BlackBerry Playbook Prices Slashed, What Gives?
On Thursday traders were buzzing about the future of Research in Motion after a top analyst said the company had made a jaw-dropping decision.
According to John Vihn of Colin Stewart, RIM may not only have halted production of its Playbook tablet, the beleaguered BlackBerry maker may be getting out of the tablet business all together.
Although RIM vehemently denies the report - the analyst drew that conclusion because a manufacturing facility focused on making the Playbook laid off a significant number of workers.
On top of that Best Buy slashed the price of the tablet to $299for 16 gig memory from $499 – a full $200 off.
”Where there’s smoke there’s usually fire,” muses trader Guy Adami. His comment suggests that Best Buy is trying to get rid of a product that’s about to be discontinued.
”It brings to mind what HP did with the Touchpad,” adds Jon Najarian. As you may remember, in August Hewlett Packard slashed the price of its tablet to $99 in an effort to liquidate the ill-fated gadget.
RIM tells CNBC it remains committed to the tablet market. If that’s the case then the slashed prices may be a sign of something else.
”It could also be a sign that the new Kindle Fire is already setting the gadget market ablaze,” says OptionMonster Jon Najarian. (Earlier in the week, Amazon introduced its new tablet at a price point that the pros thought was significant - $199.) “It shows how quickly the tablet market is shaking out.”
”They’ve changed the game with that price point,” adds trader Patty Edwards.
It’s entirely possible that Research in Motion felt they had no choice but to slash prices just to compete.
And it’s not just RIM that could be facing woes – “Sharp and Samsung may be facing the same thing,” Najarian says.
If RIM is exiting the table market and/or new competition is forcing RIM to slash prices, should you short the stock?
Although he expects RIM to trade down into the high teens on the speculation, Guy Adami thinks the right trade is long RIM. “I don’t think its crazy to start dipping a toe here,” he says.
Adami sees plenty of catalysts. Technically he says “the stock is trading at levels we haven’t seen in quite some time,” which suggests bargain hunters could step in. And he adds there’s chatter Carl Icahn could be interested in the name.
Jon Najarian agrees that the best trade is long. “The Playbook wasn’t doing very well for them,” he says. If they are, in fact, planning to discontinue the gadget, they’re cutting their losses and moving on. That’s a positive.”
”When you have a problem you have to admit it, that’s the first step in getting better,” adds Adami. This may be that admission.
Trader Steve Grasso sees RIM as a trading vehicle but nothing more. “Sure you can play it for a pop,” he says, “but don’t hold for long. I don’t see any reason to hold this stock.”
Always the contrarian, Steve Cortes is on the other side entirely . “I wouldn’t touch the stock,” he says. He takes the sharp discount as another sign that consumers are just unwilling to open their wallets.
“And tech is used to fat margins,” he adds. “I’m negative on the whole space.”
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Trader disclosure: On Sep 29, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Cortes is long SO; Cortes is long DNKN; Cortes is long PEET; Cortes is long Treasuries; Cortes is short AAPL; Cortes is short Nasdaq futures; Cortes is short Aussie; Edwards is long XLK; Grasso owns AKS; Grasso owns AMD; Grasso owns ASTM; Grasso owns BA; Grasso owns BAC; Grasso owns C; Grasso owns D; Grasso owns JPM; Grasso owns LIT; Grasso owns LPX; Grasso owns MAR; Grasso owns MHY; Grasso owns NDAQ; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns XHB; Grasso owns XLB; Grasso owns XLI
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