It has become accepted wisdom that Apple's
Well, almost nothing. Research In Motion's
But is it really? Management's confidence is a good sign, and so may be RIM's inventory buildup. During the typically blowout Christmas quarter, Research In Motion actually grew inventory by almost 4%. Sure, sales rose nearly 11% over the same period, but manufacturers usually clear out their stockpiles of consumer items during the holidays to make room for new models in the new year.
Promising as that is, we won't know whether Research In Motion is too optimistic until we see its fiscal 2005 annual report. In the footnotes therein -- it was footnote No. 5 last year -- RIM will provide a more thorough breakdown for how inventory is divided between raw materials, works in process, and finished goods. Companies that grow raw materials and works in process while trimming finished goods are experiencing what legendary investor and author Thornton O'Glove called "positive inventory divergence." It's a powerful indicator that shows, in effect, that finished goods can't be made fast enough to satisfy demand. (How powerful, you ask? Tom Gardner has generated massive returns for subscribers to Motley Fool Hidden Gems by finding and investing in companies with positive inventory divergence. Take a risk-free trial today.)
Having teamed with David Gardner to write the investing case for rival palmOne
Get hooked on these Fool tech takes:
- Research In Motion has already passed "Go," but I'll bet it will collect quite a bit more than $200.
- The BlackBerry came up roses in settling its patent litigation with NTP.
- When Microsoft
(NASDAQ:MSFT)deals, Nokia (NYSE:NOK)wins. And that's not good news for smartphone makers like Research In Motion.
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Fool contributor Tim Beyers does a lot of research, but never in motion. That would make him, uh, dizzy. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.