Rebound or Requiem? A SWOT Analysis of Research in Motion, Introduction

Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

I’m old enough to remember when owning a Blackberry PDA was a status symbol.  You do remember what a PDA was, right?  It was enviable to see someone checking or writing emails - wirelessly no less - on their PDA while you just sat there, waiting for a meeting to begin or waiting to catch the next train.  I eventually opted for a Hewlett Packard iPaq.  That only elicited looks of pity from Blackberry owners who clearly owned a superior device.  A Blackberry PDA was it.  And Research in Motion (NASDAQ: BBRY) stock was a winner. For a while, the good news just kept coming.  Research in Motion (RIM) rolled out its smartphone in 2002 that combined a cell phone with a PDA.  Then in 2007, some company called Apple (NASDAQ: AAPL) came along and introduced the world to a thing called an iPhone.  The media went nuts, people started buying and the slick, hip Blackberry smartphone suddenly joined bell bottom jeans and disco on the trash heap of uncool, if not laughable, history.  The iPhone had a touchscreen instead of a keyboard, and a fast processor with memory.  The iPhone was now it.  

RIM kept making money and in 2009 they released the Blackberry Storm smartphone.  Some thought it would be an “iPhone killer.”  The stock peaked at $144/share.  But in 2010, it only had 10% of the smartphone market while Apple and Samsung controlled about 80% between them.  In 2011, RIM announced it expected earnings to drop for the first time in nine years and the stock fell to its 2006 levels. Shareholders losses continued as RIM closed a low of $6.30/share on Sept. 24. Since then, RIM has recovered to about $13/share.  Is this comeback time for RIM or a fit of unbridled and unfounded optimism? Has Apple had its day in the sun and does the recent decline open a door for a resurgent RIM?  Is Apple simply reloading, ready to crush any Blackberry smartphone that tries to compete?

SWOT Analysis

To answer these questions and more, fellow Motley Fool blogger Matt Di Lallo and I will perform a SWOT analysis of Research in Motion.  We will look at its Strengths, Weaknesses, Opportunities and Threats.  For example ...

Strengths     

A reputation for building a solid device.    

A reputation for superior security.    

A loyal customer base, particularly overseas.    

A marketing strategy targeting BB10 to a specific customer segment rather than being all things to all people.    

Lots of cash ($2 billion) and little debt.

Weaknesses    

A relatively high dependence on US government purchases.    

Dependence on the delayed BB10 for a breakout product launch, particularly in light of poor reception of BB7 products.    

Laying off people to save money.    

Losing money for the past three quarters.    

Losing customers to other smartphones in the US.

Opportunities    

Growth opportunities in Third World markets.    

The BB10 targets business users with features not seen in other smart phones.    

The BB10 comes in both keyboard and touchscreen models to broaden appeal.    

While the BB10 launch was delayed, this may mean a better product when it actually hits the market.    

Aiming for 100,000 apps at launch, a record for apps available at launch.    

General cell phone churn sees smartphones gaining at expense of non-smartphones, opening a door for potential BB10 sales from customers ditching their old cell phones.

Threats    

The expanding “bring your own device” trend, including the federal government.    

A patent infringement lawsuit brought by Nokia that may suspend sales of BB10.    

Growing competition from not just Apple, but Nokia (NYSE: NOK), Samsung and Google (NASDAQ: GOOG).

Foolish Bottom Line

Research in Motion presents an investing dilemma:  will it return to profitability and popularity with its BB10 launch or will it simply pop and then fizzle as competition and its late arrival to the touch screen smartphone market limits market share.  Read our SWOT analysis in our five future installments, including a wrap-up.


dylan588 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple and Google. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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