Market Overview

Research in Motion Drops Ahead of BlackBerry 10 Release

Research in Motion Drops Ahead of BlackBerry 10 Release

Shares of Research in Motion (NASDAQ: RIMM) dropped 5 percent on Tuesday ahead of the release of the company's BlackBerry 10 mobile operating system. The company's new operating system is set to officially launch tomorrow, January 30, although the new devices running it reportedly won't go on sale until February.

RIM has been one of the greatest tech performers since the fall, more than doubling in the last three months alone.

How much of the move has been driven by real fundamentals, and how much has simply been a short covering rally? Nearly one-third of RIM's float has been sold short.

At the same time, there has been increasing optimism about the viability of BlackBerry 10 as a mobile operating system. Although the lead built by Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) may seem insurmountable at this point, BlackBerry 10 has received some positive press: Its mobile browser is said to be the fastest available, for example.

It will also pack the traditional features that have endeared BlackBerry devices to corporate customers for years -- BlackBerry Messenger and email in particular.

The move on Tuesday might be a case of “buy the rumor sell the news” as traders begin to dump the stock ahead of the actual unveiling of the new operating system. Over the coming months, the stock's dynamic might shift from speculation to actually trading on how the market is adopting (or not adopting) BlackBerry 10 devices.

The wildcard in the equation is an acquisition. Last May, RIM hired RBC and JPMorgan to help it evaluate its options -- including a possible sale or licensing agreement.

Chinese firm Lenovo told Bloomberg it was open to a possible deal, but then retracted its statements somewhat saying they were “misinterpreted.”

At any rate, the coming months will be key for traders involved in RIM,as BlackBerry 10 devices finally start to hit the market.

Shares of RIM traded near $15.40 on Tuesday, down nearly 5 percent.


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