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RIM Stock Could Drop Under Heavy Fire From Google

Wed, 12/08/2010 - 3:48am

NEW YORK (AP) — Research in Motion Ltd.'s stock could fall over 3 percent over the next 12 months, said one analyst, as the company's line of BlackBerry smart phones continue to lose market share to phones running Google Inc.'s popular Android software.

Kaufman Bros. analyst Shaw Wu maintained his "Hold" rating on the company, which suggests it will perform in line with similar companies over the coming year. However, his 12-month price target of $60 would represent a 3.4 decrease from Tuesday's closing price.

The problem, he said, is that Android's international market share is growing, particularly as consumers realize they would prefer to buy a phone with a multi-touch display, not unlike the one on the iPhone, as well as a Web browser that displays websites as they appear on a PC.

Wholesale prices for Android phones have dropped to the $300 to $500 range, making them that much more attractive to retailers.

Meanwhile, RIM does 52 percent of its business internationally. Wu said that in the U.S., the transition to BlackBerry 6, the company's latest smart phone software, is "mixed," suggesting customers have been sluggish in upgrading to the latest and greatest BlackBerrys.

In the near term, at least, Wu said that international interest in BlackBerrys remains strong, despite growing demand for Android phones in many of those markets.

"No change in our estimates at this point as near-term trends appear fairly intact but we believe the risk is that strong international demand, which has driven RIM's results, starts to get challenged," he wrote in a note to clients.

Shares of RIM closed at $62.12 Tuesday, down $1.21. They gained 7 cents in premarket trading Wednesday.

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