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Should You Invest Into Research In Motion Ltd. (RIMM)?
By: iStockAnalyst   Monday, October 4, 2010 11:27 AM
Symbols: RIMM
RIMM's BlackBerry service is offered by some 565 wireless carriers around the globe, a clear strength of its marketability.

Product refreshments likely to sustain customers' interest from both enterprise and consumer segments

Last month, RIMM introduced its new tablet offering called the PlayBook. The devise has a 7" screen, 1 GHz dual-core processor, dual cameras and supports Adobe Flash. I believe RIMM will make a positive inroad to the enterprise market with this device, although I am somewhat concerned with the screen size and the size of the keypad. The PlayBook – has been welcomed by sell-side analysts, but many outside Canada still don't think it is enough to drive the company's share price much higher amid fierce competition with rivals such as Apple (AAPL). However, I think, it is too early to come to a conclusion on PlayBook's impact on RIMM's share price.

What the analysts are saying about RIMM's stock price

Since RIMM is Canada based, analysts from Canada are more likely to be positive about the company's prospects. For instance, Royal Bank of Canada's Mike Abramsky, who has RIM as a Top Pick, confirmed his $90 target, as did CIBC's Todd Coupland, while BMO Capital's Tim Long stuck with his $92 target and Outperform rating.

US based analysts are less likely to be optimistic about RIMM as they feel Apple outclasses RIMM. Indeed, Goldman Sachs analyst Simona Jankowski, raised her earnings per share estimate through 2013, saying that the company is improving margins. However, she reiterated sell recommendation and $45 price target. Even more bearish is Susquehanna's Jeff Fidacaro, who maintains a negative rating and a target of just $37.50, as "we believe RIM's new product launches (PlayBook, Torch) do not address near-term share losses in the North American consumer smartphone market." Net on net, as you have read, analysts have a very divergent opinion on the stock.

Negative factors those are likely to weigh

Security related legal problems

In August, India's Ministry of Home Affairs announced that it is implementing RIMM's proposals for access by law enforcement agencies. The Indian government plans to study the proposal over the next sixty days to gauge its feasibility. While this is only a temporary reprieve, I believe it is a step in the right direction in working with the various governments that have issues with the ability to access RIMM's corporate e-mail.

Intense and increasing competition

RIMM is facing intense and increasing competition particularly from Apple, Nokia, HTC, and Samsung which have been aggressively launching products to increase their market share in the smartphones segment. Additionally, HP entered the smartphone market through its acquisition of Palm in July 2010. In addition, RIMM's competitors are also actively pursuing opportunities to introduce solutions that compete with its flagship email solution. For instance, in May 2010, 2009, Nokia and Microsoft jointly launched Microsoft Office Communicator Mobile, a component that shows smartphone users the availability of workplace colleagues and offers communications with them via e-mail, instant messaging or voice. Also, RIM may face competition from companies focused on providing middleware to facilitate end-to-end wireless messaging solutions, such as IBM, Microsoft, Notify Technology, Openwave Systems, and Seven Networks, among others.

When investing in RIMM's stock, one has to keep in mind that risk to investment as indicated by its beta of 1.98 is considerable. However, probability of the stock reaching its target price and then advancing further up to breach its current 52 week price is also significant. It all boils down to the diversification in your stock/asset portfolio to reap better risk adjusted rewards from investing in RIMM's stock.

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10/4/2010 1:26:24 PM
by AlexB
Neither is apple a dividend paying stock. This article is skewed as all other American-based reports! Ask yourselves these questions: did apple announce the price and the date of their ipad when they first launched it?? Is apple company paying dividend to its stockholders??? The answers to these questions are NO.
Rating: (7) (0)
10/4/2010 1:38:27 PM
by Alex B
Most companies have stopped paying dividends due to economic downturn. the article above make unreasonable statements, and definitely bias conjectures to hurt RIM and its stock. Unfair and unreasonable. Avoid this article!
Rating: (4) (0)
10/4/2010 2:19:19 PM
by Steve Durant
another report issued by istockanalyst.com claimed RIMM to be the stock to buy for 6 reasons. http://www.istockanalyst.com/article/viewarticle/articleid/4527382 On a personal note, I have never lost money in the stock market; my stock trading strategy is simple, I always buy stock at around 52-week low, and then hold and wait it will rise up its 52-week high, especially high powered stock like RIMM. That means, I will never buy Apple stock now, which is trading at around 52-week high, it is heading south. Wait, plus apple stock DOES NOT PAY DIVIDEND.
Rating: (2) (0)
10/4/2010 2:19:30 PM
by Anti-iStockAnalyst
This article is skewed for sure. They are just trying to attack RIMM and get the most out from the innocent public. Who cares what the American analysts said? They just want to push the price lower and get in.
Rating: (3) (0)
10/4/2010 2:26:07 PM
by RIMfans
Rating: (2) (0)
10/4/2010 6:17:06 PM
by Seth
LOL.......this don't make sense, if all stocks fell to the pits in March 2009, why would it matter be it RIM or Panera or Google or Walmart, the stock market was in Great Depression mode, was it not obvious to istockanalyst before they published this article here???????????
Rating: (2) (0)
10/4/2010 6:57:08 PM
by jim
We should demand accountabilities from american analysts,reporters,and news, and we should call for investigation into their links to american mobilephone producers.
Rating: (2) (0)
10/4/2010 8:36:59 PM
by Seth
http://www.marketintellisearch.com/articles/1058012.html the article would be more aptly titled "Americans would like shares of RIMM to fall further" LOLLLLLL.................................. our American economy will continue to slide, until we choose to do good, act responsibly, and conscionably to our neighboring countries and the global communities.
Rating: (2) (0)
10/5/2010 1:40:54 AM
by Arjuna
The way american media degrade everything canadian is bad karma. Look at our currency is falling behind Canadian$. US is falling behind in everything good,falling behind in doing good things,but is keeping up with doing bad things.
Rating: (3) (0)
10/6/2010 10:45:59 AM
by jeff
another biased report by american enterprise http://www.benzinga.com/analyst-ratings/analyst-color/10/10/511179/morgan-stanley-survey-points-to-market-share-loss-for-rim And they don't let you post comment on Benzinga! SHAME ON YOU BENZINGA for publishing such lame report!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Rating: (1) (0)

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