$RIMM . Continues to be bearish.

 

$RIMM goes as low as $12.37 when the earnings came out before recovering to the $13 levels.

Clearly, in the earnings call, it leaves no doubt that there is very little RIMM can do.

They have missed the opportunity for both the smartphone and tablet market. And the opportunity to capture the market share (if any) continues to rapidly shrink with AAPL strengthening its position. RIMM need to contend with Google as well as MSFT and their partners (Samsung, Nokia, LG, HTC).

All of them will have sufficient cash to go against and respectively capabilities to be up against RIMM.

At this moment, RIMM is still trading under the kumo and I will continue to hold my bearish view.

Thick kumo resistance ahead is a reflection of the challenge that RIMM face. While the after hours trading hitting 12.37 shows that the support at around 12.75 can be easily breached.

Is $RIMM new OS really that great?

First off, this is not a post about the technical superiority of any OS.

Secondly, I am vested with a SHORT position on RIMM. So, read this with a huge pinch of salt.

For the past few days, the media has been reporting Mr. Leon Cooperman’s ownership of 1.42 million of $RIMM  shares as of Sept 30. Clearly, this suggests that the shares were bought between July to September. As we can see from the chart below, the price range from $20 to around $32 during that period.

 

 

My guess is his entry will be around $25.

During that period, the common reasons to buy RIMM are:

  • US$25B cash they have
  • Little or no debt
  • P/E of less than 10
  • Corporate entreprise still uses RIMM
  • Emerging markets are growing (despite the loss in North America)
And still RIMM falls hard. Not only does it go below $20, it breaks a critical support at around $18.50 . I recall when RIMM has the service outage, it was holding its price fairly well. What is causing the drop?
Now, back to Mr. Leon Cooperman. A Bloomberg article carries the headline RIM’S NEW OPERATING SYSTEM WILLL ‘SURPRISE’, COOPERMAN SAYS.

I have a lot of respect for Mr Cooperman for being a successful fund manager. However, I cannot agree with the statement. Just because the new operating system ‘surprises’ does not mean it can turn the company around. If that is the case, Palm will have an easy walk in the park with their webOS when it first launch (granted, Palm’s financial position is nothing to brag about).

In this new war for the ‘tablet/smartphone’ market share, it is not the device or the widget that is creating the turn. With iOS and Android cornering the major bulk of the market share, what else is left for RIMM? Microsoft will also be pursuing this market together with Nokia. As far as the ‘device’ market share is concerned, RIMM is up against Apple, Nokia, Samsung, HTC and many more.

In terms of vertical markets like Music, Videos, Publishing, Applications and Software, RIMM is losing developer base and competing with Google, Apple and Amazon in creating valuable relationships with various verticals customers. For example, Amazon most and Google most likely own the Publishing space. Where does all these leave RIMM? Will RIMM be able to replace Apple’s iTunes and their relationship with the music labels?

Internally, RIMM is losing a lot of executives including Top Execs heading the emerging markets. If this is not a sign of a sinking ship, what is? Imagine, the various Heads of your fastest growing markets are jumping ship?

RIMM has totally lost its momentum on Innovations, Growing the Community, and keeping their top executives. Meanwhile, competitors continue to gain market share at their expenses.

Anyone running a race will know how difficult it is to regain the top position once you lose the focus and momentum. This is where RIMM is at. And technically, the chart shows continue bearish movement to come.

At best, a technical rebound. However, with 5 gap down in 1 year, there is very little hope for RIMM.

Research In Motion ($RIMM) : Shipped is not equal sales

This post will not contain any chart reading. Rather, I am just going to raise one key point about RIMM.

There’s an open letter that has been going round the Internet. In it, the letter shed some insights, missteps and frustrations from within RIMM.

RIMM has a response to the open letter.

RIMM’s statement is fair; highlighting its zero debt, cash that the have etc.

However, I just want to remind RIMM about one point that they highlighted.

In fact, while growth has slowed in the US, RIM still shipped 13.2 million BlackBerry smartphones last quarter

RIMM continues to reinforce the strength of their balance sheet and amount of devices shipped.

Well, we have seen this in Nokia as well. And where did Nokia goes? Definitely still around. But, the share price is nothing to be proud of.

I tried Nokia’s E7 which is a fairly new phone and runs on the Symbian platform. As a smartphone, there’s nothing to shout about. In fact, it exposes the very key reason why consumers and developers are jumping to another platform.

Back to RIMM. What lessons can we learn from the above?

For a start, what we see in Nokia can definitely be applied to RIMM. In Nokia’s cace, I am getting the E7 for free. Somewhere, someone is trying to make sure the inventories do not get stuck in the channels. Just a few months back, this same phone would have required me to fork out a few hundred dollars.

On top of this, we also have Palm as a case study. Palm too has shipment figures. But, that does not translate to sales.

While RIMM is still able to milk the entreprises on the BES licensing fees. This is not a strong proposition. It is a great cashflow but the growth may not be there anymore.

Look at iPad. Intercontinental Exchange Ltd (ICE) has already developed apps for it. That means financial institutes are going to encourage their traders to start using the platform. And this is just one case. I am sure there are others that have not been highlighted.

RIMM, NOK, GRMN belongs to the same group. They need to know that It is not the wins but the losses that shows your weakness.

Note:

I have PUT options on RIMM and have intention to establish new positions if the chart suggest so.