RIM Offering Security Services to Rivals to Make up for Lost Business

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Research In Motion

According to a report, Research in Motion (NASDAQ:RIMM) is looking to offer security services on Apple (NASDAQ:AAPL) iPhone and Google (NADAQ:GOOG) Android phones in an effort to retain its corporate customers looking to switch to rival smartphones. [1] The company will introduce the security software, known by the name Mobile Fusion, which will help corporates set and monitor rules for passwords, apps and software on a range of devices.

We believe that although this initiative will not help RIM gain share in the smartphone market, it could help it generate more service revenues for the company. BlackBerry service accounts for around 33% of our $26 price estimate for RIM stock. Our price estimate is about 60% above market price.

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See our complete analysis for RIM stock here

RIM struggles continue

RIM has found itself struggling in the smartphone market as the company continue to find itself surrounded by issues and product delays (see RIM’s Struggles Continue Amid Issues, Product Delays). It all started with the recent spate of troubles with the BlackBerry outage in which millions of BlackBerry users were left without the basic email and other messaging service. The uncertainty around the BBX operating system launch date and the BlackBerry PlayBook OS 2.0 update delay meant that RIM’s stock will not find favors among investors.

RIM’s stock has declined from a high of around $70 that at the beginning of the year to about $16 as of today, which shows the lack of confidence in the company’s turnaround plans as well as management. The recent troubles with management have not made the matters any better. Activist shareholders are growing increasingly frustrated with the company. (see RIM Update: Jaquar Leads Calls for a Shake-up, QNX Delay Could be Final Straw).

RIM trying to make up for the lost business

By looking at offering security services for rivals, RIM is looking to stop corporate customers planning to abandon the services provided by the company in favor of iPhone and Android based smartphones. This could be an important move from RIM, and if it ultimately helps the company generate more services revenues, it could propel RIM’s stock higher.

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Notes:
  1. RIM Announces BlackBerry Mobile Fusion – The Next Generation Enterprise Mobility Solution for BlackBerry, Android and iOS Smartphones and Tablets, Press Release, November 29th, 2011 []