Some of the lessons in life are learned the hard way. In some cases, these lessons can stretch for many frustrating years without ever coming to an end. Research In Motion (RIMM) is currently taking these lessons and battling to keep its shop open, even as its stock plunged to a new low of less than $14.
The company is not only struggling for survival, but it is in a state of denial. When it comes to handling its resources, technology and planning for the future, RIM has been incredibly short-sighted. This was evident way back in January 2007, when Apple (AAPL) released the first generation iPhone. RIM had dismissed the iPhone as a toy which the company didn't need to worry too much about, as BlackBerry devices reigned supreme then.
Google (GOOG) has risen sharply, thanks to cheaper Android devices, and Apple's devices are popular enough to create riots in countries like China. With Microsoft (MSFT) also being bullish about forging its way through mobile markets, the battle of smartphones is far from over.
Just a few years ago, Research In Motion was the leader of the smartphone industry. I still remember the days when not having a BlackBerry device was akin to not being able to socialize and communicate with one's peers. Those were the days when the 'BB' was one's personal digital and communication assistant. However, times have changed, and Apple's iPhones have grown astonishingly popular.
Optimistic news related to RIM is almost rare these days, and that could be one of the reasons why the stock is plummeting. While RIM's stock rose by 7%, news sites were quick to point out that the competition between Apple and RIM is almost over, and that it is time for RIM to close shop. Such pessimistic news can have an impact on a company's stock as well. Nobody wants to invest in a company whose stock is plummeting like never before. Confidence is eroded when a company is portrayed negatively continuously.
All across the web one gets to read catastrophic news about RIM and how its end is near. That sort of apocalyptic thinking is a journalistic fallacy, because a company's saga eventually drives more traffic to the website. Everyone wants to read about a fallen giant, and when the giant is free falling, the soap-operatic and voyeuristic delight garners more attention. Right now, BlackBerry maker RIM is the giant that is bound to fall eventually. However, there are many things that need to be taken into consideration before dismissing RIM.
If one were to compare Apple and Research In Motion, the latter fell by around 79% in the last year while the former rose around 73%. Such dismal statistics point towards the eventual doom of RIM. However, one needs to think deeply if all this doom and gloom are really as serious as the journalists make it seem to be.
Yes, there is a real possibility of RIM closing shop and there is a real possibility of the company ceasing to function. There is also the possibility of no one desiring to buy RIM anyway. However, it is never too late, as they say. RIM took a step in the right direction by launching BlackBerry Mobile Fusion. The new move allows enterprise users to access mobile device management services offered by RIM on their iOS and Android devices.
RIM still has a few assets to boost confidence among stockholders. If RIM were smart enough, it would decide to either allow Android apps on its BlackBerry devices, or franchise BBM services to other operators, like Apple and Android smartphone makers. RIM also has the option of leveraging its supremacy in the area of tactile keypads.
We must remember that a number of people still prefer using tactile keypads over touchscreen ones. No matter how much you argue against, it is always easier to type on a BlackBerry than on an iPhone. With its tactile keypads, BBM services and enterprise security products, RIM still has quite a bit of mojo to regain some of the losses it has encountered.
Nonetheless, RIM may finally realize that it is no more the king of enterprises, and that Apple's iPhones have become popular among corporations as well. The reason why RIM's shares picked up by 7% is because CEO Thorston Heins gave indications that he is not unaware of the dire situation his company is in now. He also mentioned that in the next few quarters, he expects similar dismal stock situations. With a reality testing like that, and with a few goodies like I mentioned earlier to sell rights to, RIM may kick back; though it may not win the race.
RIM seems to have awakened to the possibility of agreeing to acquisition and has also realized that iPhones and Androids are popular in enterprises. However, RIM is still popular in emerging countries like India, Brazil and China. If the company gets its act together, it may actually be able to continue to license BBM, security features, and tactile keypads to other cellphone manufacturers.
As I see it, RIM is special and it has class. The company's devices are handy, ergonomic, and do what they are supposed to do. If the BB10 enabled phones kick off with better specs, there is no reason why Blackberry shouldn't do well in the market. RIM needs to focus on making the screens larger, while maintaining the same functional keypads.
However, it is never too late to get the company back on track, and Mr. Heins understands this better than the previous two who ran the company. In order to build confidence among investors, the company will have to not only launch great devices but also license some of its own goodies, like security products and BBM, to other tech giants. The company also needs to attract developers to make applications that aren't mundane and basic.
What does this mean to you as an investor of RIM common stock? Well, the answer may not be palatable but certainly can be swallowed with a little difficulty. You may not get the returns you desire immediately and may have to let your shares hibernate for a while. If you have money to spare, now is the time to buy RIM shares as they are very cheap. Whether the company is bought by someone else, or it manages to pull its act together, the shares are bound to increase in value. Don't go by the mood reflected in newspapers, but try to go by your own instinct. Things can't be that bad!