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Foolish Forecast: Calling on BlackBerry

By Anders Bylund - Updated Apr 5, 2017 at 7:58PM

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Views you can use to get clues on tomorrow's news.

If a BlackBerry bush falls in the forest but no one is there to hear it, does it make a sound? I guess that depends on cell-tower coverage and installed ringtones. Either way, we'll get a third-quarter update from BlackBerry maker Research In Motion (NASDAQ:RIMM) on Thursday night. Fellow Fool Alex Dumortier was left skeptical by the second-quarter report, and Dave Mock can find a few reasons to either buy or sell this stock. Let's find out why.

What Fools say:
Here's how Research In Motion's Motley Fool CAPS rating stacks up against some of its peers and competitors:

 

Market Cap (billions)

Trailing P/E Ratio

CAPS Rating

Google (NASDAQ:GOOG)

$102.4

19.6

***

Apple (NASDAQ:AAPL)

$84.8

17.8

****

Nokia (NYSE:NOK)

$62.0

8.6

****

Research In Motion

$22.6

12.8

**

Motorola (NYSE:MOT)

$10.0

N/A

**

Data taken from Motley Fool CAPS and Capital IQ, a division of Standard & Poor's, on Dec. 17.

"People aren't rushing out to buy a new $200 phone when their old phone is working just fine," says CAPS player Foliobuilder in support of a thumbs-down rating on RIM. "Meanwhile Apple is eating RIMM's lunch because they have the consumer side and are now encroaching on the enterprise side."

On the other hand, all-star CAPS player DemonDoug poses the rhetorical question, "What kind of company is most likely to survive a severe downturn, even a depression, and possible U$dollar deflation (and therefore beat the S&P 500)?" The answer: "One with no debt," like Research In Motion.

What management does:
The BlackBerry has certainly held its own against an onslaught of iPhones, Androids, and assorted lesser lights. What other multibillion-dollar seller of high-tech goods can still double both sales and earnings year over year these days?

Margins

6/07

9/07

12/07

3/08

5/08

8/08

Gross

53.6%

52.5%

51.6%

51.3%

51%

50.9%

Operating

26.5%

27.1%

27.8%

28.8%

29.2%

28.7%

Net

20.7%

20.7%

21.1%

21.5%

21.7%

21%

FCF/Revenue

16.7%

13%

16.3%

20.4%

12.2%

13.5%

Y-O-Y Growth

6/07

9/07

12/07

3/08

5/08

8/08

Revenue

57.6%

76.3%

89.6%

97.9%

104.5%

98.5%

Earnings

94.9%

116.5%

133.1%

104.9%

113.9%

101.6%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Research In Motion's unique market position is based on a huge and very adoring fan base. Sure, iPhones can run business applications. Of course you can connect to your company's Microsoft (NASDAQ:MSFT) Exchange servers with a humble Nokia or Motorola smartphone. But then you don't have a BlackBerry, dude, so it can't be real business. Customer perception is a powerful force, indeed. And customers perceive BlackBerry to be the business smartphone.

I'm curious to see how the experiment from Verizon Wireless, a joint venture between Vodafone and Verizon (NYSE:VZ), using BlackBerry Storm in consumer-oriented RIM phones is working out. I think chances of a massive success are about equal to the risk of a headlong pratfall, and the outcome here will set the tone for the next few years of growth -- or lack thereof. Tune in, then turn on or back out.

Nokia and Microsoft are Motley Fool Inside Value recommendations. Google is a Rule Breakers selection and Apple is a Stock Advisor pick. Try any of our Foolish newsletters today, free for 30 days. Or just sign up for a free CAPS account to learn more from fellow Fools who were quoted above. They might have more to tell you!

Fool contributor Anders Bylund is a Google shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is the Punxsutawney Phil of financial forecasting.

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Stocks Mentioned

BlackBerry Stock Quote
BlackBerry
BB
$6.93 (5.16%) $0.34
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$289.16 (2.43%) $6.86
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$119.70 (2.63%) $3.07
Apple Inc. Stock Quote
Apple Inc.
AAPL
$169.24 (2.62%) $4.32
Nokia Corporation Stock Quote
Nokia Corporation
NOK
$5.21 (2.56%) $0.13
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$44.84 (0.36%) $0.16
Motorola Solutions, Inc. Stock Quote
Motorola Solutions, Inc.
MSI
$253.00 (1.50%) $3.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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