Research in motion

Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) stock has undergone a stupendous recovery in recent weeks, as major analysts projected that the firm’s upcoming smart phone line might save the firm. A new report from Canaccord Genuity released today bursts that bubble, and downgrades the firm to a sell with a price target of $10.

Shares in the Canadian handset manufacturer have risen 34% since November 5th, and 74% since the 4th of September. The market is clearly anticipating signs of a recovery in the firm’s accounts early in 2013. BB10 has been touted as the beast to bear positive earnings results, but can it really do enough to save the company.

According to today’s report, the analyst does not expect the “consumer pull, carrier push, or developer excitement necessary… to reverse the challenging trends faced by Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM).” The new range of phones and the enhanced software is likely to improve the firm’s fortunes, but at current levels of interest, they are unlikely to give a huge boost to Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) fortunes.

Smart Phone Market Share

The above table gives the past and expected performance of all of the smart phone players from 2009 up until 2013. Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM)’s share for the market has fallen from almost 20% in 2009, to an expected 4.6% this year. BB10 is expected to give the firm a total of 3.2% in 2013. That number represents a number of older Blackberry devices being replaced at a higher rate than BB10 devices are purchased.

Because of Blackberry’s dismal performance in recent years, both Android and Apple based mobile phones have become a new normal in the enterprise sector. A growing use of one’s own smart phone in the work place is likely to make this trend worse. The enterprise sector has traditionally been Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) territory, no longer, according to the most recent statistics.

According to Canaccord, RIM is likely to announce a loss of around $1.39 in 2013, and a loss of $0.26 in 2014. Revenue is expected to fall to $11.45 billion in 2013 and recover to $12.87 billion in 2014. Both of those numbers are far below the company’s 2012 revenue of $18.44 billion. The2012 EPS was 4.19.

The recent recovery in Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) shares has spurred many to declare the company’s fortunes on the rise. It is not the equities market that will decide this, but the mobile device market. RIM has not yet entered that market with its new devices, it is certainly wiser to wait until that happens to make a decision on the company’s future.

Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) plans to release an under-featured device into a competitive market that values brand loyalty. RIM devices will be under-featured because it simply does not have the applications base of the iOS or Android ecosystems. On brand loyalty, 92% of iPhone users plan to upgrade to a newer iPhone. How many users of RIM’s current generation smart phones are looking to stay within the ecosystem?

Research In Motion Limited (USA) (NASDAQ:RIMM) (TSE:RIM) shares have remained steady in trading today, at around $11.60. Those investors who bought into the company’s most recent price surge are questioning their decision. The most recent reports on the firm’s future do not paint a desirable picture of the company’s future.