Resolve to keep your portfolio healthy: Help us pick the worst stock for 2008.
The BlackBerry, Research In Motion's
When roses lose their blooms
Unfortunately, there's plenty to worry about when it comes to the company's current state. Three big issues loom in its path, only one of which is anywhere close to being within the company's own sphere of influence. Currently staring Research In Motion in the face are problems related to:
- Changing consumer tastes
- Stretched valuation
- General economic woes.
There are times when the light at the end of the tunnel really is an oncoming train. Considering these challenges, the big question isn't whether or not 2008 will be a tough year for Research In Motion, it's: How tough will 2008 be?
For instance, at one time, Motorola
Now, everyone is taking aim at Research In Motion and its BlackBerry. Last year's salvo by Apple
Product wars are costly
What are the chances that the current generation of BlackBerries will emerge from this assault unscathed? Frankly, somewhere between slim and none. Even if Research In Motion does successfully fight history and remain on top, it won't be easy or cheap to stay there. "Me, too"-style innovation rarely wins converts, and one-upmanship can get very expensive, very fast.
To raise the stakes even higher, Google's
Even worse, the need for constant spending on R&D just to keep up can turn a great business into a dreadful stock to own. In the face of such strong, technically savvy current and emerging competition, does Research In Motion really deserve a price-to-earnings ratio of around 50? Such a frothy multiple might make sense for a rapidly growing company with nothing but open space ahead of it, but not for the leader in a maturing, highly competitive industry.
As if that weren't bad enough
Finally, there's the fact that the economy seems to be taking a turn for the worse. When technology bellwether Cisco
If Cisco's woes are harbingers of problems to come, can a slowdown in the market for productivity-enhancement tools like smartphones be far behind?
With these headwinds blowing against it, I can't possibly see how 2008 will be anything less than a disaster for Research In Motion. If you agree, then join us for free at Motley Fool CAPS, and add your underperform rating alongside mine. If enough of us speak with one mind on its stock, CAPS will give Research In Motion the one-star basement rating it so greatly deserves. So join today and get rating!
At the time of publication, Fool contributor Chuck Saletta did not own shares of any company mentioned in this article. Palm is a Motley Fool Stock Advisor selection. The Fool has a disclosure policy.