Where Will Research In Motion Go From Here?

Research In Motion (NASDAQ: BBRY  ) is getting a lot of attention these days. For one thing, the stock has been resurrected. Shares are up more than 50% year to date on renewed hopes that its BlackBerry 10 operating system can save the company from ruin. But before you throw your inhibitions to the wind and jump on the hype wagon, let's flesh out the facts.

Dangling the carrot
On Wednesday, Research In Motion unveiled an updated version of its business software service, known as BlackBerry Enterprise Service 10. This is a key product launch for the company as it struggles to keep hold of its enterprise customers. One of the most noteworthy additions to the streamlined platform is that it works across operating systems. That means employers using BlackBerry Enterprise Service 10 are able to securely manage employees' smartphones, be it iPhones running iOS, BlackBerry handhelds, or Android-powered devices.

This is something RIM needed to do a long time ago, as more companies began swapping BlackBerrys for competing gadgets. Last year, Apple (NASDAQ: AAPL  ) stole a massive enterprise customer from RIM when Halliburton, one of the world's largest oilfield-services companies, agreed to trade in its employees' BlackBerry smartphones for Apple's iPhones. That's just one company, but it's indicative of a trend of large company and government accounts that shifted from BlackBerry in 2012.

However, it's a new year, and loyal users are hoping that a new, more competitive RIM will emerge from the ashes. The device maker is attempting to entice new customers by offering a free 60-day trial of its updated enterprise service.

According to the company, about 1,600 businesses in North America are planning to participate in a training program for RIM's new BlackBerry Enterprise Service 10. In addition, The Wall Street Journal reports, "130 corporate customers have been testing an early version of the service." Importantly, RIM released this mobile enterprise application as a lead-in to next week's long overdue debut of its new operating system, BlackBerry 10.

Welcome back to life, RIM. Please keep your hands inside the vehicle at all times.

At long last, RIM looks to be taking destiny into its own hands. However, the question now is: Will it be enough? The company continues to bleed market share to competitors Apple and Google (NASDAQ: GOOGL  ) . In fact, RIM closed out 2012 with just 1.6% of the U.S. smartphone market during December, according to ComTech. For comparison, the search giant's Android operating system grabbed 44.2% of smartphone sales, while Apple led with more than 51% of the market.

Don't call it a comeback
After a series of delays, it finally looks as if BlackBerry 10 will show its face. RIM is on track to release the long-awaited mobile operating system on Jan. 30. On top of that, the company plans to introduce at least six separate BlackBerry 10 devices this year, as RIM looks to grow its subscriber base. This, along with reports that Lenovo  may make a bid for the company, has stoked interest in the stock, though it took a bit of a break today as speculation of a Lenovo bid cools.

Shares of RIM hit a 52-week high of $18.32 last week, before today's retreat back into the $16 range as investors reacted to the rumored takeover buzz. Interest from Lenovo Group, new smartphones and software releases, and possible licensing deals are all very encouraging for Research In Motion. However, the disclaimer for investors is that where there is hype, there is often inflated expectations.

That's not to say I don't admire the investors who have been long RIM from the beginning. I'm just not confident that these developments can restore RIM to the greatness it once knew. If you're a current RIM shareholder, I'd love to hear from you. Drop me a note in the comments section below and tell the Fool community where you think the stock will go in the year ahead.

Research In Motion has a lot riding on its new BlackBerry 10 debut. But with added competition from tech giant Apple, it could be too little too late for the BlackBerry maker. However, there is a separate debate raging as to whether Apple remains a buy.

The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and, more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

 
 
 
 
 
 
 
 
 
 

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

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 28, 2013, at 9:30 PM, TimmyBee123 wrote:

    Where will RIM be in one years time? Nobody knows for sure but here are some things to ponder.

    RIM is a small company. It does not need huge market share to be successful. Plus, if it has a high ASP, it can be profitable with lower numbers.

    If they can get between 10 and 15% market share back, I think that would be a good start.

    Consider this. Many reviewers who were formerly very bearish on RIM have seen their new phones, or the older hardwared dev alpha devices and said they were very good. One said they were better than any Android phone out there and he was looking at RIM's developer devices. Others have said they will be as good as iPhones.

    Obviously, not everyone will agree but if you can get 10% of iPhone owners and 10% of Android users to agree and switch, RIM then has over 10% of the market share.

    Also, realize that RIM is setting up other revenue streams that it formerly didn't have. They will provid the Secure Element Management portion of many carriers' electronic wallet transactions that are expected to take off in the next few years. I'm sure they are not going to do that for free.

    RIM also owns QNX, which is being used in various automobiles as well as nuclear reactors and other situations where stability is necessary.

    If M2M explodes, RIM might be positioned to make a lot of money there.

    And thirdly, they have a secure network that they can lease to corporations and governments that need to pass information securely. Think health records, for instance.

    RIM has a lot of verticals that they are getting their products set up for and smartphones may eventually be a much smaller part of the revenue stream instead of the majority.

  • Report this Comment On January 28, 2013, at 9:43 PM, digitally404 wrote:

    RIM is not out to take out Apple. Because, as we all know, if RIM had a chance of stealing just 50% of all the market share back from Apple and Android, the share price would be ~$100, dare I say even $200.

    I.e. It would become a 90B company (which is still only 20% of Apple's market cap).

    Let's get a correct frame of reference here. RIM's current valuation sits at ~10B. A measly 5% return would be $125M in gross profit per quarter. Current revenues sit at around ~$3B / quarter.

    Really? $125M/quarter of net income post-release of BB10? How hard is it going to be to achieve this? 80 Million subscribers.. Even if 10% are starved for an upgrade, and the company earns $15/user, you're looking at a justified stock price.

    This stock price is grossly undervalued, as most analysts may expect a 25-50% upgrades from its current subscriber base, and this is not including "stealing" market share from Apple/Android.

    As most analysts point out, you're looking at a $30/share stock by March.

  • Report this Comment On January 28, 2013, at 9:46 PM, digitally404 wrote:

    @TimmyBee123

    I 100% agree with your post. I came a tad too late as I was writing mine.

  • Report this Comment On January 28, 2013, at 11:13 PM, TimKnows wrote:

    I dumped my iPhone and pre-ordered the new BlackBerry Z10,, the first decent phone in years. Apple makes such boring products with too many limitations, Z10 is sleek and fast, much better in every way.

  • Report this Comment On January 28, 2013, at 11:47 PM, MPF94025 wrote:

    Thanks for an open perspective on RIMM. I was unsure that I'd ever see one on MF. It's timely, as there is so much uncertainty.

    I thought it would be interesting to see how Apple stock performed at the time the iPhone was release in June 2007 (at least per Wikipedia). It was interesting to see just how closely RIMM and Apple tracked each other's performance at the time. Although Apple rose slightly in the weeks before the iPhone release, Apple stock didn't take off right away, was actually only mildly increasing for months. It was only after the market crashed in 2008 that RIMM and Apple so markedly deviated. Less for me is that even with a successful launch with a dynamic new phone using BB10, I'm not expecting to see the stock skyrocket. As an aside, I called the local AT&T store to see when the new Z10 would be available. As expected there was no idea: however, I also asked how many inquiries there had been. The response: a few the day before, and I was the only one asking mid-day on the day I called. While I'm planning on getting the new Z10 ASAP, I'm not expecting big lines.

    Regarding current BB users, there have been a number of posts by current BB users who have seen the Z10: while bemoaning the lack of a keypad, the sentiment was pretty universal: existing BB users were planning on getting the new phones.

    As someone who uses both a BB and iPhone, I still find the BB indispensable for communication. I can keep 3 months of email on my BB, about 10 days on my iPhone. Search capabilities are vastly superior on the BB, and it is easy to track down a colleague by phone, email, or text more easily with the BB. The iPhone wins hands down at variety of apps. Having said that, the BB version of many apps is much faster, and frankly easier to use. (Worldmate, Fidelity, etc). Battery life also on the BB is far better. To me, these are major issues (battery life may be a big loser with the larger BB screen, but we'll see).

    While Thorsten Hein's mgmt so far seems solid, there are some positive and negative things that appear. I'm glad he didn't try to rush out a broken product in time for the Holidays: THAT would have been the end of RIM. Score 1 for that decision. He also seems to be developing a portfolio of useful tools: comparing RIM to Palm is likely comparing a triple chain road bike to a training bike. And let's not forget that HP has not proven itself to be the most well run organization over the last few years.

    I'm hopeful for RIM and all of us that BB10 has something that will make our lives easier. Let's face it: the iPhone is "cool" and useful, but stale. Apple is now running ads about how great it is to turn on/off the phone at different periods of the day: that's already available on the BB! I don't have an Android phone and frankly with > 150 iPhone apps can't think of a single app that Android has Apple can't match: I also don't need the security headaches that come along with Android. Furthermore, there isn't so much that is "cool" about Android any more. The only "cool" factor are the phones it is available with (Kudos to Samsung).

    RIM messed up badly by letting so many corporate/gov't agencies defect to Apple over the last 12 months. I do think they could be won back over, as some RIM Board members have said, with the 3 to 4 year plan to restore RIM to greatness. I don't see any organization rushing to use Android phones. As a physician, with the current focus on HIPAA laws, our hospital won't permit users to handle email or other patient related information on Android devices. How is that for confidence in the product?

    Regarding Goole/Android, (and Facebook) for that matter, I have an issue with any major company whose business model is built upon exploiting the personal information of its users . Blackberry is built on protecting it.

    I am not a financial analyst, but enjoy technology, and see the ecosystem here coming down to RIM (if they can execute, ie news phones delivered w/o backlog, no battery problems, no system outages) versus Android, of security and "real world applications)" built on QNX vs a "cool" product. The RIM phones will have to be as compelling as the Samsung phones: it that occurs I think RIM has a fighting chance. If not, it is toast.

    As a final thought, I think RIM sees the Jan 30th release as a battle within a war and don't see their world ending with a slow product release. This is perhaps they are not fanning the flames as Apple has by allowing users to preorder the Z10 (curious they haven't, as it would be a solid indicator of how many current users are planning on switching very soon). I'm one, ready to put my Torch "on ice".

    As far as other competitors, the Windows phone is nothing amazing based on time I've used it in the Microsoft store. And having just purchased a netbook with Windows 8 I'm certainly not blown away. Microsoft just doesn't get the user experience (Vista, Windows 8, need I say more....).

    I own Apple and RIM. Based on the last few days, I think we'll see a solid RIM product on Jan 30th, a stable stock price (perhaps a dip into the mid to lower teens), and if it is solid a slow steady increase (as with the iPhone in June 2007). If the news on Jan 30th is a revelation, a modest jump until sales figures come in. If the new on Jan 30th is unexciting (and I don't think it will be, RIM will be a sad casualty of bad management that it's Board tolerated for far too long.)

    Thanks again for the objective comments on RIM. There was a time Apple was left for dead as well.

  • Report this Comment On January 29, 2013, at 12:18 AM, goog2013 wrote:

    RIMM is a stock for trade, not for invest. Anyone not seeing that should leave stock market.

    In the long run, RIMM would probably have no chance to success, it just does not have any advantage competing vs. Apple/Google/Msft(WP8).

    Eventually, a cellphone OS will be the same as pad/notebook/desktop OS. It is already getting close to there.

    However, I agree RIMM trading at 15 is fairly valued even if BB10 fails.

    And there are so many RIMM stock shorters, so short squeeze could push it to 20+, but I doubt it could hold.

  • Report this Comment On January 29, 2013, at 5:42 AM, bb10fool wrote:

    I am following the news from fool closely, i have read every article that they post about bb10 and other smartphone makers, they've stop being skeptical for a while but i see a commentator still posting irrelevant information. If you short, you are short and there is no way coming back, you should have analyzed better the company and the product, don't waste your time trying to make longs to sell the stock, it is not happening. Tomorrow is the big day, my suggestion is cover up your short asap.

  • Report this Comment On January 29, 2013, at 11:26 AM, MPF94025 wrote:

    "All data are storage and maintained on servers, never on the devices." is inaccurate. Just turn off your internet connection. The email doesn't disappear. If you have sensitive information, it's "out there" if the phone is stolen.

    It is one of the reasons that BB, and now Apple, enable encryption of devices. BB has a simple checkbox that enables encryption/decryption. I don't understand the mechanisms for Apple's encryption, but it too has some encryption capacity built in. Furthermore, BB and Apple enable encryption of device backups.

    Android may had some sort of encryption, but apparently it is not secure enough for at least some in the health care industry dealing with patient records. This is fact.

    If there is information otherwise, that is accurate, I'd be happy toe learn more.

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