Two very different takes on RIM’s stock

14 Comments

It’s not uncommon to find two opposing financial analysts on RIM’s stock in even the best of times, so it should come as no surprise that during the current global economic crisis we can’t get two analysts to agree on anything.

First we have Apple shareholder Howard Lindzon of Knight’s Bridge Capital, who is not so much down on RIM as he is long on Apple. However, he does state that RIM is “chasing Apple”, and should not cannibalize their sales with the BlackBerry Bold and Storm, but rather focus on improving the BlackBerry Curve. Hmmm. (via Yahoo!)

In contrast, we have Ben McClure from McClure & Co, with a much more focused look at RIM’s stock. Ben’s essential premise is that the recent pummeling RIM’s stock has taken (currently trading around $45/share) has made it a perfect buy stock. Here’s a little snippet of the article, which centers around RIM’s solid fundamentals:

To drop any further, the Research in Motion’s business would have to really fall apart. That’s not impossible, but it seems unlikely. The company still has only a tiny share of the overall global market for smart phones, leaving it heaps of room to grow. Wireless data global adoption is still early and at a tipping point. Research in Motion’s global carrier and distribution channels are just beginning to ramp up.

What’s more, Research in Motion is rapidly launching new phones, like the Bold, Storm, Thunder and Kickstart to enter consumer markets and address different needs and price points. These should boost Wall Street confidence in estimates for the third quarter ending in November and the fourth quarter ending in February.

(via Investopedia)

The question that must be asked is fairly simple: is RIM a fundamentally sound stock that has been recently undervalued due to the global economy and increasing competition, or are they simply running around chasing Apple?

  • crazylegs

    First, I don’t know Howard personally but I do know much about him through a very close contact who is good friends with him and he is nothing more than a momentum trader, so any fundamental analysis should be questioned. Those who look at the iPhone and then say Blackberry isn’t as good and will fall simply misunderstands the dynamics of the market, which is huge, and growing. Both platforms can succeed. What that same person also won’t tell you is that iPhone sells through about 70 carriers while RIM sells into 400 carriers. Distribution matters.

  • crazylegs

    First, I don’t know Howard personally but I do know much about him through a very close contact who is good friends with him and he is nothing more than a momentum trader, so any fundamental analysis should be questioned. Those who look at the iPhone and then say Blackberry isn’t as good and will fall simply misunderstands the dynamics of the market, which is huge, and growing. Both platforms can succeed. What that same person also won’t tell you is that iPhone sells through about 70 carriers while RIM sells into 400 carriers. Distribution matters.

  • ghostzapper

    IMO the current price is not representative of its long term underlying value/growth. Its share price has been slaughtered at a very vulnerable point in time, uncertainty concerning pending product launches, economy, etc. Investor returns are dependent on the success and timeliness of important product launches such as the Storm. I’m hopeful that the Storm is a huge and imminent success.

    Disclosure: I own RIM and have increased my weighting recently.

  • ghostzapper

    IMO the current price is not representative of its long term underlying value/growth. Its share price has been slaughtered at a very vulnerable point in time, uncertainty concerning pending product launches, economy, etc. Investor returns are dependent on the success and timeliness of important product launches such as the Storm. I’m hopeful that the Storm is a huge and imminent success.

    Disclosure: I own RIM and have increased my weighting recently.

  • Jameel

    Fact of the matter is RIM’s sales and net new account activations are falling faster than the drop in markets. RIM is being out-engineered, out performed, out marketed,and out-sold.

    But RIM’s biggest problem of all is the billionaire executives have bunkered down and ceased any meaningful, intelligent communications with the rest of the company. As a result, employees have simply stopped caring about the company’s fortunes, and have especially lost confidence in the 2 CEO’s they once held in such high regard.

    In one of the most bizarre acts in the history of the company, about 2 weeks ago the employees [and their families] were threatened by the CIO with middle of the night arrests. The prevailing spirit is now fear, not the determination that existed only a year ago.

    While RIM employees might have been prepared to buckle down and support a once proud Canadian icon, they probably have little inclination to contribute much to a company that simply taps you on the shoulder and replaces you with a friend of a friend from AT&T.

    The point of all this is even if the market rebounds, the employees need to have a reason to turn the ship around. At present, that reason seems quite elusive, job or no job.

  • Jameel

    Fact of the matter is RIM’s sales and net new account activations are falling faster than the drop in markets. RIM is being out-engineered, out performed, out marketed,and out-sold.

    But RIM’s biggest problem of all is the billionaire executives have bunkered down and ceased any meaningful, intelligent communications with the rest of the company. As a result, employees have simply stopped caring about the company’s fortunes, and have especially lost confidence in the 2 CEO’s they once held in such high regard.

    In one of the most bizarre acts in the history of the company, about 2 weeks ago the employees [and their families] were threatened by the CIO with middle of the night arrests. The prevailing spirit is now fear, not the determination that existed only a year ago.

    While RIM employees might have been prepared to buckle down and support a once proud Canadian icon, they probably have little inclination to contribute much to a company that simply taps you on the shoulder and replaces you with a friend of a friend from AT&T.

    The point of all this is even if the market rebounds, the employees need to have a reason to turn the ship around. At present, that reason seems quite elusive, job or no job.

  • SM

    Listen folks,
    When investors are profit taking , which do you think they will sell first ?
    The biggest bang.. so both sold off! Both are great stocks to own…there is enough room for both.
    RIM is still the leader. by the time apple catches up, RIMS stake would have planted. Both have great blance sheets, RIM has doubled its net profits. this was seen as negative because they spent more to make more. The big finacial companies who were trying to stay afloat played the peons for fools !

  • SM

    Listen folks,
    When investors are profit taking , which do you think they will sell first ?
    The biggest bang.. so both sold off! Both are great stocks to own…there is enough room for both.
    RIM is still the leader. by the time apple catches up, RIMS stake would have planted. Both have great blance sheets, RIM has doubled its net profits. this was seen as negative because they spent more to make more. The big finacial companies who were trying to stay afloat played the peons for fools !

  • BR14

    At it’s height RIMs price made it one of the largest companies in Canada, while in terms of revenue it was around 50th. i.e. probably massively overpriced.

    Anyone that thinks RIM is chasing Apple doesn’t understand the technology. RIM may not have quite the glitz of an iPhone (Storm excluded), but their push email backbone is years ahead of Apple.

    The fact that RIM supports all the primary wireless technologies (GSM, CDMA etc etc) and is introducing a broad range of products means it will have a significantly greater market to address than can Apple as things stand right now.

  • BR14

    At it’s height RIMs price made it one of the largest companies in Canada, while in terms of revenue it was around 50th. i.e. probably massively overpriced.

    Anyone that thinks RIM is chasing Apple doesn’t understand the technology. RIM may not have quite the glitz of an iPhone (Storm excluded), but their push email backbone is years ahead of Apple.

    The fact that RIM supports all the primary wireless technologies (GSM, CDMA etc etc) and is introducing a broad range of products means it will have a significantly greater market to address than can Apple as things stand right now.

  • BR14

    At it’s height RIMs price made it one of the largest companies in Canada, while in terms of revenue it was around 50th. i.e. probably massively overpriced.

    Anyone that thinks RIM is chasing Apple doesn’t understand the technology. RIM may not have quite the glitz of an iPhone (Storm excluded), but their push email backbone is years ahead of Apple.

    The fact that RIM supports all the primary wireless technologies (GSM, CDMA etc etc) and is introducing a broad range of products means it will have a significantly greater market to address than can Apple as things stand right now.

  • BR14

    At it’s height RIMs price made it one of the largest companies in Canada, while in terms of revenue it was around 50th. i.e. probably massively overpriced.

    Anyone that thinks RIM is chasing Apple doesn’t understand the technology. RIM may not have quite the glitz of an iPhone (Storm excluded), but their push email backbone is years ahead of Apple.

    The fact that RIM supports all the primary wireless technologies (GSM, CDMA etc etc) and is introducing a broad range of products means it will have a significantly greater market to address than can Apple as things stand right now.

  • BR14

    One additional comment.

    A tech stock analyst that says “why don’t they just improve on the Curve”. Doesn’t he read the news/BlackBerryCool? Wait till he sees the Javelin, he’ll feel such a fool.

    Lindzon is uninformed. I wouldn’t want to be paying for his advice.

  • BR14

    One additional comment.

    A tech stock analyst that says “why don’t they just improve on the Curve”. Doesn’t he read the news/BlackBerryCool? Wait till he sees the Javelin, he’ll feel such a fool.

    Lindzon is uninformed. I wouldn’t want to be paying for his advice.