Why RIM’s stock will soon rebound

It’s no secret that we here at BlackBerry Cool try to keep our hands out of the stock market game (we prefer a rousing match of Snakes ‘n Ladders). However, we can’t help but notice that RIM’s stock yesterday closed at $64.40 a share (Nasdaq RIMM), the stock’s lowest point since January 23 — back when RIM was still fighting NTP in their first patent lawsuit. RIM’s share price is obviously a reflection of investor concern over their patent fight with Visto and potential sales of the Motorola Q. However, looking to RIM’s future, it’s easy to see how their share slump could quickly rebound in the near future.

Let’s break it down case by case. First, RIM’s new patent fight with Visto. While we have reported previously that RIM entering a new legal battle so soon after settling with NTP is hurting investor confidence, the suspicious nature of Visto’s claims of patent infringement leads us to believe that RIM will achieve a swifter and more favorable resolution than they did with NTP. A swift resolution, or indeed any resolution, will command with it a noticeable jump in stock price.

Now on to Motorola. A fair amount of investor concern regarding BlackBerry’s new competitor has stemmed from RIM’s failure to unveil their new multimedia-focused device (Mike Lazaridis’ comments aside). In this case, no news is bad news: investors worry that the delay is because RIM fears displaying an inferior device. More likely, RIM does not want to reveal the device until they’ve gotten it just right. As long as RIM presents a new BlackBerry that is at least comparable in features to the Motorola Q, investor confidence will return.

Finally, RIM’s new venture into China will also provide the company with a significant share price boost. Investors go crazy over companies who show growth in new markets and BlackBerrys in China are a homerun in that sense. While this may be a fair way off, expect RIM’s stock to soar as soon as they release any kind of sales numbers in China.

In the interests of full disclosure, none of the employees of BlackBerry Cool own RIM stock. But they did take us out for ice cream once. It was nice.

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Comments [2 Responses]

May 28th, 2006 at 9:50 am

RIMM will have no chance in China.
I live there as expat for last 4 years and know a bit about Chinese oversight of information. The best RIM can accomplish is that visiting BB owner can get connected.
Very samll fee here for RIM.
So, RIm playing China card is just misleading investors.

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