Forget about RIMM. Buy Google and stick with Apple. How’s that for being blunt?
RIMM Is Dead; now what?
Comments from Marketwatch (part of The Wall Street Journal) about RIMM and Morgan Stanley downgrading their stock...
Forget about RIMM. Buy Google and stick with Apple. How’s that for being blunt? Earlier this week I called critical mass, “the only thing that matters to your tech stock now”, and today’s big downgrade of RIMM by the analysts at Morgan Stanley sure does drive that point home.
We are downgrading RIM to UW from OW and lowering our price target to $47 on mounting evidence that RIM could lose share faster than we had been modeling. We now estimate RIM’s global smartphone share in CY’12 at just 13.1%, down from prior of 16.0%. Our concerns are based on the following…The drumbeat of enterprises starting to explore “bring your own phone” devices such as iPhone for corporate email; the recent success of Android; and the not unexpected, but disheartening nonetheless, lukewarm initial sales of the new Torch.
In other words, the virtuous cycles that critical mass brings to a tech company, has recently ended for RIMM. RIMM had critical mass for the enterprise email solutionns for a decade, but the technology has been creatively destructed by the very similar and more flexible (though still slightly less reliable) email/message/social-networking capabilities of the iPhone and Android…which, as I wrote yesterday, are just starting to see the virtuous cycles that come from critical mass.
How do you know when a company’s got critical mass, or for that matter, when they’re starting to get it or when they’re losing it? There’s not set formula, of course. You’ve got to watch the trends, the technologies, the companies, the consumers actions and where the developers are going. Look, we’ve been conducting a poll over at my new app news and reviews site, AppConsumer.com, in which we ask visitors one simple question: “What’s your favorite device?”
The poll results of nearly 1000 responses from a group of people who obviously have interest in the app world (or they wouldn’t have been on AppConsumer.com, a site dedicated to the app-world, voting in our poll, right?) are unscientific, but very meaningful, nonetheless:
You can see that the vast majority of (no-longer-so-early) early-adopters of apps and devices are looking at Apple and Android products and just about nothing else. A year and a half ago, Blackberry would have had a much higher percentage of people voting it as their favorite choice of devices — of course there was no Android back then, huh? Three years ago, it would have been even higher than that — of course, almost nobody had had a chance to play with an iPhone back then, huh?
The results show exactly what the analysts at Morgan Stanley just figured out today: RIMM’s lost critical mass and it ain’t gonna get it back. Apple’s iPhone/iPad/iPod/iWhateverComesNext and the barrage of Android phones, tablets and other devices (and some Nokia Symbian stuff too) have already won.
I might add, btw, that we were writing about everything you can read in today’s Morgan Stanley downgrade report of RIMM back several months ago in my Revolution Investing newsletter. In fact, we added it as a short position in the model portfolio back in the $70s and we just this week took profits on that position — a 30% plus gain on a short position in four months. Not too shabby. Now it’s trading at 8x earnings, and that’s cheap enough, I wouldn’t be staying short this name anymore. If you want to read what the tech analysts on Wall Street will be writing four months from now, might I suggest you sign up for the Revolution Investing newsletter?
Google and Apple are the must-own app revolution stocks. I actually expect we’ll see RIMM rally from the high $40s to get closer to $60 again…or it might just be dead money for a long-time. RIMM’s got no meaningful long-term upside from these levels.
- 08-20-10, 05:49 PM #5
If RIM or RIMM falls to 47 I'll be incresing my holdings for sure, I'm confident that they will bounce back into the 60's in the new year.
I almost am affraid company strategy right now is hold steady during the Stock buy back, then launch hard in the new year to get the biggest growth potential, if RIM busts out the gate with something new, the people who defected would come back to try it out, if they loved their RIM phones in 2005-2008 and RIM came out with a game changer in 2011, those Android/Apple phone users would give them a second chance.
- 08-20-10, 06:18 PM #6
Here's the problem with this waiting game: by the time RIM remotely comes close to Android and iPhone, the latter two will be already ten steps ahead. Where is the slightest bit of evidence that RIM is capable of even making up those steps?
- CrackBerry Addict
08-20-10, 07:42 PM #7
- 541 Posts
RIM still has a chance to at least make a phone that can compete with Apple and Android. With all bashing there taking it should get through to them. They're still in a better position that Palm was in.
Posted from my CrackBerry at wapforums.crackberry.com
- CrackBerry Abuser
08-20-10, 07:52 PM #8
- 286 Posts
- CrackBerry Genius of Geniuses
08-20-10, 07:58 PM #9
- 10,044 Posts
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Posted from my CrackBerry at wapforums.crackberry.com
Last edited by exelant; 08-20-10 at 08:01 PM.
- CrackBerry Master
08-20-10, 07:58 PM #10
- 1,035 Posts
Why google what the **** has there stock done nothing android this and android that there stock hasn't moved at all from that
And as far as rimm some time I wonder about these market share numbers I'm in Toronto and I kid you not I have not seen someone or bumped into someone or one of my friends with an android not one the only android I've seen is on display at the stores that's it all I are around hear are blackberrys and iphones and as far as that ratio 3to1 so I'm very skeptical with those market share numbers. You always got to skeptical when money is involved especially with those crooks from morgan Stanley and goldman sachs.
- CrackBerry Abuser
08-20-10, 08:06 PM #11
- 138 Posts
Owning Google shares hasn't been any better than RIM, especially when you consider the CDN to USD exchange rate. Also, Google doesn't make any money from Android. They give it away free to anyone willing to put it on a phone. That doesn't mean it's not any good. Rather it means they don't make any money off it.
- 08-20-10, 08:09 PM #12
I think the real problem is that the OS 6 preview video showed a very responsive, slick OS that could possible compete with Google and Android. The reality is we only have one device running OS 6 currently, on one carrier, with lackluster initial sales and the OS isn't running as smooth as the preview video. We keep getting told the Blackberry that will compete is "coming".... Sounds a lot like Palm with the OS that was supposed to come out for Treo's forever, and finally materialized after most people had switched over to other smartphones.
RIM is still King so they do have time to turn it around. But I'm more worried about the OS and Applications than the lackluster hardware specs. Plus the speed of routing everything through RIM's Servers.
Hardware they could easily fix, just copy what the others are doing. They don't really have to surpass them to stay relevant.
But OS 6 leaving so many existing user behind really make me wonder what they are thinking. And now we are hearing more about their new QNX software that the STORM4 and the BlackPad are rumored to run, this will be another huge departure for RIM again... Are they only going to use the QNX software on select devices? Or are they going to change the entire line up next year? Will existing devices be able to run QNX software? Either way were does that leave app developers? RIM really needs some top of the line applications - other than utilities that just make a poorly designed device work better. Not sure I'd want to be a developer for the BB platform any more than I'd want to own their stock.
Most of the comparisons I'm see today show that OS6 new browsers is an improvement, but it is not able to keep up with the iPhone or Android. I bet the bottle neck is RIM's servers and the security encryption plus RIM's "wonderful" compression technology. If that is the case then how much worse will the browser perform once we see 4G speeds? That bottle neck will be much more evident at that point.
The whole point of Android is that Google saw the future, and in it a persons "cellphone" will be a key portal to the internet. If you "control" that portal they you control where that person goes and what they buy - that is where Google makes their money now, and where they hope to continue to make their money.
I'm not sure what you are saying with this and comparing RIM with company's that have a better price-to-earnings ratio.
I like the quote from the Analyst with Morgan Stanley, he told clients that while the company's numbers for the current quarter likely remain intact, "the longer-term headwinds have just become too numerous."
It's not over for RIM by a long shot... but they need to do MUCH more that "refreshes" and cripple devices with using two year old technology.
- Retired Moderator
08-21-10, 09:43 AM #17I'm not sure what you are saying with this and comparing RIM with company's that have a better price-to-earnings ratio.
- 9,473 Posts
20% Upside to RIM from Higher BlackBerry Margins and Share
Over the last week, Trefis members have predicted improving margins and market share for BlackBerry phones, which account for around 50% of Research in Motion’s (NASDAQ:RIMM) stock. RIM competes with other mobile makers like Motorola (NYSE:MOT), Nokia (NYSE:NOK) and Apple (NASDAQ:AAPL). We currently have a Trefis price estimate of $72 for Research in Motion’s stock, about 42% above the current market price of around around $51.
For a variety of reasons that aren't worth going into, brokerage analysts are usually the last folks to start screaming about impending train wrecks.
(OK, for starters, when analysts cut stocks to SELL, they burn relationships with not only the company but clients who own the company's stock. So when they finally give up and throw in the towel, you know things really have gone to ****.)
Gelblum has four concerns about RIMM:
•The "ongoing chorus" of countries threatening to shut down BlackBerry service.
•The "drumbeat" of enterprises exploring the "bring your own phone" approach for corporate e-mail, which opens the door to employees using iPhones and other non-RIMM devices.
•The recent success of Android.
•The "disheartening … lukewarm initial sales of the new Torch."
Read more: RIM slashed to SELL as Wall Street runs for hills
Balance that against the possibility that analysts are working with a flawed model. In this case, the flaw comes from the perceived situation in India. The story has been evolving for nearly two years now and the only thing that has changed are unconfirmed reports from anonymous sources that Research in Motion will hand over the keys to BES encryption instead of India banning BlackBerry service.
We have it on good authority, National Institute of Standards and Technology and the statement issued by Research in Motion, there are no keys, other then those generated internally. It is not possible to meet the demands India is making.
Will India follow through with their ban? Unthinkable, they are in competition with many other Asian nations and that would put them at a serious competitive disadvantage.
Calmer heads will prevail, when the deadline arrives, some anonymous Indian source will leak the story, they have independently decrypted 256 bit AES and all will return to normal, again.
There will be no comment from Research in Motion and all of the World's securty services will chuckle in their sleeves, they know better and they want nothing more then for this story to fade away.
- 08-24-10, 10:26 AM #18
Considering the disclaimer on the site from the article quoted above "RIM Slashed to Sell as Wall Street runs for the Hills" I would say this is about as trustworthy as Wikepedia...
The Business Insider | Oct. 2, 2007, 5:23 PM | 803
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Last edited by Qbnkelt; 08-24-10 at 10:39 AM.
- 08-24-10, 11:26 AM #21
I applaud you for sticking with RIM. In regards to RIM bouncing back, RIM would have to come out with a gadget that's outstanding. Better specs than competitors and most of all it must seem innovative. It will be tough to get back the market cap they've enjoyed for quite some time. Also, don't forget WIN7 is coming out soon. What's that gonna do to RIMs future?
- 08-24-10, 11:34 AM #22
As for buying stocks, I have never been a fan of buying into big companies. In reality Apple and Google won't make huge leaps but smaller companies can and will. But that is a little more risky of course.
Overall the current slump is more to do with how foreign governments are bashing RIM and limiting their market share. Once they open up their servers to them things should start to go back to normal.
- 08-24-10, 03:02 PM #24
It's just my personality though, my hatred of internet, media and social apps and general entertainment is rather well known in the circles I travel.
- 08-24-10, 03:13 PM #25
I wouldn't Say I Stuck with RIM, I dumped and repurchased, and am planning a further repurchase if Stocks continue to fall.
I'm going to assume that because they are buying back their own stocks they don't want to see Stocks shoot up, so the Torch was a great form factor test, it was released with minimal new hardware and they can evaluate if the Torch Sales were for the form factor, or the OS, and not having the hardware muddy the water being the most powerful blackberry.
I am really hoping they release a Storm 3, and this will be their Rebirth into the Consumer market with the comparable feature sets, that the consumers are seeing out of the Android, and the iPhone.
as for Win7, I do think that MS has finally got the mobile phone idea right, and they WILL take a chunk to RIM, and I think they will help to keep iPhone and Android out of the Enterprise sector because RIM and MS will be fighting that sector and hopefully innovating to hold it.