September 3, 2010 | In: Technology
The stock seems attractive at this price (closed today at CDN $46.50), and I might make a bit of money short term, but I think that the stock will continue its downward trend until the following things happen:
- RIM (the company) is no longer arrogant, and is willing to immediately accommodate requests from official bodies (such as countries).
- RIM’s new and innovative products are not copycats of Apple (the Blackberry torch is a great example)
See I think what RIM should worry about for the short term is its attitude and arrogance. If RIM kept a low profile during the negotiations with the governments, then RIM would have still been strong. But they have decided to make this fight (that they can never ever win) public, and worse, the world knew that eventually they lost, and they will have to accommodate the requests to grant access to the users’ data. Had they kept a low profile, then they would have the done the same (accommodated the requests), and nobody would have known, except for key people.
Well now that the whole world knows that the users’ data might be exposed to certain governments, companies no longer see the advantage of giving blackberries to their employees. A fatal mistake that made RIM lose its most important niche, the corporate world.
Now for the long term, the problem is even worse, RIM is now a company with no innovation. They have tried to copy the iPhone 4 with their Blackberry Torch, unsuccessfully. They are releasing an iPad copycat called the BlackPad. Not only do RIM have a problem with innovation, they also have a problem with their marketing team. They couldn’t even come up with an original name for their iPad clone.
For all those who are saying that RIM is the next Palm, I agree… There is still time to save RIM from this fate though, but it’s going to take a lot of hard work, more humility, and a lot of innovation, the same innovation that created the blackberry in the first place. If not, expect the stock to trade in the low 30′s next year (RIMM almost touched $42 on August 31st).
On the very flip side, the stock is currently trading at less than 10 EPS, which makes RIM an easy target for a buyout (and it’s currently the season, apparently). Note that there are some rumors that Microsoft might be interested in buying RIM.