In September I said...
So here's the salient question -- has the company turned the corner?
That is not yet in evidence. But it just got a lot harder to argue that they're going to run out of money now, and the expected destruction of their userbase appears to have halted and reversed.
I remain skeptical; despite having a clear advantage in the operating system I have yet to see the firm "break the glass", particularly with applications. And BB10, while now being seen "in the wild" among developers and going to carriers for integration testing next month, is still not going to be on the streets for another 3-4 months -- past Christmas.
[Related -Why it’s time to sell Microsoft]
Nonetheless if your thesis on this company was that they were going to run out of money and ultimately blow up, you got a problem with that in the immediate case, in that despite not yet having BB10 devices out the firm managed to post up both an increasing cash position and increasing subscriber counts.
It now is in evidence and the stock has pretty-much doubled since I wrote that. The company has now posted up two sequential quarters of increasing cash on the balance sheet despite having their restructuring both on product and headcount "in process." That's damned impressive and management deserves full credit for it.
[Related -Can Eric Schmidt Resolve Google Inc's (GOOG) Biggest Challenge After $100 Mln Bonus?]
The company handily managing to launch BB10 is of course assured at this point, which means we now turn to the simple question -- how many can they sell?
I've been long the stock, and now the question is this -- do you remain long?
Technically, the stock has a nice shelf at $14.20, and so long as it remains over that you have a technical trade that is still intact. There's a 61.8% retracement off the after-hours move at $14.70; if you're conservative and want to lock profits before tax rates go up (assuming you think they will on January 1st) that's not a bad place to say "bye-bye" for right now -- and revisit it if necessary. (Remember that wash sale rules only apply to losses; you can sell a winner, book the profit and immediately re-buy if you wish -- normally you'd never do that, but with the tax rate change this might be smart.)
From a corporate performance perspective in terms of expectations for the stock's performance in the next 12 months I'll lay it out like this -- if they sell 30 million units in the first 12 months the stock is going to double -- from here. And they very well might do exactly that.
This much is certain -- the "they're going bankrupt" thesis is looking damn shaky.
And that's bad for Google, because BB10 can run Android apps.
I can make a pretty-clean argument that if they could buy the company for $10 billion they'd be crazy not to.
If the uptake on the BB10 phones is anything approaching "real" it'll be twice that expensive a year from now.
(No, I don't think Google is seriously considering such a deal.)
Disclosure: The author is presently long RIMM and reserves the right to change his position at any time, particularly with the tax changes expected coming on January 1st.