RIM's Crisis Could Be an Opportunity, Again

It was just two weeks ago today that I was fussing about the huge Research in Motion (RIMM) advertising GRPs (see prior post “Worried about RIM” Oct 19-09), and what the omnipresent campaign must mean about RIM’s competitive environment. It was an ominous sign I figured. Since that day, the stock is off about C$10 (14%). More to come, it appears.

Technical analysts gave the stock a drubbing last week. And earlier Monday, Citibank’s analyst concluded that although the stock was a “buy” last Friday, RIM’s lock on the enterprise market was finally going to crack. This time for real. Time for a “sell” rating.

Over the past decade, RIM’s dominance in the enterprise market was going to be challenged by Palm (PALM) (think of the Palm 7), Moto’s (MOT) Q, Nokia’s (NOK) flavour of the year, and then more recently Apple's (AAPL) iPhone. But that hasn’t stopped RIM’s impressive revenue growth.

That could all change, but we’ve seen this movie before.

If the stock gets much lower, this most recent crisis of confidence will present exactly the same buying opportunity as January 2008, July 2006, March 2005, September 2002, September 2001, May 2001…to name just a few.

Disclosure - I own RIMM

Comments

[wingfootedg...:]

setting up for a short squeeze --- but the risk is committing too early. no bounce at all since earnings.

disclosure - bought post earnings but have been stopped out of entire position.

Nov 03 03:33 AM

[Martin Hill:]

RIM investors are right to be worried:
- iPhone sales went from half RIM's sales a quarter ago to almost matching (7.4 million versus 8.3 million) in q3 2009.
- From a platform perspective, Apple has already buried RIM to the tune of approx 11-12 million iPhone OS devices (iPhone & iPod Touch) in q3 2009.
- In two and a bit years the iPhone OS active installed base is already 57 million strong, more than RIM has managed in 10 years.
- RIM’s profit share of the total cellphone market of 15% sounds fantastic until you realise that Apple’s share (not counting the iPod Touch) is 20% - of the whole flippn’ cellphone market! (not just smartphones)
- 100,000 iPhone apps vs 2,000 Blackberry apps (and no, they are definitely not all fart apps)
- 100 million iTunes credit card accounts vs 32 million Blackberry subscribers (not a direct comparison but useful nonetheless)

All this and Apple isn't even yet on half the carriers that RIM supplies.

-Mart

Nov 03 04:20 AM

[aaavoid:]

As long as the smartphone market keep growing, there's still many many smartphones for rimm to sell. Consumers' tastes varies, some like touch screen, some still wants keyboard, some like black, some likes white. I had iphone before, but sold it within 2 weeks, i simply prefer keyboard to touch screen, its that simple. My old man had a hard time trying to operate an iphone.

Buy the dip.

Nov 03 05:54 AM

[rich168:]

RIMM's hold of the enterprise market looks to be under competitive threat

which would bring pricing lower
and margins lower for RIMM

thus negatively affecting future earnings

I'm sure enterprise accounts of RIMM are negotiating for a cut in charges.

RIMM focused on mobile email

Apple focused delivering unparalleled mobile multimedia experience
with mobile email and or messaging just an added bonus.

Nov 03 06:45 AM

[Roger Knights:]

"we’ve seen this movie before. If the stock gets much lower, this most recent crisis of confidence will present exactly the same buying opportunity as January 2008, July 2006, March 2005, September 2002, September 2001, May 2001…to name just a few."

This time it's different.

Nov 03 07:00 AM

[JamesApple:]

Rim has less chances to resurrect than the rise of the Third Reich.

When a company is heading for bankruptcy, don't buy it. Rim has no compelling product or service offerings to differentiate it from a huge crowd of smartphones which all provide the same set of functions and form factors. Why should Rim be favored to be priced above Motorola, Nokia, Palm, Samsung, LG, Apple? Rim has not been able to do a single damn thing to earn its keep for many years notably still churning out the same old tired outdated obsolete blackberrys wrapped in new skin under new names. Even Rolls Royce cannot survive selling the same old vehicle for so many years. Amidst being trumped by iPhone Rim went shopping for a NHL hockey team, totally messed up the opportunity in acquiring the crucial competitive Nortel LTE technologies and Nortel was also a Canadian company!! Rim is a total failure in product offerings as much as a company run amok by totally incompetent and chaotic dysfunctional management. It is fitting that Citi rates Rim a Sell downgraded from a Buy. Even without the doom on Rim from iPhone and Android, Rim should self implode under its own dead weight from failure to operate as an ongoing business concern. Rim seems heading for bankruptcy like its Canadian counterpart Nortel.

Nov 03 09:51 AM

[Wireless Wiz:]

James, how many times can you write the same thing? Why waste time, just cute and paste from every other comment you have ever made.

The weakness in RIM shares is overdone but only time will show this. When the iPhone was introduced, it was the end for RIM. When the Pre was introduced, it was the end of RIM. Now the Droid is next and it's, once again, the end of RIM. Yet through all of these introductions, RIM's business has gotten stronger each time and this quarter they guide to ship more devices than ever before. Yes, the severity ASP decline is worrisome, but it makes sense given the end of the quarter is Nov 30 and the new Storm and Bold (much higher ASP) aren't on sale for most of the quarter. ASPs will increase next quarter. Besides, their strategy is to make these devices mass market items, so what you lose in margin, you make up for in volumes. Seems smart when the land grab is on! Droid won't kill RIM if the iPhone made RIM stronger. The tailwinds in the market means all these companies should do well with varying degrees of success. I just wish James would come up with something original for once instead of repetitive drivel.


On Nov 03 09:51 AM JamesApple wrote:

> Rim has less chances to resurrect than the rise of the Third Reich.
>
>
> When a company is heading for bankruptcy, don't buy it. Rim has no
> compelling product or service offerings to differentiate it from
> a huge crowd of smartphones which all provide the same set of functions
> and form factors. Why should Rim be favored to be priced above Motorola,
> Nokia, Palm, Samsung, LG, Apple? Rim has not been able to do a single
> damn thing to earn its keep for many years notably still churning
> out the same old tired outdated obsolete blackberrys wrapped in new
> skin under new names. Even Rolls Royce cannot survive selling the
> same old vehicle for so many years. Amidst being trumped by iPhone
> Rim went shopping for a NHL hockey team, totally messed up the opportunity
> in acquiring the crucial competitive Nortel LTE technologies and
> Nortel was also a Canadian company!! Rim is a total failure in product
> offerings as much as a company run amok by totally incompetent and
> chaotic dysfunctional management. It is fitting that Citi rates Rim
> a Sell downgraded from a Buy. Even without the doom on Rim from iPhone
> and Android, Rim should self implode under its own dead weight from
> failure to operate as an ongoing business concern. Rim seems heading
> for bankruptcy like its Canadian counterpart Nortel.

Nov 03 10:30 AM

[JamesApple:]

Rim's ASP is going to be driven to the ground. iPhone addresses a general public but Android is directly addressing the enterprise business taking aim at Rim's core business.

Rim had been singing the same old tired tunes for so many years with absolutely nothing new to show. iPhone has 30% market share from 2% in 2007. Momentum will carry iPhone to capture 70% of the market as Android sweeps Rim into the corner capturing the remaining market shares.

Nov 03 10:41 AM

[JamesApple:]

It's the same old story. Rimm is going bankrupt, but the process takes time, probably by year 2012.

Nov 03 10:46 AM

[Frank Castle:]

*yawn* I see James is still asleep.

Does anyone on this blog even work in a large corporation? Enterprise Mobility in 2009 is so much more then if a device can do email and connect to Exchange. Whoop-De-F-Doo. That was great in 2001 when RIM made it work. Everyone is all excited about Microsoft ActiveSync? It's functional but provides NADA for managing a growing enterprise mobile deployment.

How do you intergrate with your PBX for your other critical applications? Sharepoint, Unified Messaging? Trust me they are not on Android and Apple only if they've opened the API. Everything on iPhone is up to a company to make an App, doesn't help none of your Apps are allowed to run in the background which something like Unified Messaging will require so your presence is always on.

*ALL* these other devices only have a connect to Exchange via ActiveSync - it's like a car with no wheels. RIM's Blackberry server is a total solution that is STILL not matched. It allows application deployment, connection to other enterprise resources (internal websites, Sharepoint etc) as well has a number of Unified Messaging solutions.

Everyone is so focused on the DEVICE they fail to grasp how a company will oversee that asset. But I forget - no one has regulatory concerns anymore, it's all about bringing your own smartphone to work and it just works. Unless one of the third party solutions gets traction and provides the tools enterprise wants and needs (Good, MobileIron, Trust Digital, Zenprise etc etc) You will not see anyone moving off their Blackberry backend. Do you honestly think any CIO is concerned that uses can't use Apps that have nothing to do with driving the business? Don't get lost in the explosion of CONSUMER mobility and think the same things matter in Enterprise.

RIM keeps pushing their enterprise solutions, it's feature set is beyond anything on the market unless all you care about is mobile email. For any company that's been on Blackberry since the early 2000's email is no longer the main draw. It's all about extension, and to do that you need SECURITY.

Has iPhone or Android proven anything in that?

Let me know when that happens.

Nov 03 11:46 AM

[rich168:]

While Rimm is indeed strong at the enterprise market.

Will CIOs continue to pay the premium?

I'm sure their is pricing pressure on the enterprise market.
which can eat into RIMMs margins

Nov 03 11:03 PM

[oghowie:]

i don't think Rimm will lose the enterprise market, but all the growth these days is in the consumer market and Rimm is definitely losing that race.

Just look at the Storm 2. Verizon is putting most of their advertising dollars into the Droid, because the Storm 2 just isn't good enough.

I already know 3 friends who dropped their BBs for iPhones. The only people that I know who have stuck with BBs are forced to because their companies currently don't support iPhones.

Nov 04 02:07 AM

[LaChic:]

you know this exactly what the problem is, just because the stock is down does not mean is a buy, Haven't you heard, "Just because the stock is cheap does not mean it can get any cheaper'?

I totally disagree with the author, this stock was a sell at 85 and it is a sell now. Listen, I think we can go higher in the market some more for a bit more, but the trend for this market is to crash back down to earth, is going to be fast and furious, gold and silver should be bought, back up the truck on those.

There is no question in my mind when the rubber band finally snaps you will see heavy selling. Believe nothing about this economy, we are in the dumps still and will be in the dumps for many years to come.

Nov 04 02:07 PM