Research in Motion (RIMM) Gets Upgraded as Anticipation for BB10 Grows
Shares of Research in Motion (RIMM: Charts, News) caught an unusual break last Friday, after Goldman Sachs analysts upgraded the stock from "Neutral" to "Buy," increasing its 12-month price target from $9 to $16. The stock has risen nearly 44% over the past month, in anticipation of the company's long-awaited Blackberry 10 software.
RIM is expected to launch a new line of BB10 smartphones in early 2013, to compete in a market dominated by Apple's (AAPL
) iPhone and Google's (GOOG
) Android devices. Daily Chart
After Blackberry 10's release in January, RIM will offer two new smartphone models featuring the new operating system immediately. One of these models still features its trademark physical keyboard - despite the market's current taste for full touch screen devices. RIM noted that an increasing number of software developers are modifying popular applications for use with RIM's QWERTY keyboard. RIM is also actively increasing the amount of business-centered applications in its BlackBerry App World, in an attempt to recapture the business enterprise users segment which it has steadily lost to Apple's iOS devices. RIM finished 2011 as the top operating system for business enterprise users, but a recent report in the Silicon Valley/San Jose Business Journal expects Apple to claim the top spot by the end of 2012. Enterprise users still favor BlackBerry over Android, due to malware and security issues in Google's operating system. Bullish analysts expressed confidence in Blackberry 10's ability to capture market share from Apple and Google, due to initially positive reviews of the software, which is expected to enjoy broad developer and carrier support upon its release in January. RIM also announced an upgrade to BlackBerry Mobile Fusion 6, which allows BlackBerry devices to interact with iOS and Android devices. Apple and Google's dominance of the smartphone and tablet markets decimated RIM's market share over the past five years, causing its share price to plunge from $144 per share to a humbling $11 today. Over that time, RIM's iconic Blackberry - the iPhone of its time - was tossed out with Nokia (NOK
) and Motorola (MSI
) handsets as outdated gadgets of the past. Despite being beaten down and becoming increasingly irrelevant to modern smartphone users, analysts believe that RIM stands a chance to return to profitability by February 2014 if it successfully unveils BB10 and its new line of smartphones on time. Shares have been highly volatile over the past few weeks, soaring on a major investment from famed investor Donald Yacktman, then plunging after Nokia attempted to block RIM's devices over alleged patent violations. RIM bulls point out that despite current troubles, the company still boasts an impressive user base of 80 million subscribers. In addition, RIM was able to add users quarter after quarter despite lacking a competitive handset over the past year. RIM still has $2.3 billion in cash for marketing and launching BB10, and analyst Steven Li noted that the company only needs to sell 18 million new units to break even on its investment. Shares of RIM do not pay a quarterly dividend, and its P/E and PEG ratios are negative, due to a lack of profitability over the past year. The stock has traded in a wide 52-week range between $6.22 and $17.96. Other News About RIMM When Research In Motion Wins, Who Loses?
Can RIM finally dent Apple and Google's market share? RIM Gain Good Sign' for Broader Market
Should RIM be considered a bellwether stock? Other Stocks in the News Yahoo's Marissa Mayer Speaks Out
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Published on Dec 3, 2012
By Leo Sun