This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

RIM Failing on All Cylinders

Stocks in this article: RIMM AAPL GOOG

NEW YORK ( TheStreet) -- Research In Motion (RIMM) failed a confidence test by badly missing nearly every target in its fiscal second-quarter results, sending investors rushing out the exits.

The BlackBerry maker had a 10% shortfall on earnings, it came up $300 million light on sales, it sold about 1.5 million fewer phones and shipped only a third of the PlayBook tablets that Wall Street expected.

RIM Co-CEO Jim Balsille

For investors, the dismal results scratch RIM from the category of would-be contender in smartphones to a dicey long shot. RIM shares fell an eye-popping 20% in the wake of the disappointing report. And even the usual optimism from co-CEOs Mike Lazaridis and Jim Balsillie on RIM's earnings call Thursday evening only contributed to the stock's slide.

RIM's "credibility sinks further as it's apparent to us that visibility remains very low and investor risks remain elevated," RBC's Mike Abramsky wrote in a research note Thursday.

Credibility isn't the only thing running low at RIM. Not only is it falling further behind Apple (AAPL) and Google's (GOOG) Android in the smartphone race, the company shocked Wall Street by draining half of its cash last quarter.

After paying $1.5 billion on patents as part of the RockStar Consortium with Apple and Microsoft (MSFT), and taking charges for restructuring and staff buyouts, RIM was left with $1.4 billion on the books.

The move puts an already teetering RIM on an even steeper precipice.

Usually, when a company hits hard times, and has rolled the dice on a new generation of devices a year from now to revive the business, keeping a big cash cushion on hand lends comfort. Unfortunately for RIM, with huge inventories of PlayBooks piled in warehouses, second-quarter cash flow turned negative, adding to the drama.

The problem with eroding credibility is that investors don't seem willing to hang around and see if the QNX devices will deliver RIM's turnaround. The new operating system, coming next year, promises all the fun of Android compatibility and all the business security of BlackBerry.

But an untimely glitch or delay on that front could be even more crushing for RIM and its investors.

--Written by Scott Moritz in New York.



To contact this writer, click here: Scott Moritz, or email: scott.moritz@thestreet.com.

Follow Scott on Twitter at MoritzDispatch

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs