Given the company's fall from grace and the potential for investors to view its share price drop as a potential rebound play, Research In Motion (RIMM) is going to be a hot stock to watch for quite a while. Investors looking for a quick turnaround, however, were disappointed last week when losses of over $100 million sent many of RIM's board members running for the doors as the company opened up a new strategy of appealing to its enterprise business while - at least for the time being - not trying to compete with Apple's (AAPL) iPhone or Google's (GOOG) Android on the consumer market.
RIM reminds me a lot of Blockbuster (now part of the Dish Network (DISH)), being a company that had dominated its space for years, but failed to stay ahead of the game and transform itself into a next-generation company before the 'new generation' had expired. In the world of technology, the competition is not looking to compete in the landscape of today, but it's the landscape of tomorrow that matters, and it could be argued that the over-confidence displayed by RIM thanks to early dominance had the company blind to tomorrow.
Blockbuster failed to prepare for the day of DVD-by-mail and streaming video in time to compete with Netflix (NFLX) - even Redbox chipped away at the one-time giant by hitting the scene with DVD-by-kiosk - and that miscalculation cost Blockbuster everything.
In the case of RIM, the company enjoyed such early dominance with the BlackBerry that it forgot to evolve beyond the basics - email, appointments and calendars. With a bit more foresight, the BlackBerry could have become tomorrow's smartphone before the iPhone or Android ever hit the market in droves.
But is RIM another Blockbuster? A company too far past its prime to recover and headed for bankruptcy?
Probably not - there's still time to act, there's still market share to be gained back and it looks like the new management team is introducing new vigor into a turnaround.
Although the earnings report last week showed that the bleeding is far from over - and the share price showed that, too - the company has announced that it will return to the roots of its core business, being its enterprise business.
BlackBerry should continue to be the smartphone of choice for enterprise, especially for those business types who travel, given the ease associated with taking the Blackberry overseas. RIM also has a strong international market to concentrate on. In many overseas markets the unlocked iPhone is priced out of the range of many consumers, making some of the lower-priced BlackBerry models the option of choice for the consumer.
Some of the newer models are also slick enough to even attract the attention of the younger generation, where the kids can save a few weeks of allowance and join all their friends on the Blackberry Messenger service - where adding contacts there is as popular and as much a badge of honor as adding them on Facebook.
With the new strategy taking shape, RIM will no longer issue sales and earnings guidance to keep investor expectations in check.
So is it all too little, too late? It's likely that RIM can rebound, but over the short term it might still be too risky proposition to jump in right now, although RIMM shares rebounded on Friday after the new corporate plans were announced.
Some additional downside could materialize if the broad markets decide to retrace a bit after the impressive first quarter run, as well, so a better buy time could shape up.
That said, RIM is far from done, and far from becoming another Blockbuster.
Finally it looks like the company has come to grips with its loss of dominance and is going to do something about it.
Disclosure: No position.