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Rough Days for Research In Motion

2 July 2012 in Trading Ideas

It’s been a difficult recent road for shareholders of BlackBerry maker Research In Motion (RIMM).

Four years ago, the maker of the once-ubiquitious smartphone was watching its stock trade north of $140 as its pre-eminence was essentially undisputed – and unthreatened.

But in the wake of what the mania surrounding the adoption of Apple’s (AAPL) iPhone – as well as the two-front war created by Google’s (GOOG) Android platform phones, shares of RIM began to crumble – to a point where they fell below $10 earlier this month.

Unfortunately, things may have just become worse.

Late Thursday, the company announced a trifecta of bad news to investors: It lost nearly a half-billion dollars in its most recent quarter on steeply declining revenue, it confirmed that it would eliminate 5,000 jobs as part of a plan, and last, but certainly not least, RIM said it would delay the release of its new line of BlackBerry 10 phones, which were the linchpin of the company’s turnaround plans.

On a day the broader market was posting huge gains across the board, RIM shares plunged as much as 17%.

Charles Golvin, an analyst with Forrester Research, told The New York Times that the delay meant that RIM’s new phones wouldn’t hit the marketplace until after an anticipated new iPhone, more phones based on the Windows 8 operating system from Microsoft (MSFT) as well as updated Android phones.

While the conventional wisdom seems skeptical of a turnaround, companies have certainly attempted a rebirth with fewer assets than RIM. As the Times pointed out, the company has $2.2 billion in cash on hand and no debt.

Do you think RIM is a lost cause?