Let me say this, I may or may not take a position personally shorting or buying puts on Research In Motion (RIMM) today or in future days. There is no way any trade I do, long or short, could ever have a market changing impact on RIMM as it trades so much dollar volume. However, you do need to know up front I am likely to come in soon on this one, and it will likely be options that benefit from a downward movement in price.
Let’s talk about why I see RIMM moving down:
All of RIMM’s hopes and dreams seem to be concentrated into two areas:
- 1. The Blackberry 10 – Teaser image shown above.
- 2. The Asian / Far East demand for Blackberry is disproportionately high as compared to the rest of the world.
- A Third Reason: 3. Perhaps current market share will not fall any more.
Let’s visit each of these. Let me say that the Blackberry has issues that go beyond a new design and a new operating system. Who really likes the way the device does email? Who likes how it handles third party email services such as Gmail and Microsoft’s new Outlook.com mail (formerly Hotmail, MSN Mail and Live Mail)? Nobody, really. I have read all of the stuff on Blackberry, and I fully understand the hardware differences expected. I have looked at demonstration of the new “Blackberry Peek Flow” in the “Hub.” I did like the demonstration as shown on a Forbes video (FOUND HERE) on Crackberry.com. Yes, that looks okay, but it’s just doesn’t really look like something that would make me want to run out and buy one. I don’t see people that have moved on to iPhone or Android going backwards.
Let’s skip to the third reason before we talk about demand from the Far East. How can it possibly hold current market share when iPhone is anticipated to come out and attempt to grab the lower end of the market with a cheaper iPhone and release an iPhone 5S. Perhaps they will even try to do a larger and wider screen that rivals some of the most popular Android devices? I don’t see an increase in market share coming from iPhone. Android has so many loyal users, and the devices are being made better and better every day. Personally I am through with the iPhone and love my Galaxy S3. There’s no way I would jump onto a Blackberry based on a short video. Android has users that like to modify their phones more than iPhone users. I don’t see that any Blackberry has ever supported such efforts, and the Android development community is very strong. Modding a Blackberry has been impossible for the most part in the past.
Now that Asian and Far Eastern Demand. Oddly, Blackberry has a much higher market share in certain countries in the Far East and throughout Asia. Now, I think that is really a lagging demand. The West typically upgrades and gets new devices first, then the East and Far East comes in afterward. I cannot see that demand continuing to be as strong.
Apps on the Blackberry. Yes, they are going to do “Apps. Before you go saying, “there’s an app for that”, you Blackberry lovers, realize that even if there is going to be a Blackberry app for that, you get to pay for it again. One of the biggest reasons many do not like to cross platforms is that they have already purchased the apps they like. Even if they do not have all of the apps they purchased actually loaded on their device, they know they can load them at anytime without paying for them again. We all know any premium apps on the Blackberry are going to have to be repurchased.
There were so many tablets and iPads purchased in the past year that many people who might consider a Blackberry have now purchased twenty or more premium apps from either the iTunes App Store or the Google Play App Store will realize that purchasing a Blackberry means buying those apps all over again. They are not going to do it.
So fundamentally I do not see a way that RIMM can continue to keep the market share it has, much less gain market share.
THE SHORT OPPORTUNITY OF RIMM:
If the news turns negative after the new Blackberry 10 is released, If we see “disappointing sales” of the device, and if the device release is considered any kind of “failure” shares for RIMM are going to tank and tank rapidly. I would be willing to bet that we might see prices fall below the 52 week low within days or weeks of the release of the new device should it appear to be a failure.
The only people that seem to be hyping it are those that are in the tech media that have some kind of connection to Blackberry. I see relatively positive pieces written on BGR.com. I see glowing pieces on Crackberry.com. Overall, most are just ignoring the device until it comes out.
You make your call. I am reviewing option contracts ending between six weeks and three months. I am looking for contracts that will likely give me a 50% or greater gain if I am even halfway right here.
Good luck to all!