Weekly Contest: Why is the market undervaluing RIM?

10 Comments

(With Thought asking the best question of the week already in his editorial, it seemed best to make this the Weekly Contest. Whomever posts the best comment will receive 3 free games (!) from Bplay. LAST WEEK’S WINNER was JEF, who thinks Wi-Fi could be a win-win for everybody. ed.)

Research In MotionInteresting report coming from financial analysts the Motley Fool today. It seems that the Fool’s investor community has given a 1-star CAP rating to the boys and girls at RIM. This is despite the fact that RIMM is currently being traded at 222 USD, well above their 3-month high, and recently posted a ‘knock one out of the park’ quarter.

Most of the Fool’s concern seems to be based around the iPhone and other devices encroaching upon BlackBerry market share. I think these are completely valid concerns. However, for a company that has continuously met or beaten expectations, aren’t we shortchanging RIM a bit here? It’s possible that RIM’s stock is overvalued, and it’s true that no company can be bullish forever, but have we seen any indication at all that RIM’s slipping? I don’t think so. Maybe this is what Jim Cramer meant when he talked about pushing down RIM’s reputation in order to make mad money.

Check out Fool analyst Matt Koppenheffer’s analysis after the jump, and post a comment to let us know if you think analysts are giving RIM a raw deal.

Many players on CAPS have noted this and think that competing phones — particularly Apple’s new, shiny iPhone — could put a dent in RIM’s business. One such investor is Jburger2007, who says that RIM will “get hit with iPhone effect. [The stock will stay] at present level until replacement applications become available for the iPhone. At which time a huge migration should occur.”

Dethroning an incumbent with penetration such as the BlackBerry, though, is easier said than done. For Apple in particular, the flashy, music-playing iPhone may be a tough pitch as a replacement for the utilitarian, secure, and dependable BlackBerry. Furthermore, for all the effort that competing companies are putting toward beating out RIM, you can be sure RIM is expending a similar amount of effort trying to increase its lead.

So what do you think?

  • Morgan

    There are 40 million or so cell phone sales per Q in th US alone, in the first Q RIMM was not even on the chart MOT had 35 % of the market. Now the cool phone and top seller at least in most cell stores and on Amazon is Crack. This stock will split go to 300 hundred and split again. Before year end. India is icing.Those who can’t see this are losers.MNgmnt said every country is strong, this stock is a multibagger from here over the next year.
    Follow the Bucks ” I really really like you”

  • Jason

    Everyone is buying into the hype of the iPhone. Yes, the iPhones sales are very impressive. The iPhone is marketed to a younger, non-business oriented audience. That is not the same audience RIM aims for. Majority of blackberry users are using them for business needs. Blackberry is known and trusted for its security. The iPhone lacks big time in securty. Another feature that sells for RIM is the ability to push email. The iPhone only pushes Yahoo mail. Basically it is comparing apples to oranges. I agree that the iPhone may take a little away from RIM just due to the fact of everyone buying into the hype of the iPhone. having said that, you cannot discredit RIM . They are consistantly improving their product line and pleasing their users. This will keep their current customers and bring more on board. I don’t see RIM dropping from the lead spot anytime in the near future!

  • shlammed

    Let’s also not forget that the huge amount of iPhone sales that occurred when it was released was a one time deal. Everyone was eager to get one once it came out. RIM is adding over 1 million BlackBerry customers per Q now. Does anyone here believe that iPhones will ever sell 1 million per Q on a consistant basis? I highly doubt it!

  • shlammed

    oh, and on top of that they’ve finally opened the door to over 1 billion more potential customers…CHINA.

  • Ralf Peppekus

    Hi!

    I believe in RIMs success but what are the reasons for undervaluing RIM?

    - No Multi-Touch Screen (we know for productivity touch doesn’t make sense, see Tablet PC)
    - Outdated looking Menu-Structure (scroll through 20+ menu items is really somehow strange)
    - Pros turn into Cons: The lean data that is transferred to a BB now seems odd. No HTML Mails, no “full” web-experience (even though, who needs that?) in times of flat rates why bother to save transmitted data?
    - No Wifi (until recently).
    - No Prosumer market (until recently)

    I short: after using various mobile phones since 1992 (all GSM) I finally found the perfect phone for me, which is the Curve!

    But yes, the user interface looks outdated, but I love it because it does what it needs to and it’s easy to understand.

    Regards,
    Ralf

  • http://www.blackberrycool.com BlackBerry Cool Douglas

    Interesting points, Ralf. Here’s another one:

    –Despite the slim stylings and new features of The Pearl, 8800 and Curve, they’re all using the same chipset as the old BlackBerry 8700. Feature improvements have come via OS updates.

    When are we going to see a BlackBerry with a new chipset that really smokes the competition in features, rather than merely stay competitive? I like the multimedia features on the Curve, but they don’t really compare to high-end Nokia handsets.

  • Vince

    Although RIM has enjoyed a recent run up in stock price, there may still be room for growth. RIM may be overvalued at this point, and I would not be surprised if a pull-back in stock price occurs over the next few weeks. However, this should be no indication that RIM is “slipping” and/or subject to the threat of an iPhone invasion.

    Claims that BlackBerry’s, being the omnipotent business devices they are, getting dethroned by the iPhone are absurd. The iPhone is aimed at a completely different target market than say the BlackBerry 8800. The iPhone is clearly aimed towards the more savvy consumer, not the corporate world. Interestingly enough, RIM’s venture into the more consumer oriented device market (a la Pearl, Curve, etc.) has seen much success with plenty of room for growth. Undoubtedly, RIM is sharing the consumer oriented device market with Apple, amongst others.

    Lastly, most of RIM’s revenue is generated from large corporations. Corporations that I see are highly unlikely to purchase $500~$600 iPhones for its employee base (except maybe Apple?). Therefore, RIM’s main revenue stream will prevail unscathed and continue to be the dominant player in the business oriented device market.

    P.S. Has anyone tried to type on an iPhone? It requires precision…and tiny fingers!

  • SaneInSF

    It’s not necessarily the product — it’s the business model. How much longer will RIM be able get revenue from having providers charge a premium for its e-mail service when other devices are just leveraging standard data service?

  • http://t3today.com Brian Spratt

    I’d say the iPhone would take market share away from the BB too if I was a ‘toys r us’ consumer.The way I see it is this clown is worried about the wrong thing. Let consumers buy a hype-unit with an inflated price tag, a glass screen, antiquated phone technology when better ia available, non-insurable device. The last time I checked, RIM creates business solutions. I know if I want music-I buy a memory card, put a couple thousand songs on it and there it is…an mp3 device. I know if I want to watch full-feature movies- I buy one-time fee software for about 30 bucks, and sownload to that same memory card the flick of the week. I already know the BB8800 can navigate me anywhere I want via GPS, and I get great Text, IM, and MMS. Lets not forget about the email, scheduler, voice dial, and calendar. So, ya, I agree there is no comparisson between the iPhone and a BB. What I disagree on is that the iPhone is geared more for the savvy consumer…NOT! It’s for the individual that wants the “latest and newest ‘whatever’ to flash around, eventually brake, and get sick of sending it back to Apple” consumer.

  • hans

    IMO(bservations),
    RIM will feel the effects of some basic struct-faults in MS to which it has relations. MS is falling down so if they will keep on relations… !
    The slowingdown of MS style communications is expensive. You do not want that.
    Moreover: OS like linux speeds up:SMALLER files (in comparision to MS-files (like no BMP’s :-). And REAL multitasking is no MS matter.
    Smaller is speedier. That’s what count.moreov er: fuzzy logics in OS are far more speeding up. MS is not adapting to that: oldish. So if RIM renews to linuxated crackberries… Count your future!