It has been a very rocky road of late for Canadian based tech company Research In Motion Inc. (NASDAQ: RIMM). Best known as the developer of the BlackBerry smartphone, Research In Motion has found itself unable to gain traction in order to keep up with the likes of competitors Apple (NASDAQ:AAPL) and Google (NASDAQ: GOOG). In fact, from June of 2008 to July 0f 2011, shareholders lost a staggering $70 billion or 82 percent of their investments in the company. To put the company’s problems into perspective, shares which once sold for $140 are now selling for $17.47. While this is above the 52 week low of just over $6.00, it is below the $17.90 high hit this week. Investors appear to be waiting for the imminent launch of the company’s newest product, the Blackberry 10 before making decisive bets in RIM’s favor.
Like Nokia (NYSE: NOK) with its newest Lumia products, Research In Motion is betting the farm that a new smartphone, the BlackBerry 10, will cure what ails the company. But there are valid reasons why it may not. RIM has a haphazard track record, at times producing product that is inferior to the competition and it seems unlikely that anything they come up with in the new BlackBerry unit will come close to the technology of the Apple iPhone or Google’s Android operating system. Another potential down side is that RIMM’s legacy BlackBerry smartphones won’t be able to run apps being created for the new platform. The motives behind this move defy logic to the consumer and investor. In addition, the launch date being put on hold until after the holiday season (when consumer discretionary spending is in large part tapped out) might not have been the best decision that the company has made regarding its newest gadget.
According to RIM CEO Thorsten Heins, “the Blackberry 10 will advance the operating system environment to a whole new level.” While that claim remains to be seen, what is certain is that Research In Motion will have to put out an ultra superior product in order to come close to recouping losses and build stymied cash flow. On the other hand, though the Canadian company is struggling in the North American Market, it has seen a rise in sales in developing markets. There is hope that the company is getting its fiscal house in order and that the new device will help it achieve that goal. Only time will tell at this point but one thing is certain; it will be an interesting release of product.
RIM needs much more than a new gadget to steer the company into a lucrative direction. And although investors might be enticed by the price of the stock right now, if the company does not begin to post gains in the near future the outlook is rather bleak. The timing of the release of the Blackberry 10 may turn out to be a marketing fiasco with disappointing sales in the first quarter of this year. There are so many problems facing the company that it is difficult to know how to plug the dam in order stop the leak. I do hope they figure it all out.