TORONTO - When a company suffers a very public stumble -- like Research in Motion did this week when its BlackBerry services went down around the world -- its stock usually takes a kicking.
That didn't happen to RIM during the longest BlackBerry outage in its history. In fact, the service problems that struck disgruntled users in Europe, Africa and the Americas seemed to have almost no impact on RIM shares.
That's partly because the company's current share price has been beaten down steadily for months to around the low $20s, reflecting a host of long-term factors that outweigh the damage done by a few days of service trouble, technology analyst Alkesh Shah said Friday.
"There's a difference between people who are unhappy not having services for two days and people who actually own the stock today," said Shah of New York-based Evercore Partners.
Investors took the company's stock (TSX:RIM) to a high of almost $150 in 2008, before the shares started a downward slide in the hyper-competitive smartphone market as observers began to surmise that the Canadian company was losing ground to Apple's iPhone and those using Google's Android operating system.
"In 2007, Apple created an Internet-oriented smartphone. It took investors about a year to realize that the Apple phone was really going to be a problem for RIM, so that was the peak for RIM's stock," said Shah, who said RIM initially created an email-oriented device.
Some of RIM's institutional shareholders have been asking for changes to the company to make it more competitive, including putting itself up for sale or spinning off its patents into a separate, publicly traded company.
The Waterloo, Ont.-based company announced earlier this year it was cutting 2,000 jobs, or about 11 per cent of its global workforce, to reduce costs after announcing lower profit guidance.
RIM shares have found support from takeover rumours, which buoy stocks in the hopes a buyer might offer a rich premium to the current price. Reports have said that U.K. telecom giant Vodafone is interested, that RIM has hired an investment bank to review its strategic options and that U.S. activist investor Carl Icahn has begun to buy shares, all unsubstantiated.
This week's outages for RIM email, texting and Internet services began on Monday in Europe and spread to the Middle East, Africa and North and South America for varying lengths of time before services were fully restored globally on Thursday.
Wunderlich Securities analyst Matthew Robison said RIM's stock is valued where it is because investors looking for growth have abandoned the company and sold their shares.
"They're the ones who sold it down from its highs," Robison said from San Francisco. "You need growth investors to drive stock prices up."
The current stock price reflects RIM's decline, he said, adding it can attract activist investors who are looking for management changes or value in splitting up the company.
Canadian institutional shareholder Jaguar Financial Corp. (TSX:JFC) has been pushing for management changes at RIM and to either sell the company or split it up.
But Shah said RIM's current investors are still looking to make some money.
"The people who own the stock now are viewing it as, there is value in this company. An outage isn't going to make a difference to the owners of this stock," Shah said.
"What they're looking for is (that) somehow RIM will monetize its assets over time."
RIM stock was up slightly on Friday afternoon, moving up 14 cents to close at $24.26 on the Toronto Stock Exchange, but has barely budged this week throughout almost four days of outages that outraged customers around the world.
The company once claimed a market value of about $70 billion and has, from time to time, been Canada's most valuable company.
RIM's shares were held by millions of Canadians in their pensions, mutual funds or other investments and the company was once of the most widely held in the country. It now has a market value of about $12 billion or so and shareholders have complained about its lagging stock price and corporate leadership.
Shah said RIM had an opportunity to take on Apple and Android several years ago, but didn't make a shift in their BlackBerrys devices soon enough to take on these Internet-oriented phones.
RIM is planning to introduce a new generation of Blackberry smartphones next year that are expected to provide more of computer-like, Internet-based experience for users.
"That, we will need to see before we know if they can better compete. The stock is now reflecting the idea that it's not going to happen very quickly."
Shah said RIM's stock has been "significantly underperforming" and has fallen from $70 in the last nine months, when it was still viewed as one of the winners in the "smartphone war."
"Those people have all sold the stock," he said of investors who held RIM shares when they were $70 a piece.
As well, some investors own the stock in the hopes that things will turn around or the company will be sold or split up as some shareholders want.
After the outage this week, Research in Motion's two co-CEOs apologized to the company's 70 million subscribers around the world.
Mike Lazaridis and Jim Balsillie said they had not made plans yet to compensate customers.
"Our priority right up until this moment (has been) making sure the system's up and running," Balsillie said. "That is something we're now turning our attention to."
