Research In Motion downgraded to underperform

The one-two punch of Apple's iPhone and Google's Android platform have doomed the BlackBerry maker.

By Zacks.com Mar 28, 2012 5:34PM

By: Zacks Equity Research
‎  

We are downgrading our recommendation on Research In Motion (RIMM) to "underperform" from "neutral" on the back of continued somber financial results coupled with a reduced outlook.


Research In Motion has consistently struggled ever since Apple's (AAPL) iPhone hit the market. The situation worsened when Google (GOOG) launched its Android software, which was adopted by several handset manufacturers. Both phone platforms have crept into the corporate environment, making RIM's BlackBerry operating system obsolete as it continues to lose market share.


RIM's global smartphone market share fell to 12% in the last quarter from 19% a year earlier. The situation is worst in the U.S., where revenue declined 7% year over year.


Research In Motion is planning to launch its new QNX-based smartphones in the second half of the year. However, we believe that the long-delayed product launch will further create pressure not only on their present market share but also on the average selling price (ASP).


In the mature North American market, Research In Motion has failed to compete with large and established competitors, while in the lucrative emerging markets, the company is facing cutthroat competition from low-cost phone manufacturers in Taiwan, China and India. Moreover, availability of cheap Android-based smartphones and the iPhone in these emerging markets is a big threat at both the enterprise and retail consumer segments.


Recently, the company launched a new BlackBerry PlayBook operating system for tablet computers to improve the way email functions. However, we believe that the upgrade will not make a huge difference to its market share, as the tablet market is dominated by Apple's iPad. The newest version of the iPad recently hit stores, and Apple sold a record 6 million in one day.


The PlayBook can't squeeze into the lower end of the market, either, as Amazon's (AMZN) low-priced Kindle tablets are already dominant there. That leaves less opportunity for higher-priced PlayBook tablets to be a success.


Currently, Research In Motion has a short-term Zacks No. 5 rank ("sell" rating).


Read this article on Zacks.com

Read the full analyst report on "RIMM" (registration required)
Read the full analyst report on "AAPL" (registration required)

Read the full analyst report on "GOOG" (registration required)
Read the full analyst report on "AMZN" (registration required)

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
282
282 rated 2
455
455 rated 3
624
624 rated 4
642
642 rated 5
665
665 rated 6
610
610 rated 7
460
460 rated 8
287
287 rated 9
167
167 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
KOGKODIAK OIL & GAS Corp10
TWXTIME WARNER Inc10
BBBYBED BATH & BEYOND INC10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.