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Sell Research In Motion Before It's Too Late

Rick Aristotle Munarriz
November 8, 2011

It's just another gloomy day in Research In Motion's (Nasdaq: RIMM  ) gradual descent into market indifference.

Barclays Capital's Jeff Kvaal became the latest analyst to talk down the BlackBerry maker this morning. Downgrading the battered smartphone maker at this juncture may seem like overkill, but lowering his price target on the stock from $40 to $23 is as sobering as it is overdue.

RIM isn't going anywhere on its own right now.

Bulls will argue that I'm not being fair. How can this possibly be the ceiling for a smartphone titan selling at just four times this year's projected profitability? Forget the stateside malaise. There are areas in Europe and Asia where the BlackBerry Bold 9900 is actually out of stock! Check out QNX, dude.

Here's the problem. Financial journalism hasn't always been kind to RIM during this demise, but the bearishness has been warranted. Who cares if RIM has 70 million accounts worldwide? Slowing unit shipments and fading market share tells anyone with a sense of inertia where this company is going.

It's going to get worse
RIM's global market share has fallen from 18.7% to 11.7% over the past year. Doing one thing right -- corporate email -- just isn't enough in a world where Apple (Nasdaq: AAPL  ) and Google's (Nasdaq: GOOG  ) Android sell Swiss army smartphones.

Consumers are choosing iOS and Android as their operating systems of choice, and companies are left with little choice but to play along. If there's any resistance from IT departments, nerd-approved Microsoft (Nasdaq: MSFT  ) is finally starting to flood the market with new Windows Phone devices. The Samsung Focus S and Focus Flash were announced yesterday, joining the introduction of T-Mobile's HTC Radar 4G last week.

Microsoft is going to put up a good fight, already earmarking billions in its battle to regaining relevance in wireless. Android handsets and iPhones are only gaining in popularity. Something's got to give -- and it's going to be RIM.

Sell before it's too late
Selling the invisible is easier than buying the inevitable, so it's in RIM's best financial interest to cash out now. Why wait for the off chance that its three better-financed rivals all slip?

Kvaal argues that delays in PlayBook 2.0 tablets and QNX phones are a problem. I suggest that it's actually an opportunity for RIM to punch out before it embarrasses itself again.

It takes two to tango, naturally. Microsoft has been a long-rumored suitor for RIM, but it just doesn't make sense now that it's throwing billions at Nokia (NYSE: