BlackBerry Breather: RIM Regains Footing But Not Direction

by Anthony John Agnello | August 29, 2011 12:12 pm

There’s always hope. August was grim for Research In Motion (NASDAQ:RIMM[1]), with each week bringing another announcement that pounded into the company’s share price like so many nails into a coffin. By Aug. 8, shares in the smartphone manufacturer sank below $22 for the first time since 2004. The company is recovering, though, and while around $30 per share isn’t a price that reflects a return to the gloried value of RIM three years ago, it is at least a signal to shareholders that all is not lost. Wall Street analyst Shaw Wu of Sterne Agee agrees.

Speaking to All Things Digital on Monday, Wu said RIM’s latest phones are going to help the company regain ground[2] it has ceded to Apple (NASDAQ:AAPL[3]) and Google‘s (NASDAQ:GOOG[4]) many manufacturing partners in the smartphone market. These new phones include the BlackBerry Torch 9850/9860, touchscreen-only devices running the new BlackBerry 7 operating system and supported by AT&T (NYSE:T[5]) and Sprint (NYSE:S[6]). A more traditional BlackBerry with a keyboard interface, the BlackBerry 9810, joins those models.

Reviews of these phones haven’t been favorable, though. Even though the BlackBerry Torch 9850 is recognized as a significant improvement over the company’s last attempt at a purely touchscreen device, the lamentable BlackBerry Storm, it has been criticized by outlets like CNET for having poor phone call quality and performance problems. What RIM does have working in its favor, however, is the new BlackBerry 7 operating system, which has received better press than the devices on which it runs and which Wu claims makes for RIM’s “strongest product cycle in some time.”

Wu thinks its possible that Nokia (NYSE:NOK[7]) and Microsoft (NASDAQ:MSFT[8]) will not release their first Windows phones in the U.S. until early 2012. RIM then has a shot at capturing some market share across the fourth quarter, despite Apple’s impending omni-telecom iPhone 5 release expected in October[9]. Strong software, cheap phones and support for Android app developers[10] on the platform — not a bad place to be for RIM. The company has even started up new media services that aren’t complete embarrassments.

RIM opened BlackBerry Music for business on Thursday. For $5 per month, BlackBerry users can access 50 songs and cycle out 25 of those songs for others each month. It sounds weak compared to streaming services like Pandora (NYSE:P[11]) and cloud services like Amazon‘s (NASDAQ:AMZN[12]) CloudPlayer, but its social networking feature that lets BlackBerry users share songs with each other to expand available tracks should convince users to idly drop the $5. It isn’t a game-changer, but a fine perk.

Things look OK for RIM, but not great. While there’s hope for shareholders, it’s important to note that RIM’s improved outlook is only for the short term. The BlackBerry 7 OS, the new Torch phones, the new music service — these are all factors that make for a promising fourth quarter, not a promising 2012 or 2013.

IDC expects RIM to control a 14% share of the worldwide smartphone market by the end of 2011. By 2015, that should fall to 13%[13]. The best outcome for RIM’s holiday? A slightly healthier place in the market that will make its technology and brand more attractive for acquisition by another partner[14].

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[15] and become a fan of InvestorPlace on Facebook[16].

Source URL: https://investorplace.com/2011/08/blackberry-7-torch-research-in-motion-rimm/

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