Is It Time to Short Research In Motion?
Jan 10th 2013 8:00PM
Updated Jan 11th 2013 8:25AM
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Brendan Byrnes: Hey Fools, I'm Brendan Byrnes and I'm joined today by Andrew Tonner, our tech and telecom Analyst for Fool.com.
Andrew, let's talk about Research In Motion, a stock that a lot of us are pretty bearish on. It had recently a pretty big run-up here, kind of been up and down a little bit since. What do you think about this stock? Is it time to short Research In Motion?
Andrew Tonner: Well, it's up about 50% over the last three months. I think now, when you look at the company, yeah there might be a little more to gain on the downside versus the upside. I'm not sure I'm going to say, "Go ahead and short it right now," but I definitely would say it's at least a hold in my book.
You see the recent rise sparked by the announcement that BB10 is finally going to come to market. The global launch event is scheduled for Jan. 30, but at the same time it also is a little shortsighted, in that even once they have this launch ceremony it doesn't mean that there will be any direct or immediate revenue benefit for them.
They still don't have devices coming on market until around, people say, at the earliest March for a touchscreen model, and then maybe sometime in early summer for a keyboard model.
At the same time you see them having crumbling dynamics. Their earnings this most recent quarter were brutal, and now we see -- which is what has been the Holy Grail of this company, one of the things people said in bankruptcy would be one of the most valuable assets -- their secure messaging franchise, potentially facing some headwinds as well.
I don't necessarily see the bullish case, especially in the short term. The fact that BB10 is launching, after the two-year delays and every headache and embarrassment investors had seen from this stock... it's definitely a positive, but at the same time if you look at this company in the context of, say, a three- to five-year period, they basically had the booming smartphone market under lock and key, and they've been completely side-swept and decimated by the likes of an Apple and a Google now, who basically own the U.S. market and are having huge successes internationally as well.
You look at a company like that, versus maybe a better rebound play, a sustainable rebound play, like a Nokia because they are, again, so deeply ingrained into Microsoft, and Microsoft really needs them to help launch their Windows 8 phone platform.
Research In Motion, they're a stand-alone business. They have enough cash to keep paying the bills, but at the same time A, with their long-term track record of ineptitude and not delivering, and then B, that some of that revenue -- even if BlackBerry 10 is a hit, which is not a given -- is quite extended, out into next year, at least into the second quarter of next year.
I'm not that excited about the stock.
Brendan: Yeah, I agree. I think it's a hold at best. One of the reasons I thumbed it down in CAPS recently. Andrew, thank you for your insight. Make sure you head over to Fool.com for more analysis.
The article Is It Time to Short Research In Motion? originally appeared on Fool.com.Andrew Tonner owns shares of Apple. Brendan Byrnes owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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