Research in Motion (NASDAQ:RIMM), which operates the popular Blackberry Messenger service, has been facing mounting pressure to open its secured data network for scrutiny by the governments of Saudi Arabia and the United Arab Emirates. Until last week the company had refused, maintaining that its business depended on maintaining the confidentiality of its data.
According to recent news reports, Saudi officials are now in talks with RIM to place BlackBerry servers inside Saudi Arabia that the government could monitor. RIM competes with Apple (NASDAQ:AAPL), Motorola (NYSE:MOT) and Nokia (NYSE:NOK) in the mobile phone market. Several other countries, including India, Algeria and Lebanon, have recently pushed for access to BlackBerry data for law enforcement purposes.
If RIM denies their requests, its BlackBerry Messenger service and/or smartphones could be banned from these countries. On the other hand, some BlackBerry users might lose confidence in the service if they feel that their data is no longer confidential.
If the issue is not successfully resolved, there could be serious implications for RIM’s stock price. Our analysis follows below. Read More »