Positive sentiment around RIM proves contagious
Stock leaps by biggest amount since April 2009 as several analysts upgrade their forecasts and cite carrier enthusiasm
Published: 26 November, 2012
RIM enjoyed an unexpected Thanksgiving gift, seeing its shares leap over the course of last week as a result of several analyst notes reflecting greater confidence in the ailing firm.
On Friday, the BlackBerry maker's shares surged by 18% when Kris Thompson, an analyst at National Bank in Toronto, published a client note predicting that RIM would sell 33.5m smartphones running its upcoming, make-or-break BB10 operating system, during the next fiscal year. This estimate was up from Thompson's previous forecast of 31.6m.
The analyst said he had upped his figure to account for an additional month of availability and "a little extra for the positive sentiment building in the industry from our discussions". RIM announced last week that BB10 devices would launch on January 31, ending fears that the already-delayed platform would not appear until later in the quarter.
That sparked several analysts to take a kinder view of the firm, and several also cited positive feedback from conversations with operators, which have been testing BB10 prototypes over recent months as RIM engages in a huge drive to recruit developers and carrier partners. Even the usually critical Peter Misek of Jefferies said last week that cellcos were adopting a "much more positive view of BB10 than expected".
Thompson wrote in his note: "The new management team is executing by maintaining the BlackBerry subscriber base, managing costs and cash, and seemingly readying a February 2013 BB10 global platform launch." And Eric Jackson of Ironfire told Bloomberg: "Most are greatly underestimating how many loyal subscribers will upgrade to BB10 in calendar 2013. All those pending upgrades are currently not factored into the stock."
Such comments have boosted RIM's stock price, although only to the uninspiring figure of C$12.06 after Friday's leap - but that day did see the shares' biggest gain since April 2009, reducing the stock's total loss this year to 19%. In the US, where trading closed for the holiday, RIM stock had gained 5.7% to reach US$10.26 just ahead of the break.
While it is nice to believe RIM will have another chance at being a counterweight to Android and iOS, its challenges remain huge, and the high percentage gains in its stock are mainly possible because the value has fallen so low. And much of the new optimism relies on analyst belief that it may maintain the loyalty in its current base rather than attracting new users in droves - though in its last quarter, it did deliver a surprise growth in its user numbers, up to over 80m even without a new product.
But many commentators refuse to ride what may be a brief wave of enthusiasm. Neeraj Monga at Veritas Investment Research told Bloomberg: "RIM is one of those fallen angels where people are latching on to any good news they can. I'll wait to hold the first BB10 phone in my hand before I change my sell opinion."