Research in Motion Soars as Investors Ready for BlackBerry 10
Shares of struggling smartphone-maker Research in Motion (NASDAQ: RIMM) soared on Wednesday. Shares had climbed nearly 12 percent and to trade near $11.80 late Wednesday.
Last Thursday, Research in Motion plunged after releasing its third-quarter earnings results. The stock initially traded sharply higher on the back of the results, then dropped during the conference call and continued to sell off in the following session.
Wednesday's jump in the share price comes on the heels of a better than 25 percent decline in the stock on Friday and the Monday prior to Christmas. The shift in investor sentiment, however, has still left the stock down roughly 13 percent over the last 5 trading days. This name will likely continue to be very active going forward as the company prepares for its crucial January 30 launch of BlackBerry 10.
While Research in Motion's most recent earnings report left investors disappointed, the launch of BlackBerry 10 may be enough to provide some optimism in the stock in the near-term.
For the third-quarter, Research in Motion reported net income of $9 million or $0.02 per share, compared to $265 million or $0.51 per share, in the year ago period.
On an adjusted basis, which is comparable to analysts' consensus, Research in Motion reported a loss of $114 million or $0.22 per share. This was well ahead of Wall Street analysts' consensus earnings per share expectations of a loss of $0.35.
Sales in the period were $2.7 billion, a 47 percent decline versus the $5.2 billion the company reported last year. This also beat analysts' consensus revenue estimates of $2.66 billion.
Research in Motion said that it expects further pressure on operating results ahead of its launch of BlackBerry 10 in the fourth quarter. The company added that it anticipates it will report an operating loss in the fourth quarter.
BlackBerry 10 is expected to launch on January 30, 2013 and will be critical to to the future of Research in Motion as a going concern. The stock has been extremely volatile in 2012, trading in a range between $6.22 and $17.96 as the company's operating position continues to deteriorate. BlackBerry 10 is likely Research in Motion's last chance to save itself. The product could potentially do just that.
While RIMM's market share has collapsed in the United States amid competition from iPhone and Google's (NASDAQ: GOOG) Android devices, Research in Motion still maintains a strong position in international markets. A successful BB10 launch could prevent the BlackBerry ecosystem from being relegated to the dustbin of history in developed markets and allow the company to re-establish a profitable niche in the smartphone market.
At the very least, the upcoming launch date provides a catalyst for the stock in the month of January. While many observers may be skeptical about the success of BlackBerry 10, the stock could see marginal buying in coming weeks from investors who think they can play a rally into the release date before flipping out of the stock for a quick profit. In the longer-term, Research in Motion's outlook continues to look bleak, but this name could have a big month and should remain very active.
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