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TheStreet Open House

How to Put RIM Out of Its Misery

Stocks in this article: RIMMSIRI

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

"There is winning and there is misery." -- Bill Parcells

NEW YORK ( TheStreet) -- If you have been an investor in beleaguered tech giant Research in Motion (RIMM)over the past couple of years, it is safe to say that you are feeling pretty miserable. If you're not feeling some form of misery then you are probably not paying attention. Better yet, I would like to hear from you so you can share your coping strategies because as the quote above from legendary coach Bill Parcells states, there is no middle ground between winning and misery.

It's a foregone conclusion that RIM has lost its fight with Apple (AAPL) and Google (GOOG) over the smartphone and devices market -- a market that by all accounts that it perfected after trouncing Palm in the same manner that it now finds itself. What is the silver lining and can it recover?

These are the most important questions to consider when mulling over RIM as an investment. But the company, by its own admission has no idea what its next good idea will be. Remarkably there are many who now wish to proclaim that the company has become cheap by virtue of its recent close of $12.89. But solely from the standpoint of valuation, I remain unimpressed by any perceived value that may be hidden within the stock.

Investors need to understand what exactly is going on with this company and realize that the prudent thing to do is secure any profits and/or prevent any further losses that may be around the corner. Another way to say this is to quit while you're ahead. The fact of the matter is, even at $12.89 the stock yet remains expensive from the standpoint of its rapidly diminishing market share not only from Apple, but embarrassingly, from Nokia (NOK).

When considering RIM, investors need to ask themselves, at what point will the market not only realize that RIM has no business trading above $10, but even worse, the company has no business. I really don't see a scenario where the stock will not drop into the single digits at some point this year unless it gets acquired by another firm. For further confirmation of this, one only needs to look at the results of the company's recent quarter. I would have called it a disappointment, but except (from me) not much was expected.

The quarter that was

In the company's first quarter 2012 earnings results it reported revenues of $4.2 billion -- a number that represents a drop of 19% from the previous quarter. RIM attributed the decline to decreased BlackBerry smartphone shipments falling from 14.1 million in Q3 to 11.1 million in Q4, as well as a higher proportion of lower ASP products in the mix. RIM also said that the BlackBerry smartphones continue to sell well into the prepaid and entry-level market, and the Bold 9900 continues to gain traction while certain models of the BlackBerry 7 were not selling as well as the company had anticipated.

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