RIM Cuts Through the Wireless Junk

Thousands of investment bankers couldn't be wrong.

Wall Street is devoted to Research in Motion (RIMM). Why? The addictive power of the BlackBerry pager. Users cherish their BlackBerries. The BlackBerry is not just a gadget, after all. It's an umbilical cord, delivering the pulsing, surging nutrition of the corporate office through countless applications.

If you want a wireless device company that's financially stable, RIM is your only pick. RIM had $457 million in cash and equivalents as of June 2, as well as $242 million in marketable securities, thanks to a fortuitous follow-on offering in November 2000 at $102 a share. It has used the money wisely, bucking the trend of loss-loving PDA sector cohorts by posting $3.8 million in profit in the first quarter of its fiscal 2002. We'd like to see less of that come from investment income, but black ink is a long, lost friend in a year sapped of corporate spending.

And this from a company with its whole life ahead of it. RIM is only beginning to earnestly expand its reach with partners such as AOL (AOL), support of new enterprise software platforms such as recent addition Lotus Notes, and adherence to the Java standard for mobile devices, putting in it the full embrace of thousands of third-party Java developers.

RIM's technological strength is 16 years of development that allow it to wirelessly deliver your email to a small form-factor device in a secure manner that politely deals with firewalls, virtual private networks and encryption. Suzy Q. Public is perfectly content to get on the library computer and type up her Yahoo! mail for all of Des Moines' perusal. But employees working on a stalled public offering need security. RIM targets corporations and government workers who want reliable email on the go that doesn't require user fiddling.

Which brings me to a serious point: If you are going to love RIM as much as its customers, you have to embrace the fact that RIM is a corporate device. It's not RIM's job to provide a hot-pink email access with integrated voice capability that can be marketed at Target in a bundle with a Mariah Carey CD and red tube sock elbow warmers for $24.99. Investors are quick to go gaga over the potential of millions of consumers buying bargain pagers from AOL and U.K. wireless carrier BT Cellnet, comparing the RIM devices with cell phones for the masses. Not so!

RIM sells servers as part of a pricey package that cuts through companies' networking crap to give workers access to their messages without hard-to-manage laptops and dial-up accounts. At first you might find this distressing, all those consumer dollars swirling above your head. But you'll soon begin to love a company for going with its strengths and working with established communications companies to offer those bundled packages of services that convergence has brought to us. Companies that use RIM love RIM. And once they've installed it, as with most corporate sales, they are loath to abandon a popular technology that works well. RIM is a small, fast-growing company with a safe place in the market, plus fans in executive suites across the country.

And thanks to the wonders of the shrinking stock market, the stock is now selling for the low, low price of $15.80, off a 52-week high of $132. Sure, it still holds a market cap north of $1 billion. But for all the promise this company holds, it's a bargain.

>To order reprints of this article, click here: Reprints