Two Options Left for RIM, Period.
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
It appears the hoped-for change in Research in Motion’s (NASDAQ: BBRY) management philosophy brought on by the rollout of Mobile Fusion was not to be. The recent earnings call disappointed in more ways than one but wasn’t difficult to sum up; too little, too late.
Though the poor results RIMM announced were not unexpected, it was the delayed release of the new Blackberry that really stung. It’s no secret by now that Apple (NASDAQ: AAPL) and their iPhone and iPad, along with Google’s (NASDAQ: GOOG) Android, have essentially beaten RIM senseless the past year and more. These two giants own the smartphone market at 71% and have the treasure troves to continue their domination.
When we look back at what became of RIMM a year from now, this will be remembered as the watershed moment. They had a chance, but were unable to complete the Hail Mary. And that leaves the company with two options, and two options only. Actually that statement needs qualifying because disintegrating after a fire sale is another possibility; one many analysts believe likely.
Why the company has any alternatives after the fiasco of 2011 is a legitimate question. The answer is in the brand. Just hearing the company name makes investors squeamish; sort of like when the chalk catches on the chalkboard resulting in that horrendous screeching sound. But for consumers, Blackberry is still a recognizable brand that conjures images of the smartphone revolution. Call it goodwill if you like, but it’s real.
The Options
Get new management, and get new management now. At this point, there is no way the current management team in Ontario, Canada can instill the kind of investor confidence needed to turn this thing around. They must go. In fact, regardless of the road RIMM ends up traveling, it will be without the existing co-CEO team of Jim Balsillie and Mike Lazaridis. If they care one iota for the company they’ve run for years, they’ll do everyone a favor and expedite the process. This is the only chance for the company to remain a viable, independent entity.
The other option is perhaps the most likely; though it will no longer include the premium it would have even a couple of months ago. It’s time for Research in Motion to aggressively shop themselves to prospective suitors. Hire a quality, reputable investment banking firm and let them get to work. At this point, getting $15 a share or higher would be a win. And when things are this bleak, even small wins should be jumped at wholeheartedly.
A darn shame really, but that’s the world we live in. Sticking to your guns regardless of what those around you have been saying for over a year only makes you a "maverick" when it works. It didn’t, period, and now it’s time to salvage what you can.
The investment opinions included are just that, opinions. Tim is not a licensed investment professional, nor has he been for several years. Investing involves risk, as you well know, so consider your decisions wisely.
