(RIMM) Research In Motion Maintained at Underperform

We reaffirm our Underperform recommendation on Research In Motion Ltd. (RIMM). The company is in a complete mess. Revenue and net income plunged in the fourth quarter of fiscal 2012, future financial outlook is grim, and the stock price is at its trough. All these negative events took place despite the fact that the previous quarter included December Holiday sales.

So far, Research In Motion has failed to provide any specific time frame when its free-fall will finally end and is delaying the launch its much-hyped QNX based phones. Management has decided to refrain from providing any specific financial guidance in future. We believe this decision highlights how grave the situation is as the company is unsure of its future prospects.

Research In Motion is facing severe problems from several fronts. We believe management has so far failed to do proper research to move the company forward. We are still waiting for a game-changing product (either software innovation or hardware innovation), which can turn the tide in favor of Research In Motion.

Moreover, delaying the launch of its new BlackBerry 10 smartphones may further deteriorate its market share in the forthcoming quarters. Management stated that BlackBerry 10 OS based devices will come to the market in late 2012.

BlackBerry is quickly losing its leadership position in the corporate segment. This segment was characterized as high-margin since business executives, who generally purchase pricier smartphones.

Research In Motion is trying hard to cater extensively to the retail consumer segment but failed to do so as its software remains uncompetitive with respect to application friendly features of Apple Inc.’s (AAPL) iPhone and Google Inc. (GOOG) developed Android-based smartphones.

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