21 percent plunge in BlackBerry stock

June 18th, 2011 - 10:51 am ICT by IANS  

Toronto, June 18 (IANS) In the biggest one-day fall in its fortunes Friday, the BlackBerry company Research In Motion (RIM) plunged about 21 percent - or more than $7 per share - after Thursday’s poor quarterly results.

The stock of the iconic wireless giant closed at $27.24 - the lowest in five years - after RIM posted much lower-than-expected net income of $695 million as compared to $934 million in the previous quarter.

Friday’s exit by investors was triggered by forecast of shrinking revenue, profits and hob losses.

RIL stock has now plunged almost 57 percent this year. At $27.24, it is not even one-fifth of its peak value of $150 in June 2008 just before the global meltdown started. Since then, RIM’s market cap has tumbled from $80 billion to just $14 billion Friday.

As analysts downgraded RIM to $20, they feared that unless the Waterloo-based company takes drastic steps to stop onslaught by Apple and Google Android smart phones, it could face demise just like the other Canadian icon Nortel.
Once the world’s top telecom company, Toronto-based Nortel filed for bankruptcy two years ago.

“The implications are potentially dire if RIM does not regain its mojo,” said the Globe and Mail, quoting technology consultant Carmi Levy.

Calling the BlackBerry maker the hub of Canada’s technology universe, the paper said, “It’s not that RIM is in its death throes - far from it. It remains a profitable company with a product line that is still revered around the world. But it is a matter of the future ability to spin out new generations of products the world wants.

Prof Rick Powers of Toronto’s world-famous Rotman School of Management too said RIM couldn’t be counted out this early. “There’s always a risk. But I think where Nortel became a bit complacent, that’s not a word that you would use with RIM. They’re in a war (with Apple and Google Android devices). Innovation is the game,” he said.

The two co-CEOs - Jim Balsillie and Mike Lazaridis - own 10 percent stake in RIM which is also currently sitting on a $3-billion cash pile.

(Gurmukh Singh can be contacted at gurmukh.s@ians.in)

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