM's) to license their QNX platform to expand their platform brand but I can't mention their names at this time."

    This is best news of all for the following reasons:

    - RIM will be profiting from the licencing fees and that in return will provide them with another revenue stream. This is a reward for the two year time and money RIM has spent on developing the QNX/BB10 platform.

    - The platform will be getting more recognition and allow to expand the market share for RIM's platform, thus allowing this platform to compete better with the likes of Android and iOS platforms.

    But, most importantly:

    RIM is already talking about licencing their platform and or selling off their hardware. If RIM sells their hardware division and licences their platform to as many OEM's they can (and they have already been approached by many companies) they have an enormous chance to re-gain a much bigger market share.

    Additionally, their resources will be allocated to expansion of their back end which is very lucrative and have a tremendous potential for growth.

    They are already positioned for managing all mobile platforms using their redeveloped security backbone including VISA approved secure payment system (worth billions within the next 5-10 years), auto-industry based on their QNX platform, integration of their QNX mobile technology with everything that runs QNX (and there is a lot) and more...

    The mobile hardware is already becoming a "cut throat" industry were only Koreans and Chinese manufacturers will be able to make some money. RIM is heading towards service based approach. Look what has become of IBM? They are now a serviced based company with enormous profits. This were RIM is going and they have positioned themselves better than any mobile competitor out there.

    Long RIM since $7/share. Go RIM! GO!

  • Report this Comment On January 21, 2013, at 3:26 PM, H3D wrote:

    "When CEO Thorsten Heins announced that RIM's new BB10 OS will be here Jan. 30, the excitement was palpable."

    I think that was disbelief.

  • Report this Comment On January 21, 2013, at 7:18 PM, digitally404 wrote:

    @m008:

    I disagree. I don't believe people chose Android or Apple. What people really chose are fast, touch-based, mobile devices with a good browser, which I believe is what they longed for.

    Z10 satisifes those needs now. People will get 3 choices: Android, Apple, or Blackberry. And with the current blackberry outperforming A&A by nearly all metrics, it's going to be obvious what the best value for your money is.

    I'm buying the BB10 because it will be the best value for my money. I expect many others will do the same.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2206207, ~/Articles/ArticleHandler.aspx, 11/27/2014 6:48:57 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement