The last one week again turned to be a difficult week for Research in Motion (NASDAQ:RIMM), as millions of BlackBerry users were left without the basic email and other messaging service for four days. The disruption was caused by a failure at a RIM data center causing inconvenience to subscribers from Europe, the Middle East, Africa, India and the U.S. The disruption couldn’t have come at a worse time, when the company is already struggling. Its stock has taken a beating from the highs of $70 at the beginning of the year to $22 as of today. At the same time competitors are making rapid strides, with Apple (NASDAQ:AAPL) having sold 4 million iPhone 4S in the three days after its launch last week.
We believe that this disruption could have a long lasting effect on RIM’s reputation even though the company later tried to appease the users by offering them $100 worth of free apps. RIM really needs to come up with an innovative answer if it wants to resurrect its fortunes. The company will be holding its annual three-day BlackBerry DevCon Conference for software developers this week, and we expect it to unveil a major software upgrade for the PlayBook tablet. The company has failed to make much of an impression with the PlayBook and was forced to cut its price recently (see Retailers Cut Playbook Prices as Kindle Lights Fire for Cheaper Tablets).
During the conference, RIM may also provide a glimpse at next-generation smartphones using its QNX software. The company plans to replace its BlackBerry operating system with QNX, and this transition is expected to be completed by end of next year. We believe that QNX remains its only hope for a comeback. We are optimistic about QNX fortunes and our $26 price estimate for RIM stock is about 15% above market price.
See our complete analysis for RIM stock here
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