BlackBerry underfoot: RIM stock loses 20% on downgrades, weak performance

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BlackBerrys are getting trampled.

The device’s maker, Research in Motion Ltd., is watching as its stock has lost nearly one-fifth of its value Friday, after a weak quarterly performance that triggered downgrades by Wall Street analysts.

The company sold fewer handsets than analysts expected in the previous quarter, and its revenues dropped 10% from the same period a year earlier. The company’s problems keeping up with the rapid adoption of Google-powered Android smartphones and Apple Inc.’s iPhone -- as well as RIM’s lack of success with its PlayBook tablet computer -- had analysts hinting again that the company might be headed for a sale.


The PlayBook sold about 200,000 units, RIM executives said -- fewer than they expected. Apple’s iPad tablet sold more than 9 million units in its most recent quarter.

‘We believe that the disappointing launch of the PlayBook has heavily compromised RIM’s ability to further develop a mobile ecosystem with long-term profitability,’ wrote James Faucette, an analyst with Pacific Crest Securities who downgraded the stock to an underperform rating, and guessed that its patents could fetch $5 billion if put on the market.

Of the 55 analysts listed by Bloomberg’s financial system, 17 now recommend selling RIM stock, while 11 recommend buying it. The remainder say to hold on to it for the time being if you already own some.

Shaw Wu, an analyst at Sterne Agee, remained hopeful about the company’s chances. Investors should look past the grim financial performance and buy the stock, he wrote in a note to investors. ‘We continue to believe that RIM is about to undergo arguably the biggest product upgrade cycle in its 27-year history.’


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-- David Sarno