RIM Not a Long Term Value Play Yet: Pro
Although Research In Motion’s positive quarterly earnings report injected the market with new hope for the struggling company, one analyst cautioned investors against considering the stock a value play yet.
In the near term, Mike Abramsky, a principal at Red Team Global, said the BlackBerry maker’s stock could inch higher as more pieces of RIM’s BlackBerry 10’s strategy are unveiled.
“But in the long term, I don’t think that, you consider this a turnaround play yet from a stock point of view or even a value play,” Abramsky said.
On Thursday, RIM revealed that it has increased its cash to about $2.3 billion from $2.2 billion. In another positive sign, the company’s subscriber base has grown to 80 million from 78 million earlier this year.
“It was actually rather surprising that they were able to load up on more cash and more subscribers,” he said. “But at the same time it doesn’t diminish the huge uphill battle that they still have to fight.”
Abramsky cited RIM’s competitive position in emerging markets and the low-end messaging market as another positive for the company.
“Plus, they still are the most secure solution on the marketplace and to some extent there will be enterprises that will have concerns about the security vulnerabilities of Android and Apple,” he said.
Having a physical keyboard also gives the company a unique position in the market.
Although the company still owns a vast (and valuable) portfolio of patents, Abramsky said it is uncertain, to some extent, how the company can monetize them.
“So I think this is still really about whether they can turn the business around relative to BlackBerry 10, and I am doubtful,” he said.
— Written by CNBC.com's Katie Little. Follow Katie Little on Twitter @katie_little_.
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Mike Abramsky owns shares of Research In Motion.