Yes, it Can Get Worse
Jonathan is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Never say never.
For those who thought that the progression of business activity could never worsen for Research-in-Motion (NASDAQ: BBRY), it just did. The Canadian-maker of the Blackberry smart phone was just hit with $147.2 million in damages in a patent case brought by Mformation Technologies. According to an article in The New York Times about the lawsuit, "Jurors determined that the closely held Mformation proved in federal court in San Francisco that RIM software that lets companies manage workers' Blackberry devices remotely infringed Mformation patents. The software is called Blackberry Enterprise Server."
So much for Research-in-Motion generating much-needed capital before the Blackberry 10 hits the market by being a "patent troll."
Research-in-Motion, and its shareholders, are victims of bad everything: bad management, bad sales, bad publicity and bad luck. The Blackberry 10 was supposed to be out and bringing the company back against the iPhone from Apple (NASDAQ: AAPL), the Galuxy Nexus from Samsung and Google (NASDAQ: GOOG), and the Windows Phone from Microsoft (NASDAQ: MSFT) and Nokia Corporation (NYSE: NOK).
But in mismanagement of an epic scale, the introduction of the Blackberry 10 has been delayed twice. Which is probably just as well as preliminary reviews of it were negative. Supposedly, the BlackBerry 10 will now be released in January (even better: too late for the holiday shopping season which is the peak selling period for high tech goods).
When the iPhone5 is introduced by Apple in the Fall, before the Blackberry 10, it will only get worse for Research-in-Motion. No one does a product introduction better than Apple. An Amazon Kindle smart phone will certainly not help matters for Research-in-Motion if it makes it to the market before the Blackberry 10. As a result, Resarch-in-Motion is down more than 32% over the month of market action. By contrast, Apple is up 5.73% for the last month; as is Google by 2.75%; and Microsoft by about 1%.
In addition to the loss in federal court in San Francisco, a report just issued by Northern Securities details that the Blackberry is falling in usage around the world. According to analyst Sameet Kaade, "The Blackberry has been pushed to the #4 slot behind Nokia devices. In some markets, RIM has been relegated to even the #5 slot, behind HTC." The top slots are occupied by products from Apple, Google and Samsung. Research-in-Motion, which introduced the smart phone, has been trying to sell itself since last year. Good luck with finding a buyer now after the new report of its plummeting appeal.
Like Dante Alighieri journeying through the innermost circle of Hell in "Dante's Inferno," the universe of the professional investment community has flipped for Research-in-Motion. On FinViz, there has not been a single Sell recommendation issued for Research-in-Motion since last September. Over that period, the share price has fallen more than 73%. On November 17, 2011, Brigantine issued a Buy recommendation for Research-in-Motion with a target price of $25. Research-in-Motion is now selling for around $7 a share. On July 3, there was finally a negative recommendation from Barclays from "Neutral" to "Underweight" with a new target price of $6. That is the first negative recommendation since the March 30 downgrade by FBR Capital, which reduced its target price for Research-in-Motion from $14 to $11.
As the stock price is falling, the short float is rising. The short float for Research-in-Motion is now 19.38%. A short float of 5% is considered to be troubling for a company. "Trouble" does not even begin to describe the current position nor the future for Research-in-Motion.
jonathanyates13 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, Microsoft, and Nokia. 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.If you have questions about this post or the Fool’s blog network, click here for information.