Research In Motion – Not R.I.P Yet!
I wrote this prior to Research in Motion releasing their Playbook tablet…So part 2 will follow
On a weekly chart, stock has broken the downtrend. This should take the stock 58 – 59 range (previous resistance)
Research in Motion (RIM.TO, RIMM) recently has been plagued by bad PR; first with security concerns from countries like India, Saudi Arabia and it's recent release of it's next generation BlackBerry "Torch".
Valuations
Looking at valuations, by every measure the stock is cheap relative to it's peers. Added Nokia (which is suffering growth problems) for comparison purposes.
At Price-to-Sales of just 1.6, No Debt, 5 billion in cash, 50 Million subscribers, an earnings growth of 30%, margins in the 40% range and a P/E of 9, this stock screams a buy on all fronts! Yet, stock performance YTD has been dismal! while NASDAQ is up 8%, RIMM Is down 30% and apple is up 35%. So, is the market telling us something?
Gurufocus.com
The Threat is Real!
What is RIM's bread and butter? It is the architecture that runs their network. Yes the same network that's so good that governments can't spy on their own citizens. While RIM is a network service provider Apple is content services provider. This is where RIM suffers, it does not have the experience in the consumer market nor does it have experience delivering content to it's users. RIM seriously sufferes from a lack of apps, like apple does for it's blackberry OS. Yes, RIM is a productivity tool for businesses but if you are competing in the consumer market, you have to have a platform to deliver content to your users. This is what the competitors are all doing.
Let's take a look at each competitor in more detail
Apple (AAPL)
- More and More companies are trial testing the iphone for business use (enough said…)
- Itunes is the platform that all their devices operate from! From apps, digital content (music, movies, now iTV) to credit card payments; the bread and butter of the IPAD, iphone and itouch are the apps and itunes store
- This is a formidable competitor that has built a solid platform and has sex appeal with young people (and they all want an iphone)
Nokia (NOK)
- Not a threat yet! but will be in the next year or two!
- currently they are suffering from lack of good products, and recently hired a microsoft exec to restrategize their busines (will have to wait and see)
Google/Andriod (GOOG)
- While Google is giving away Andriod to other phone manufacturers and telecom providers, make no mistake they are building a platform around the andriod OS.
- Andriod phones are #1 selling devices right now
- Google also like apple has been busy building a platform for Andriod users to deliver digital content and google "marketplace" for google apps users, and of course Andriod apps
- Samsung will be selling the Galaxy Tab (running Andriod) through Verizon in December
Microsoft (MSFT)
- Windows phone 7 OS for smartphones looks good! MSFT is certainly poised to steal some thunder from iphone/Andriod based phones next year or two
- Microsoft is also quietly building a platform (like Bing, new streetmap technogies(geolocation), office online apps, integration with video games and Xbox 360live). In addition, developers can readily use .net technologies to quickly build apps for the new OS
Indeed the threat is real and it's coming from all fronts.
Part 2 to follow
