RIM Ain't Dead Just Yet

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

RIM (NASDAQ: BBRY) did something not many people saw coming -- it beat earnings estimates last week. Although they weren't positive numbers, they were better than analysts expected.

Many saw this as insignificant while others saw RIM’s quarterly report as a sign of life.  In reality, it was a little bit of both. It shows RIM is still alive and won’t burn out of cash before BB10 is released, but the numbers don’t paint a vastly different picture than what was there before the report.  RIM has no debt, ample cash and now 80 million subscribers to profit from.  In my opinion what this report did was just reconfirm the fact that RIM is still in a position where a turnaround is much more likely than the company going bust.

The Big Dogs

At one point of the smart phone revolution, RIM was the big dog in the park.  We know what happened and where they have fallen.  RIM is not Apple (NASDAQ: AAPL) and a turnaround will not rival the iPhone any time soon.  The idea that there is only room for the iPhone and handsets running Android-based OS’s is silly and refutes the premise that brought Apple back from the grave. 

It’s hard to remember but less than a decade ago, Apple was splitting its stock and was trading post split under $50 a share.  Apple built its business comeback on the success of one innovative product.  We have a tendency especially in investing to want either black or white.  Either a company is going to be a high flyer, a long-term play or a company is destined for failure.  Like Apple, this thinking precludes the fact that companies can be reinvented, reimagined and come back as different variations of what they once were. 

IBM (NYSE: IBM) is another great example of this.  Once the main manufacturer of the antiquated mainframe-style computers of the 1960s, IBM has reinvented itself as a software provider to businesses.  IBM has done phenomenally over the last decade, even lacking a celebrity CEO.  IBM has also shown interest in parts of RIM’s business as it would make a perfect fit for IBM’s business-focused software products.  RIM is far from dead and still has a lot of room to maneuver in a turnaround.

What Happens Now

As I said, to think that everyone on the planet will own either an iPhone or a Google-based OS smartphone makes no sense.  It would be like saying that everyone will drive a Honda Accord or a Toyota Camry because they are the two most popular cars at the moment. 

The smart phone revolution is far from over and in countries where it is in full effect RIM is very strong.  Though RIM has lost market share in most of the first world, it has increased its presence worldwide.  Moving forward, RIM and its investors will have to wait until BB10 is released to really see what will happen next. BB10 has reviewed well when parts have been shown and the new updated Playbook is a solid tablet with built-in email functionality.  Combined with a subscriber base of 80 million people, this is a great foundation to build the next chapter of this company on.  

Possibilities are Abundant

In a best-case scenario, RIM will unveil a fantastic product and BB10 will be a hit similar to what the Galaxy Note was for Samsung.  RIM will have an abrupt turnaround and will be firmly pointed in the right direction.  In another scenario the BB10 is moderately successful and RIM will have to seek out partners, of which there are plenty who can leverage their technology to build a successful business.  The last earnings report shows that RIM is not dead and has a very good chance of surprising a lot of people.         

Compare and Contrast

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mooseelz owns shares of Apple and RIM. The Motley Fool owns shares of Apple and International Business Machines. Motley Fool newsletter services recommend Apple. 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.

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