RIM: Could Be Worse, Could Be Raining

May 19, 2011 at 4:15 am PT

It says a lot about Research In Motion’s current situation that the company’s shares can rise on an analyst upgrade to market perform announced in a note entitled, “RIMM: Things Can’t Get Worse in the Foreseeable Future.”

But after a near 40 percent decline in share price since the beginning of the year, RIM and its investors are taking anything they can get–even a disdainful, back-handed upgrade from Bernstein & Co.’s Pierre Ferragu, a longtime RIM pessimist with a particularly bleak view of the company.

To Ferragu, RIM is a company with a broken brand and a management in denial of the challenges it faces. That said, its situation isn’t deteriorating so rapidly that it will frighten the market beyond its current negative sentiment.

“RIM has been for 10 years a premium brand, supported by a fundamentally differentiated product: the only mobile phone offering proper email,” Ferragu argues. “This time is now over; mobile email has become a commodity, offered at no extra cost on any smartphone platform. We also argue that the iPhone established a new innovation cycle in which RIM became a lagging follower, running behind in terms of application store and browsing capabilities. As a consequence, we believe RIM’s high level of profitability is at risk.”

And if you think growth in international markets will offset any of these risks, don’t. The challenging business trends RIM faces in the States will inevitably migrate abroad as well.

Says Ferragu, “…We expect consumers’ awareness of the superiority of Apple and Android phones to grow very fast in the rest of the world and these very same competitors to expand quickly in lower price points. In such a context we would expect RIM’s trajectory in international markets to get closer to the one observed so far in North America.”

So… good news. Could be worse, right?

Tagged with: Pierre Ferragu, Research In Motion, RIM, RIMM: Things Can’t Get Worse in the Foreseeable Future

comments so far. Add yours.

Anonymous

Rim has firmly established itself as premium inferior goods and valueless services that are unwanted in a free flow information age. Would radio stations encrypt their talk shows? Would Google encrypt their commercials? NOT. Rim was born in the Cold War era and everything Rim does and every aspect of Rim’s culture reeks of Imperial Colonist stink and rot.

Consequence is, the Sun wil never rise on Rim everywhere in the world.
http://twitter.com/chrispycrunch Chris Lau

One sentence type would summarize RIM’s premium brand loss over the years. A few years ago ”Sent from Blackberry” denoted recognition on being an owner of a premium in communications.

Now, all smartphone makers copied the tag:”Sent from My iPhone”"Sent from My HTC”"Sent from My Android”

The latter part of the author’s analysis is incorrect and misleading. BBM is untouchable. It’s simply too cheap for other makers to be able to offer this service. BBM is a big selling point for blackberry, in places where blackberry phones are cheaper and where pre-paid and blackberry compliment each other.
http://www.facebook.com/anthony.heslehurst Anthony Daniel Heslehurst

RIM are in the middle of a major transition to a completely different OS, so its unsurprising that they’ve taken a few hits.

If executed well, QNX will transform the BlackBerry line and push it ahead of iOS and Android in terms of innovation, and their brand is still rock solid and growing everywhere outside the US. Here in the UK for example, BlackBerry has never been stronger. QNX will be entering this market from a position of strength.

Also, why do analysts predict doom for RIM’s profit margins because of their growth in emerging markets? I feel that analysts are missing part of the picture. In China, BlackBerry is being aggressively marketed as a premium device in wealthy urban areas, and indeed the most heavily promoted device over there seems to be the Torch. Analysts need to remember that there are premium buyers outside the US, too.

Give them a break, maybe?

Yours,
Consumer.
http://www.tptbh.com/ AMAcloud.COM + AMAclouds.COM

the Playbook design is completely wrong and its price too high

they must make it like the Apple and HP tablets to succeed
http://www.BarnesFamily.com/ davebarnes

One of the best movies ever!
“Why thank you Herr Docktor”
Rugged Canadians

another weak article of regurgiation by John who can’t seem to think on his own.

What is the D exactly in All things D?
Anonymous

Maybe he decided to take the same approach to this article as RIM seems to be taking to its business. Maybe it’s an “homage.”
Anonymous

Back in the day, one distinctive advantage of the BlackBerry was that it pioneered the QWERTY keyboard on a mobile device. Now, its lack of screen size is a real factor, in comparison to others. I’ve used the ‘Berry for nearly 15 years, but couldn’t dream of a new OS on the same old device. I expect many law and business users to do the same. I’ve reviewed and compared the Nexus S to BlackBerry and the iPhone:
http://trial-technology.blogsp.....ement.html
Anonymous

The Bears use the microscope on the rear view mirror looking at RIM. The very same old story is being repeated again and again on all articles and surprisingly the market goes with the mood. Can anyone start looking forward on the fact that QNX is a superior OS. RIM acquired a lot of technologies recently and they just need a couple more months to get the prototype ready. RIM is not Palm. RIM got all neat stuff pending to roll out to the market. If they plan to have the new phones ready next year, the prototype should be ready within months. When that happens, the mood may change dramatically. The upgrade is totally a clever act that need a lot of courage to make. Start cover your shorts before too late.
http://profiles.google.com/flpuglisi Fernando Puglisi

i think there are some analyst that are very happy looking rimm´s stck price falls. when they talk about apple it sames like talking about god. came on, Rimm is a solid brand, whit a solid line of products, and a promising pipeline for 2011/12. they have a lot of cash in their hands and no debt. they adquire technology and their 7″ tablet is a very good product (also i want same differents specs; but there is no perfect product in tablet market until now). analyst one day say rimm have a target price of $ 90, and next day, when profits are 10% smaller, its target price is $ 40 and buying that sahere is a crazy things. i believe in price formers, but i dont believe them
Anonymous

Do not think Playbook design is wrong. The speaker is right in front of you and the screen is great. Cannot complaint on the QNX OS because it is so easy to use. You can actually see what is active and running (IOS and Android cannot do). The only weakness is the software apps, that that can be fixed over time. If you know technology, you will know all electronics need firmware and software upgrades. Routers, mp3, phones,… almost all need software upgrades. Look at Android, see how many different versions of Andriods out there. Why it is so different when it comes to RIM? Maybe it is just the easiest target for short selling?
Anonymous

No, John, it says a lot about Pierre’s manipulation of the stock for the purpose of shorting – or are you so naive that you ignore what pundits do with their cash? There is no I repeat NO legitimate reason for him to suddenly change his tone with such an announcement unless he’s playing with the stock.
Anonymous

Ya I really want a phone that Leaks my personal data out to the web (99% of all android do), has viruses, and sends my banking login information in clear text. Oh ya, and buy Android tablet that crashes all the time and is slow, with 100 native apps.
Anonymous

Business intelligence is dead important. Look at Apple, they would not even like to leak what their next generation iPhone will looks like. Encryption is a must….always. RIM get the flesh and meat in technology and Apple only get the looks. Once RIM push out the new phone with QNX, you will know what I mean.
demodave

Whatever a company might be selling in the future is of no business value today. I totally stand behind work on future developments so that there *will* be a great new future product, but the difference is very simple: Apple is currently/already selling the best product on the market *today*. In another year, Apple will also be selling something newer and better than they are today. Their next “firmware upgrade” will effectively be iOS 5, which I would assume we will be seeing in either prototype or shipping form in June at WWDC. “Just wait and see” for RIM looks a lot like “I’ll just go buy that iPad or iPhone, then” to consumers.
Anonymous

Great points… also add that in emerging market, BBM replaces the data and texting plans.
Anonymous

Another lemming article. At least this one freely admits the article is based on another person’s work. Small wonder nothing new, same old flawed perspectives.

To touch on just a few realities regarding RIM. RIM is not a consumer focused company. They entered the consumer market two years ago and became a world leader in servicing many emerging markets, paving the way for new players to compete. RIM has maintained its corporate markets, even under competitive pressures to “consumerize” the corporate world.

Many analysts bash RIM for losing ground to Apple and Google, but overlook the fact they have no aspirations to conquer the world with premium priced handsets that largely provide a gateway to additional fee based services beyond the expected communications features. Many Apple users today must be questioning the monthly costs to maintain communication devices which perform these basic services relatively poorly yet is superlative at value-added additional cost services.

RIM provides value based, high functionality communications devices that extend corporate information technology to the individual on a scale never seen before, facilitating mobile business for large and small companies including professional people looking for the same functionality.

So any comparison to the world domination aspirations of Apple and Google simply paint a distorted picture of RIM’s market plans.

Until this simple fact is understood, RIM will continue to be misunderstood and suffer the consequences.
Anonymous

All Things D(isagreeable) to RIM investor Rugged Canadians?
Anonymous

The word *today* was highlighted correctly. That is the fact that every body talking about and know about. This is history and talking about for months if not years. Market does not base on history. A reasonably market should be forward looking. Based on the technology RIM is sitting on, there is little reason to keep dumping the stock when the current PE is just 7x and future PE close to 5x. Start thinking and look forward, do not just believe what others said. It is hard for Ferragu to go against the crowd, but I share his view and totally agree with his comment.
John Peters

I love how only the negative quotes were taken from the analyst. This just proves that this site is for Apple Fanboys. I’ve yet to read a single positive article from John about RIM. I bet John believes that the dropped calls and location tracking on the iPhone are both great features.
John Peters

All articles John writes about RIM are negative.
Anonymous

And it’s a Sisyphean challenge to manufacture all that negative market sentiment by myself.
http://blog.macb.net macbeach

Government adoption of these things will prop the company up for a good while yet because governments are so slow to change. When the feds, and police agencies and so forth mentioned in the comments so far start to experiment with alternatives then the end is near. Could be a few years though.
Anonymous

all of John’s articles are negative on RIM because he gets an uptick in web traffic everytime, mainly from blackberry fans who click on his pages. with each negative RIM headline, he needs to outdo it the next time to keep up the webhits.

i think its quite dispicable, but hey, its for money and everyone needs to earn an income.
Anonymous

all of John’s articles are negative on RIM because he gets an uptick in web traffic everytime, mainly from blackberry fans who click on his pages. with each negative RIM headline, he needs to outdo it the next time to keep up the webhits.

i think its quite dispicable, but hey, its for money and everyone needs to earn an income.
demodave

sun_pie, it is RIMM’s remarkably low past and future P/E that makes is a technical “buy”. It is the market sentiment that has earned it that incredibly low P/E. From a god-honest perspective (of which I am becoming increasingly doubtful), stocks sell based on supply and demand. Unless something about demand (investor sentiment) changes, RIMM stays in the P/E toilet. Maybe, just maybe, if your implications about QNX are correct, and the E goes up, the P will go with it, but for now, that “P” only seems to be something stinky….
Anonymous

interesting how John likes to delete peoples comments that call him out. I think I’m living in China.
Anonymous

john: i request please do not delete this post.

interesting… i kept my old history cache, after noticing some comments removed on this post (posters including myself). interestingly all deleted comments were those that defend RIM. I will not say more as I suspect then this post will be deleted.
Anonymous

You still do not get it. The whole point of the upgrade is the
“sentiment” (if you prefer to use this term)cannot go down any
further. Previous news/ “zentiment” has already priced into the
unreasonably low stock price. The upgrade is indicating the stock is
hitting a bottom, and will get the Bears nothing when short selling at
the current price.
http://www.tptbh.com/ AMAcloud.COM & AMAppSTORE.COM

a TRUE iPad clone MUST have a 10″ 4:3 display

RIM: Could Be Worse, Could Be Raining

comments so far. Add yours.

AllThingsD by Writer