With its volatile appetite, the bear market showed little respect last week, not even for the sweet Blackberry.
The Blackberry, a popular handheld device created by Research In Motion Ltd., was not only the mainstay of its company’s fabled fortunes in the past year, it has elevated itself into a marquee product among corporate types on the go from the Wall Street investment banker to the Nasdaq hero.
Yet, last week, when the stock market sailed into stormy waters, the Blackberry was bruised along with most telecom stocks.
The performance led H.C. Wainwright to downgrade it from buy to sell and a Barron’s article put it in a fund manager’s short-sell list.
This stock-market slide stripped the company of $1.6 billion.
But analysts think the product has the staying power to survive all the blitz, and even prosper.
“While all the telecom stocks were going down, RIM has been one of the exceptions. For the most part, the stock sold for about $100,” said Jeff Chang, an analyst with The Strategis Group.
The fairy-tale ride of the product has led analysts to compare it with the miracle of the i-mode service in Japan. The two-way device, with its power to combine the geniuses of personal digital assistant, wireless e-mail device and pager in one portable unit, has not only compelled the respect of competitors, it has had to sell itself to about 200,000 by word of mouth, breaking away from the frenzied patterns of huge publicity and advertising campaigns that have characterized the industry.
The force of Blackberry’s appeal has driven others to its bandwagon. America Online Inc. has promised to adopt RIM’s hardware and software to customize its AOL Mobile Communicator series of handhelds and this could further boost Blackberry’s sales.
Personal computer makers like Compaq Corp. and Dell have decided to include it in their products to their customers.
Yet, if i-mode has had a near-monopoly ride in Japan, analysts are not so sure that the North American markets will oblige.
“Although RIM has a stranglehold on the corporate data market, I would think there is going to be a significant amount of competition in the next couple of years,” said Chang.
He said that the market is still young and there are various competing networks developing to set the stage for a battle for customers, especially with the onset of third-generation technology.
“In Japan,” Chang said, “there are a lot fewer possibilities and networks than in the United States,” naming paging, cellular and high-speed data networks as competition.
Companies eying Blackberry’s successes include Motorola Inc., Palm Corp. and Handspring.
Motorola is marketing its Timeport pagers with charming features like neon colors and lower prices. Palm and Handspring have also been trying to create new features and offer new service such as OmniSky. But so far, Blackberry is still ahead.
“We are a personal information manager, wireless e-mail device and pager all rolled into one device,” said Jim Balsillie, chairman and chief executive officer of RIM.
Sacrificing profits in the short term for expansion, RIM has set its eyes on Europe with agreements with BTCellnet to sell the product in Europe.
Merrill Lynch estimates expect RIM to report a loss of $9.7 million for fiscal 2001 against $10.1 million net income in fiscal 2000. But it is expected to jump back to $9.5 million on sales of $334.4 million in 2002.
