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Blackberry's Investor Strategy

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Research In Motion Limited (NASDAQ: RIMM) How is Blackberry surviving so far in the volatile stock market? Investors are not certain that it will come out short. The high risk strategy follows after its redesigned smartphone, the BlackBerry Z10 came out earlier this year. Investors are also questioning the future which looks to be uncertain. BlackBerry 10 line of smartphones has been performing well, meeting Research In Motion’s expectations after being launched earlier this year. The company is capitalizing on the rise of smartphones. RIM’s share price fell to $14.45 this week. Technology stocks fell last Wednesday, with shares down more than 4%.

 

According to Reuters, Shares of BlackBerry, which reports fiscal first-quarter results on June 28, fell 3.6 percent to $14.31 in morning Nasdaq trading. The stock dropped as low as $6.22 last September, but has more than doubled in value since then. RBC Capital Markets raised first-quarter sales estimate to 3.5 million BlackBerry 10 units from 2.75 million with expected shipments of 4 million BB10-enabled devices in the current quarter, up from a prior outlook of 3 million.

 

Smartphone Global Mobile Growth

The mobile device market is the fastest growing market sector today being let by smartphone users worldwide. Wireless Intelligence had stated in its report "1.5 billion subscribers will be added to 3G networks in the next two years." The smartphone market is expected to grow to 18.3% compounded annually through 2016. It is estimated that 1 in 7 of the world's population owned a smartphone in the third quarter of 2012. Global growth has yet to penetrate in the market. It is forecasted the next billion growth of smartphones to be achieved in less than three years, by 2015.

 

" Worldwide smartphone sales rose 43% last year, down from 58% in 2011 and 72% in 2010, the year that they really took off, following increases of just 24% in 2009 and 14% in 2008 " via Gartner.


Consumer Demand

With over 100 million smartphone owners, these mobile consumers want simplicity and speed. By 2014, worldwide mobile commerce will reach $352.7 billion. Consumer growth expectations are demanding. The mobile market is evolving at a rapid pace. Mobile market growth is being driven by demand developing world, led by rapid mobile adoption in China and India. Subscribers are expected to reach 6.9 billion by the end of 2013 and 8 billion by the end of 2016.

 

RIM’s devices are aimed at developing markets. McKinsey research indicates that the industry’s globalization remains in its infancy. China, India, and Russia are likely to emerge as significant players over the next two decades, a development that will give Western companies major short-term cost-reduction opportunities that they must capture.  The cost of labor, which on average is three to five times lower in these countries than it is in the developed world, also makes emerging markets attractive for labor.

 

Investors are bullish towards the stock despite its volatile outlook. Blackberry’s newest devices by RIM have been steady in growth and positive from consumers. The stock has ranged in price between $14.53-$15.27 after having opened the day at $14.70 as compared to the previous trading day's close of $14.62. Research in Motion has a market cap of $6.8 billion and is part of the technology sector. Shares are up 9.4% year to date.

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets

 

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