Nokia and RIM: dead cats bouncing?
The share prices of both Nokia and BlackBerry maker Research in Motion have leapt higher in recent weeks. Is it a case of dead cats bouncing or genuine turnarounds for the troubled handset manufacturers? By Craig Wilson.
Canada’s Research in Motion (RIM) and Finland’s Nokia have both taken a beating in recent years. The former’s share price has slumped 89% in the past five years; the latter’s is down by 91%.
Yet, in recent weeks, both shares have bounced up significantly, prompting questions about whether new products, in the case of Nokia with its new Lumia phones, or promises of them, as is the case with the devices that will soon be running RIM’s upcoming BlackBerry 10 operating system, signal that the worst is over for the two companies.
Nokia’s share price has added more than a third in the past month and 21% in the past week alone. The surge has come after it released its latest flagship smartphone, the Microsoft Windows Phone 8-powered Lumia 920.
RIM’s stock has gained just over 30% in the past week and an amazing 58% in a month. In three months, it’s added 73%. The stock has been helped higher by news that it has a firm deadline for the release of BlackBerry 10, its make or break attempt to catch up with the rival Windows Phone, iOS and Android platforms. It’s tried all sorts of measures, some of them quite wacky (see video below), to reassure the crucially important developer community that the company isn’t going anywhere.
Early indications are that the Lumia 920 is living up to the prerelease hype. The first shipments of the device have already sold out in the US, Germany, the United Arab Emirates and Australia, although actual sales figures are not yet available.
With no supply problems reported, it appears the demand is genuine rather than Nokia limiting quantities to give the appearance of rampant demand.
Nokia and partner Microsoft have deep pockets so they can afford to invest heavily in a third mobile operating system and play a long game of attrition against market leaders Apple, with iOS, and Samsung, whose flagship smartphone, the Galaxy S3, is powered by Android from Google.
The strong performance in RIM’s share price recently is a little more difficult to make sense of given that, although BlackBerry 10 has a launch date, it comes after numerous delays. RIM has also not announced details about its 2013 handsets yet.
Hardware aside, RIM’s greatest challenge is convincing developers to write for BlackBerry 10. It’s betting the farm on the new operating system and hoping it’s good enough to keep current BlackBerry users loyal and even win back people who have defected to the iPhone and other platforms.
It appears that investors believe either that RIM is on the verge of a big turnaround or that the share had simply fallen too far too fast and that a technical correction was overdue. Have these companies turned the corner or are we watching a couple of dead cats bouncing on the pavement? The next few months should answer that question. — (c) 2012 NewsCentral Media