Challenges Aplenty For Research In Motion

| About: BlackBerry Ltd. (BBRY)

Canada's own Research In Motion (RIMM) seems to be facing the same challenge again and again. Its big gunner in the wireless phone industry is the ubiquitous (perhaps only in name, now) Blackberry smartphone line. The struggle in investors' mind is whether the company can rebound as Blackberry's stake in phone sales continues to erode.

The company is set to announce its fiscal fourth-quarter results late this week and analysts will be paying particularly close attention to Research In Motion's plan to counteract the popularity of the Apple (AAPL) produced iPhone.

Unfortunately for Research In Motion investors, it won't stop at just the iPhone. The rising popularity of Google (GOOG) Android-platform phones just means another wall to block them out of the business.

That's not to say Blackberry sales haven't buoyed Research In Motion to popularity. It has sold 524 million shares of it stock, and any serious smartphone guru can enlighten you to the distinct features of Blackberry. No one is suggesting that Blackberry is not a player in the game. It just seems to be the newest one to fade out. That prognosis couldn't come at a worse time as Nielsen now estimates half of US cell phone owners are using smart phones. The market is growing and the Blackberry platform may find itself left in the bushes.

Research In Motion price is down to about $13.73, which is 75% lower than its price at this time last year, a year in which the company posted a profit of $934 million in the fourth quarter alone. The company predicted movement of up to 12 million units of its Blackberry phones, though analysts now predict that the resulting number will be much lower. Experts now point to a $12 target price for the end of the year, continuing the spiral downward.

Yes, things have not been great. One could try and pinpoint events in which Research In Motion started to lose its way. The three-day Blackberry service black-out last October would certainly be one. The forced delay of the release of its PlayBook tablet would be another. But let's keep it to smart phones for now.

How bad have things really gotten, though? Try this one on for size. Barclay analyst Jeff Kvaal headlined his most recent report on Research In Motion as "Grim And Getting Grimmer". Analysts have been following suit and it's near impossible to find yourself a Research In Motion article today that has the word "buy" anywhere near it, unless its referring to a competitor.

Recent releases haven't helped much later. Experts are now saying that the initial buying power of the newly released Blackberry 7 series, including the Blackberry Bold 9900, have tapered off. Results were not as good as anticipated and there's little hope it will pick up after so much time.

Insiders blame lack of innovation. Blackberry phones simply look and feel too similar to their older versions, while iPhones and Androids continue to introduce sleeker designs and features. User satisfaction is down to an all-time low at 16% answering "completely satisfied".

The company introduced a new CEO, Thorston Heins, only two months ago in an attempt to turn things around. Heins, a former Siemens (SI) executive, vowed to streamline Research In Motion operations. He also promised to appoint a new chief marketing officer, but has yet to deliver on said promise. It's no wonder then, that experts are unsure he'll have the capacity to turn things around for the struggling company. Moreover, he'll be doing it without the help of familiar faces around Research In Motion, as he announced high-level lay offs to begin the same day as the announcement of earnings.

Heins has made increasing the Blackberry phone popularity a main objective. This will certainly be difficult, as the industry is not exactly opening its doors for more vendors. Microsoft (MSFT) does not release its sales figure for its phones, but experts pinned sales at 2.7 million for the fourth quarter, representing another threat to Blackberry's shrinking market space. Needless to say, Heins and Research In Motion have their work cut out for them moving forward.

You'll want to obviously look into the fourth quarter results, which by the time you're reading this have probably been announced. If experts are correct in their negative-leaning predictions, Research In Motion will have a tough road to face moving forward. Already down 75% might lead some investors to think buy at the low price, but there is not much on the way for Research In Motion that shines.

If you had to find a silver lining in Research In Motion's current status, it would have to be that they aren't involved in the war going on between Apple and Google at the top. Both companies are now forced to spend a large portion of its money and time into developing their products. Users will be disappointed with new iPhone releases that do not feature large, innovative alterations. And their high expectations are certainly not going to end anytime soon.

I can't in the right mind encourage you to invest with Research In Motion. I'd like to, believe me, because I'm a Blackberry user myself. I, along with a small contingent of buyers, still prefer the keyboard option and still believe Blackberry is the best messaging phone on the market.

I'll still buy Blackberry. At least for now I'll be buying Blackberry. It may come to a point where an iPhone, Android or Windows Phone is just simply more beneficial to own. They often cost about the same. If it comes to that point, and Blackberry loses a faithful buyer like myself, who will they have left? Certainly, it seems, Blackberry and Research In Motion are not drawing in anybody new.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.