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Monday, 30 August 2010 15:05

As Research in Motion Continues Its Inevitable Downward Descent In Both Equity Value and Market Share, Investors Should Tweak Their Assumptions Accordingly

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Following up on my Research in Motion commentary in This Quarter Offers a Lot of Challenges for Smart Phone Vendors with Fruit in Their Names!, I'd like to comment on potential future paths for the company. From what I see from their public announcements, I remain as unimpressed now as I was just before (After Getting a Glimpse of the New Windows Phone 7 Functionality, RIMM is Looking More Like a Short Play) and after (RIM Smart Phone Market Share, RIP?) the OS6/Torch launch. The tricky part is that RIMM is now starting to look rather inexpensive relative to consensus earnings and historically projected growth rates. This is where a little strategic foresight comes into play. I have made available for download (for all paying subscribers) the Mobile Operating System Market Share Model which illustrates, on a very granular level, the market share movements (gains and losses)  of the major mobile OS providers.

Research in Motions recent equity share decline stems not only from market share loss, but from the apparent lack of a clear cut and believable plan to stem that market share loss.

Thus the downloadable OS model design is to congeal data garnered from Gartner, Bloomberg, Neilsen, Canalys and other sources in order to realistically track movement in the mobile OS space. Since this model actually deserves a post of its own, I will simply pull out some pertinent charts that pertain to RIMM.

Research in Motion, is still currently the market leader in terms of share, but is losing both demonstrably and rapidly in new users. As a matter of fact, if the recent historical trends persist, this is the last quarter that RIM will be able to claim the top of the market title as Android looks well situated to claim that crown.

As can be seen from this chart, Android is just about there. Apple will probably show better numbers in Q3 with additional evidence of iPhone 4 adoption as well.

We, at BoomBustBlog actually believe that RIM is poised to lose market share (particularly the consumer market where it enterprise stickiness can't come into play) quite quickly and radically due to dissatisfaction among its user base combined with technically far superior handsets in the iPhone and Android camps.

So, although RIM is looking quite cheap now, it is quite possible for it to look much cheaper. The question is how does this market share loss factor into its equity valuation. That is why I have supplied our Professional and Institutional subscribers with the plug and play File Icon RIMM Multivariate Valuation Model.  By plugging

in the latest trends gleaned from the File Icon Mobile Operating System Market Share Model, a much more clearer and reliable picture can be had concerning RIMM's situation.

Additional writings on Research in Motion:

  • Many More Black Eyes for the Blackberry? A Complete Forensic Analysis of Research in Motion
  • The BoomBustBlog Multivariate Research in Motion Valuation Model: Ready for Download
  • File Icon RIMM Forensic Analysis and Valuation - Professional & Institutional
  • File Icon RIMM Forensic Analysis and Valuation - Retail
  • File Icon Smartphone Market Model - Blog Download Version
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More in this category: « How Has BoomBustBlog Research Done for the 3 Quarters of 2010? Even With Clawbacks, the House Always Wins in Private Equity Funds »

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