Ready To Jump On The Research In Motion Train? You Must Be Insane

| About: BlackBerry Ltd. (BBRY)

I have not traded Research in Motion (RIMM) in some time now. In fact, a few months ago I publicly said that it was very unlikely that we'd see RIMM recover. Turns out that the stock (see the 5 year chart later in this post) has done very well in the past few months based on hopes that the new BlackBerry10 would be a game changer.

Yesterday, the company unveiled BlackBerry10, announced it would be changing the company's name to BlackBerry and even its ticker to BBRY.

Time To Rethink My Position On BlackBerry (NASDAQ:BBRY)?

I've not been a believer and I'm not about to change. Why? There are so many reasons.

-Apps rule: Having the best hardware is important but having the apps is critical. Apple and Android feature hundreds of thousands of apps and while BlackBerry expects to launch with 70K apps, it's not even close. There will be several of the top apps but many of the critical ones such as YouTube, Google Maps, Instagram have so far refused to commit to building a BlackBerry map.

-There's No Reason To Switch: BlackBerry is pulling off all the steps (including a Super Bowl ad) to make this a success but the fact is that even in its most recent presentation, BlackBerry was not able to provide any solid reasons why users would want to switch. Their best reason is that some users have 2 phones (BlackBerry for work and iPhone/Android for personal stuff).. The fact is that there is little reason why users of those phones would want to switch.

-It's Just Too Late: Just ask Microsoft (NASDAQ:MSFT) how things have been going with its Windows mobile strategy. The network effect creates major incentives for developers to keep focusing on Android and iOS devices and for users to stick to what they know and where their friends and family are.

-Users Are Leaving Or Preparing To Do So: A large portion of BlackBerry's users are corporate users in governments and large corporations. Those react more slowly and many governments and large banks are currently testing and preparing to start migrating to other platforms. Just look at how revenues have been progressing in the past few quarters… it's not looking good:

RIMM Revenue Quarterly YoY Growth Chart

RIMM Revenue Quarterly YoY Growth data by YCharts

I'm thinking of making a longer term speculative trade on RIM. I just don't see much upside here, I don't believe BBM10 has a shot and analysts don't either. They expect the company to lose money both this year and in 2014… so P/E ratios are very difficult/impossible to use. Still, I think there is a fair possibility that the stock will suffer major losses in the next few months. The company is expected to report its next earnings at the end of March which will certainly give us a good indication of how sales are going. Limited upside and plenty of downside? Seems like a good short to consider.. I'm still skeptical as the risk of taking a longer term position is significant but I'll certainly keep posted.

Here are some numbers:

Ticker Name Price EPS PE Ratio PE Next Year Return YTD Sales Growth Analyst rating Book Value Beta
RIMM Research In Motion Ltd 13.78 2.22 N/A N/A 31.93 -7.39 2.46 17.82 1

And the chart:

Disclaimer: No position on RIMM