When Research in Motion Ltd. (NASDAQ: RIMM) started venturing into the consumer handset space years ago, the market saw it as a good move. After all, making business-oriented handsets with keyboards and real-time e-mail does stall after a while. To make it, you have to have those cameras, MP3 players and other consumer goodies built in.RIM's newer handsets (like the 8900) pack in a wallop of high-tech consumer features, high-resolution screens and new download service for all kinds of software. Is that emphasis weighing on the company's product margins? After all, those whiz-bang features and software development are not free.
It's pretty clear to see that a dedicated messaging device without all the glitz made more money for the company. But, without consumer handsets, the company would have missed a huge boat. The boat was turned into a yacht once the Apple, Inc. (NASDAQ: AAPL) iPhone was introduced in June 2007.
Regardless, RIM's profit margin decline from 50% to 40% recently has helped push its stock price down. With the company about to release earnings this week, we'll see if margins have slipped even further. Even if they do, the company has a very healthy market share in the only category of growth in the wireless handset business -- smart phones.
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Reader Comments (Page 1 of 1)
4-01-2009 @ 1:17PM
Beltway Greg said...
Cuppertino: In a move that can only be described as astounding Apple acting CEO Tim Cook announced that developers at Apple had created an IPhone application that transforms your Blackberry into an IPhone. This ap will be available immediately for .99 on Apple's on-line ap store. When reached for comment Cook said that this is something they've been working on for the past two months. When downloaded onto your Blackberry it immediately develops that wow factor and it sheds the keyboard to reveal Apple's touchscreen design. While RIMM's management wouldn't comment on this development it is rumored that they are working on an ap that will transform their companies stock into the Apple's stock which like the IPhone has been and will continue to out perform RIMMs. A newly enervated Gene Munster raised his target price on Apple to $750 and Shaw Wu, currently working out of a seacave on the island of Kauai forecasts near-term pricing pressure coupled with slightly negative channel checks that
could result in both a lessening of demand based on apprehension concerning long-term economic conditions going forward but the possibility of a strong upside should the economy recover in either the short or long-term. Price target $64.00. Hold.