RIM Apologizes, Offers Cash but Fails to Appease Mr. Market

October 19th, 2011 by Trefis Team
11.98
Trefis
RIMM: Research In Motion logo
RIMM
Research In Motion

Research in Motion’s (NASDAQ:RIMM) shares have fallen by 10% the last two days in spite of a public apology by the company’s CEO followed by an offer of $100 worth of free apps to all BlackBerry users. [1] RIM is also offering all businesses that use the gadget with one month of free technical support as a show of gratitude for their patience during the recent service outage. With this fall, RIM has dropped by over 60% in the last one year.

It is tough to estimate how much the free offers will cost RIM but the financial impact could be significant if a sizable number of its 70 million subscribers choose to download the apps. At a time when shareholders are already trying to unseat a stubborn management group in the hopes of a takeover offer or an asset sale, the prolonged service outages have further hurt investor sentiment and hopes of a turnaround seem even remote now. We have discussed this in a previous note titled RIM’s BlackBerry Service Disruptions a Blow to its Turnaround.

Starting today, RIM is holding its annual three-day Blackberry DevCon Conference for software developers where it will try to persuade developers to build apps for its new QNX platform. [2] In order to assure the markets of the management’s focus, the company will have to come out with a strong long-term outlook on its operating system, QNX and give more clarity on the launch dates of its next generation devices.

Relevant Articles
  1. IQOS Helps Philip Morris Navigate Well In Q1
  2. Down 45% Year To Date, What’s Happening With Sirius Stock?
  3. Meta Platforms Stock Dropped 10.6% In A Day, What’s Next?
  4. What Factors Will Drive Pfizer’s Q1 Performance?
  5. A Rebound In Asia Travel Will Likely Drive Estée Lauder’s Q3 Performance
  6. Higher Medical Costs Likely Weighed On CVS Health’s Q1 Earnings

Our $26 price estimate for RIM’s stock is about 17% above the current market price.

See our complete analysis for RIM stock here

Notes:
  1. RIM apologizes for BlackBerry downtime with $100 worth of free apps, AppleInsider, October 17th, 2011 [↩]
  2. RIM to Host BlackBerry DevCon Americas 2011, RIM Press release, Oct 3rd, 2011 [↩]