RIM Shares Continue to Drop

SAN FRANCISCO -- Research In Motion(RIMM Quote - Cramer on RIMM - Stock Picks) continued to lose ground two days after the company's shaky first quarter and a disappointing outlook for the current quarter.

Shares of RIM were down 3.4%, or $4.25 to $119.21 Friday. That was on top of a 13.5% hit the day before.

But some portfolio managers and analysts believe that the BlackBerry maker's shares may have just been beaten down too much, and that the stock is ripe for buying on the pull back.

"The sell-off is overdone as I do think RIM is a market-share taker in the smartphone category and we are still in the early innings of the move towards smartphones," says Romeo Dator, co-portfolio manager of the All American Equity Fund(GBTFX Quote - Cramer on GBTFX - Stock Picks) at U.S. Global Investors. The fund holds shares of RIM in its portfolio.

RIM is a "must-own stock for growth managers," adds Rob Sanderson, an analyst at independent research firm American Technology Research. Sanderson, one of the most bullish analysts covering RIM, reiterated his buy rating and $205 price target on the stock in a research note Friday.

"The number of technology stocks with over $1 billion in quarterly sales that are growing in triple digits is one," he wrote. "For RIM, given the early stage of the market penetration, extraordinary growth will be sustainable for some time."

RIM's revenue in the first quarter rose 107% to $2.24 billion from $1.08 billion a year ago.

But that was offset by selling, general and administrative expenses that increased 22% compared to expectations of a 17%-to-18% rise and a 28%-to-30% jump in the next quarter. The company's capital expenditure also rose to $195 million, about $15 million more than guidance, and up from $66 million in the same quarter the year before.

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