Waiting to be bullish on RIM

I'll start out by saying that I've spent the last 24 hours playing with my new Blackberry 9900 bold, and I must say that although I've missed the Blackberry, since i parted ways with the phone nothing's changed significantly. I took a temporary leave from the world of Blackberry back in June of 2011 when Samsung released the new Sidekick 4g with the android platform, I have been a fan of the Sidekick and the android platform, so when they were put together all bets were off, the berry couldn't hold me any more, but that's neither here nor there. What I'm trying to say is that since I put down my blackberry (or what was affectionately known as "crack-berry") for its competitor the Android, The company has failed to make any tangible changes or innovations to their handsets. Nothing significant has happened with the company or the devices they offer. As far as I understand consumers(Tech Savy consumers that want more in a phone than BBM and SMS) consider the phone makers to be a stagnant company that lacked innovation and refused to evolve with the industry. As a result Blackberry's share holders suffered a dismal performance last year with a stock price drop of over 70%. What then happened on December 20th to spark such a bullish run in the price of the stock until two days ago?

On December 20th 2011 RIM traded at $12.45 which marked the lowest price the stock has ever traded at. At these prices the company's shares were clearly oversold and investors saw some value, enough in fact to cause a mild rally (price correction ), or so I thought. What was supposed to be a technical correction of the price reverting to its [steeply downward sloping]moving average, turned for the most part to be a trend reversal of sorts as RIM broke through resistance at $15.50 and continued it's rally up until two days ago.

Perhaps investors noticed that RIM is clearly under valued, trading at a PE of just below 4 while its competitors are well over 10 (AAPL~12 and GOOG~16). If that's the case I could be a bullish Investor in RIM, but I'm not quite buying it, RIM has had a relatively low PE ratio for most of the latter part of last year and it failed to see investors flooding in. For this to be a solid trend change there needs to be a reason to believe they will grow. The market price for rim is obviously undervalued but no one has any concrete reason to believe that the company will sustain growth and remain relevant in a highly competitive environment. This brings me to my next point.

Shareholders have begged RIM to change its leadership for months, That's the obvious move that could revitalize a dying franchise. In my opinion that would be a step in the right direction, but for RIM to be truly successful (And ill probably get killed for this) they need to divest from their handset creating business, it's obviously not their strong suit. They have yet to make a handset(Cellular device) with crucial features that the everyday cell phone user needs (Front facing Camera, WiFi hotspot capabilities, really they have just introduced one handset with touch capabilities that is worth mentioning (Okay maybe 2), the GPS on any one of their phones is absolutely dismal[I'm not even sure the Bold 9900 has one] ). RIM's competitive edge is in its enterprise security and information technology. I will say without a shadow of a doubt that rim has the most secure operating system, but their handsets just aren't competing with others out there.

To my surprise; yesterday, as I was picking up my new blackberry bold 9900 (for reasons too long for this blog) I got a text telling me to check the news, lo and behold, the thing that every Research In Motion investor wanted for RIM was coming true, the board had appointed Thorsten Heins as the new CEO of RIM. At first I was sad, mainly because I was looking forward to a pull back that began two days ago so that I could find an attractive entry price and trade up till its over bought again, but I believed that this was a piece of good news that would move markets further in a bullish direction.

I woke up this morning to hear pre market bullish sentiments about RIM as I suspected, but a drastic change occurred when the market opened and inched to the contrary. Apparently Thorsten Heins had effectively thrown me a bone and said that he plans to change nothing about current operations at RIM[no drastic changes necessary]. The markets quickly reacted to this unexpected news and the stock suffered for it, thereby furthering its correction/decent, and potentially presenting me with an attractive entry price.

while I believe that investors will see the value in this undervalued stock, I cant see it reversing in trend just yet, until some catalyst of "EPIC PROPORTION" comes by and attracts a flock of eager investors. For now I will wait for pull back and a technical signal for an oversold sign to find an attractive entry point.

I've done some technical analysis to illustrate my points and share my POV.
PS. Forgive the image size, I'm not a pro at coding HTML ... YET



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