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Don’t Count Blackberry Out on iPhone-Verizon Report


Many investors expected to see Research-In-Motion shares down at least 10 percent today following a Wall Street Journal Monday night that Apple was building a new iPhone to be compatible with Verizon Wireless’ network.

One trader, who wished to remain anonymous because he doesn’t trade the names, even went so far as to say following the news: “The game is over for Research-In-Motion . I’m turning in my Blackberry as soon as I can now.”

Not so fast. Shares of the Blackberry-maker are down only about 2 percent, bringing their 2010 return to just under 10 percent.

The reason for the surprising strength is that the “switchover effect to iPhone by Verizon subscribers is likely to be far less damaging than what occurred to Research-In-Motion after iPhone’s original exclusive deal with AT&T,” said Pip Coburn, founder of Coburn Ventures and the formerly top-ranked technology strategist at UBS.

After the iPhone’s initial introduction, Blackberry sales to AT&T subscribers essentially flat lined, according to Coburn. The worry is that a similar defection will occur with Verizon users, who currently account for a quarter of Research-In-Motion’s revenue, according to Coburn.

Another reason Research-In-Motion is holding up well is that the company is set to report earnings tomorrow after the bell and three months ago it reported a blowout quarter, raising earnings estimates and its device shipment forecast. The shares jumped 10 percent the day after the report. Investors don’t want to potentially miss out on a similar windfall.

“The company on the earnings conference call will be prepared to address this potential threat from Apple ,” said Pete Najarian, co-founder of OptionMonster.com and TradeMonster.com. “The one theory that gets overdone in investing is that only one company can survive and the rest will die.”

Najarian said he’s ready to buy Research-In-Motion if it breaches the $70 level, where there is a lot of technical support. It also would bring the company’s price-earnings ratio to an “attractive” 15 times, said the ‘Fast Money’ trader.

The Waterloo, Ontario-based company may have plenty of time to strategize their comeback as a Verizon-compatible phone may not come for a while. “Our best guess is A&T retains exclusivity on the iPhone through 2010,” wrote Tavis McCourt, Morgan Keegan analyst, in a note to clients this morning. A Verizon Wireless launch could come “in early or late 2011.”

Coburn, whose firm counts Apple as its largest position, admittedly sold some of his Research-In-Motion this morning, but similar to Najarian, he’s hoping to buy that back much more cheaply as investors overreact to this news as they have in the past.

“We’re staying in both because they both have a loyal customer base, are on top of the latest technology and can both be winners over the long term,” said Coburn. “This news probably is more damaging to a Motorola.”

For the best market insight, catch 'Fast Money' each night at 5pm ET on CNBC. To play Fast Money’s bracket challenge, go to fastmadness.cnbc.com.

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Trader disclosure: On March 30th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (IPI) Call Spread; Najarian Owns (MRVL); Najarian Owns (CLF) Call Spread; Najarian Owns (YUM) Call Spread; Najarian Owns (DOW) Call Spread; Finerman's Firm Is Short (IYR), (IWM), (SPY), (MDY); Finerman's Firm Is Long S&P Puts; Finerman Owns (AAPL); Finerman's Firm Owns (BAC), (BAC) Preferred; Finerman Owns (BAC), (BAC) Leaps; Finerman's Firm Owns (FLIR); Finerman Owns (GOOG); Finerman's Firm And Finerman Own (GGP); Finerman's Firm Owns (NOK), (OSIP); Finerman's Firm And Finerman Own (WFC); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Terranova Is Short (EL); Terranova Is Short (GS); Terranova Is Short (CAL); Terranova Is Short (UAUA); Terranova Is Long May 2010 Crude Oil Futures; Cortes Is Short Euro; Cortes Is Short Treasuries; Cortes Owns (IWM), (IBB) vs. Short S&P; Edwards Owns (TM), (UUP)

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