Research in Motion: Upside Prospects Might Be Short-lived

Research in Motion (RIMM) has done phenomenally well over the past year, returning roughly 150% to investors, many of whom see significant upside in the company's continued inertia into the consumer space.  In the near-term, this sort of fad-rich perspective could very well push the stock price higher, as RIM rolls out its new media rich handset, the Blackberry Bold. 

Longer-term prospects, however, could play out in a completely different way. 

A break-down of RIM's subscriber base illustrates the overwhelming number of users who are given handsets by employers rather than required to dole out personal funds for the devices. 

Although there is no denying the impact of consumer market growth (up nearly 150% from last year due in large part to the building demand for personal email and social networking), we must consider whether the company can sustain this level of consumer related growth going forward in light of competition.  The entry of Apple's (AAPL) 3G iPhone, and subsequent flurry of "iPhone killers," could bring significant customer attrition to RIM devices. 

Additionally, after such significant growth and reorientation of the cell phone space over the past year, perhaps there is less room for growth in the U.S. consumer market altogether.  RIM is set to launch the Bold this summer, but I imagine this product will do more to preserve a component of current users through upgrades than attract new ones.  Although the Bold is a 3G device, it will hardly stack up to the new, cheaper, iPhone.

Disclosure: none

Comments

[Hayweed]

Excellent call and the stock is now down $11.00

[Shorting Should be Banned]

Really short lived !

[Daves Here 62]

BS. Do you know how many Blackberrys are ofered for $99? ANd do you know hoy many countries and carriers RIMM is in bed with? And do you know how many new subscribers they just added? Look, the subscriber base is growing by leaps and bound for everone, so that means everyone gets a piece of the pie. Apple, RIMM, and even NOK with their newfound development kit to be released. Relax, everyone. Only PALM will suffer over the next two years, then who knows. That's my best guess.

[.crazylegs..]

this is BS. the stock today is your classic voting machine vs weighing machine. they said over and over last night that they are investing heavily to grow this platform. the upped their sub adds bigtime to 2.6 mln this quarter vs 2.3 last and 2.2 the quarter before. the top line will behuge and the only reason the bottom wasn't last q was due tio a new NOC and a patent portfolio purchase, which the ceo said was extremely fortunate.

[Shorting Should be Banned]

RIMM now down $17 and taking AAPL down with it by RIM's reference to higher component pricing.
Both the explosive growth story and the associated high p/e are over.
Just take a look at DELL. They sell a darn lot of PCs more that Apple, but......

[Daves Here 62]

They'll be back....

[Daves Here 62]

@ Apple Heavy: Darn good time to buy Apple 2010 220 call leaps ... cheap today!