Event: Much-maligned cell phone maker Research In Motion (NASDAQ:RIMM) is set to launch BlackBerry 10 on Wednesday. The device is the next-generation operating system for BlackBerry, and it supposedly comes with all sorts of new bells and whistles.
The success or failure of the device will ultimately determine the fate of the company.
On Monday, Lenovo put out a statement downplaying the possibility of acquiring RIM. That news, as well as a “buy the rumor, sell the news” trade, sent shares of RIMM plunging yesterday.
Analysis: Much is riding on the release of this ballyhooed OS. Prior to the announcement last summer of this product coming to market, the future for Research In Motion looked bleak. Investors had pushed shares to an all-time low of $6 a share in September. The company responded by aggressively targeting a specific launch date for BB10. Delays in that launch date did little to deter the bulls.
Although much of the recent gain in the stock can be attributed to short-covering, there appears to be some realistic hope that the device can make inroads against industry giants Apple (NASDAQ:AAPL) and Samsung (PINK:SSNLF).
I doubt it.
While BlackBerry corporate customers are signing on for upgrades to the new phone, there is little buzz in the consumer market for the product. This could be the colossal failure of all time, and I would trade accordingly. If sales are not strong out of the gate, this stock could be heading back to below $10 a share.
Action: Buy RIMM April 11 puts before the release of the BlackBerry 10.
At the time of publication, Dlugosch had no positions in the securities mentioned.