For years, Research In Motion (RIMM) was the Wall Street darling, and for good reason. Quarter after quarter the company delivered startling results, as its BlackBerry took over conventional phones, driving its stock to the stratosphere—even outperforming Apple (AAPL). But as the company failed to meet revenue expectations on June 16th, citing excess inventories and new product delays, the love affair was over. In the five days following the earnings announcement, the stock lost 30% of its value, as investors cashed out.
Source: Yahoo Finance
In the article, “A Second Chance to Profit From RIMM’s Pain,” Volatility Trader claims that the stock fundamentals look appealing despite all the recent bad news. However, a more compelling reason why the stock is a buy is the new product RIMM should release by the end of this summer, the BlackBerry 9900.
The BlackBerry 9900 may be the game changer that Research In Motion has been hoping for. The BlackBerry 9900 has a lot of new features that set it apart from previous BlackBerrys and is comparable to leading phones on the market. First of all, it features a capacitive touchscreen (similar to that of the iPhone). Second, its form factor is the standard BlackBerry candy bar, but it is much thinner than its predecessors. Third, RIMM has added more memory (8 gigs), a faster processor (1.2 MHz), and an updated operating system (OS 7), which make the phone more responsive and user-friendly. When put all together, the BlackBerry 9900 has all the features that BlackBerry owners fell in love with the first time around, and perhaps enough new hardware to entice new users to make the switch.
Just recently, a prototype of the BlackBerry 9900 was released to Engadget.com, where it was met with positive reviews. Engadget’s Jacob Schulman even went as far as to write,
RIM's BlackBerry 9900 is the device that the BlackBerry diehards have been hoping, wishing, and waiting for since the original Bold launched way back in 2008.
But, unfortunately for RIMM, not every consumer is a BlackBerry fan boy, so to gain back serious market share from Apple and Google (GOOG),
RIM desperately needs to get something radically new out the door as soon as humanly possible, or else users will continue flocking to other platforms.
The introduction of the BlackBerry 9900 may be the beginning of a turnaround for RIMM, but in order for its stock to revisit its former glory, the company must innovate fundamentally different smartphones down the road.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.