Research in Motion: Moving Again?
It's been a rough year so far for Research in Motion, maker of BlackBerry wireless e-mail devices. The Waterloo, Ontario, company is still recovering from -- and eager to distance itself from -- a damaging patent infringement lawsuit it settled in March with Arlington, Va.-based NTP Inc. for $612.5 million. Since the settlement, more bad news has rattled Research in Motion. This includes lackluster forecasts for growth and concerns about competition from a new crop of smart phones from rivals Motorola, Nokia and Palm. Shares of Research in Motion (symbol RIMM), currently $66 in U.S. dollars, are down 27% since mid March.
Company executives offered an upbeat outlook last month, citing plans to launch BlackBerry service in China, as well as a spate of new products in the fall. But Research in Motion's bosses were tight-lipped about details, so although investors listened, they didn't bite. Any major upward move in the stock in the short run is unlikely until the world sees the new products and decides whether they will be must-haves. If they are, today's share price will prove to be a mighty good buy. The stock trades at 21 times analysts' estimated earnings of $3.04 per share for the fiscal year that ends next February 2007, according to Thomson First Call.
Analysts at J.P Morgan say they believe the springtime slide is overdone and on Wednesday upgraded the stock from "neutral" to "overweight." They say Research in Motion's subscriber base should double over the next 18 months, to more than 10 million, despite the intense competition. Morgan predicts annualized earnings growth of 29% through 2009.