One of the most distressed stocks in recent years has been Research in Motion (RIMM). RIM was once on the forefront of the smartphone industry, but Apple (AAPL) and Google (GOOG) have changed the game, and RIM has seen its market share continue to slip.
The company is putting a great deal of hope in the upcoming Backberry 10 operating system, and some analysts have turned bullish on the company. It is easy to understand why some analysts would turn positive on the stock, seeing as how it has traded up 50% since the start of November, but is it wise to do so?
In my opinion, no… the company remains very troubled, and there is no reason to believe it will ever be able to regain its lost market share from Apple and Google.
Eric Jackson, founder of IronFire Capital, went on Yahoo’s (YHOO) Breakout and gave his argument for why he is betting on RIM’s future. After listening to his interview, not only did he fail to convince me that RIM was a buy, he actually convinced me more than ever that the company is doomed.
He started off by calling the company’s management over the past five years “clowns,” but said he believes the situation is so bad that management just can’t screw up any more from here.
Wow, I can’t remember the last time I have heard an analyst recommend buying a stock on the basis that the company has messed up so much that they can’t mess up any more.
Blackberry 10 has been delayed several times (at least twice), and when it does come to market, even Jackson believes that it will not be able to attract any new customers. He believes that RIM will be able to keep its current customers.
There are about 80 million people using their phones worldwide, but that number continues to drop.
Jackson also points out that the company only has to sell 18 million phones next year in order to break even.
In my opinion, unless Blackberry 10 hits the scene and revolutionizes the market, there is nothing that can save the company.
Another big problem will be the number of apps available for users to download. RIM hopes to have around 70,000 apps available for download by the time Blackberry 10 ships, but it doesn’t seem like developers have much interest in developing apps for an operating system they have very little faith in.