RIM Stock Takes Another Major Hit
Analysts Starting to Doubt a Recovery
Embattled technology firm Research in Motion (RIM) took another slap to the face this week when it was revealed the company's stock had slipped a further three per cent, settling below book value. To many analysts, it indicates that product loyalty is dwindling and a recovery increasingly unlikely.
Word that RIM stock is down is not particularly surprising given recent events. Back at the beginning of October the company suffered a worldwide blackout of services that first affected Europe but soon spread to a number of other continents, including North America. RIM's inability to handle that situation cleanly has even led to the emergence of class-action lawsuits over the matter.
Beyond that, there are sliding sales of the BlackBerry smartphone and the total disaster that was the PlayBook, RIM's failed answer to the popular Apple iPad.
Given all of this, it's no surprise that RIM stock dipped a few per cent this week to $18.77.
Speculating on why the drop occurred, analysts at Canalys point to RIM's sliding popularity in the American market, where rivals are steadily surpassing it in market share. Right now, RIM sits well behind HTC, Samsung and Apple; all three of these companies posted much better numbers in the third quarter than Research in Motion.
"There's no disputing that RIM are in a really difficult place at the moment," noted Pete Cunningham, Canalys analyst.
Other analysts have presented even grimmer pictures for RIM. "The market, at book value, seems to be saying not only is RIM going to not get bigger in the future, but it’s actually going to shrink," noted Toronto-based analyst, Richard Fogler, of Kingwest & Co. Fogler says he sold his RIM shares in the third quarter. "Everyone’s frightened of what’s going to keep happening tomorrow."
Another Toronto-based analyst shared this outlook. "The market has no faith in its current model, that is what the market is telling you," said Neeraj Monga, an analyst working for Veritas Investment Research Corp. Monga encourages people to sell rather than buy declining RIM stock.
Is the dream over for RIM? Maybe not. The company still enjoys considerable popularity around the world and even now boasts better name recognition than most, save Apple. One or two fine products that improve upon those offered by competitors could easily right this sinking ship.
But those are big expectations for a company that has not truly innovated in a few years now.
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