You'd think people would avoid a company that's losing money and reporting massive declines in revenue like the plague. But Research in Motion (RIMM), maker of the not as popular as it used to be BlackBerry smartphone, surged nearly 13% Friday morning even though RIM posted a big quarterly loss and more than 30% drop in sales.
The reason? Like the disease-infested peasant in "Monty Python & The Holy Grail," RIM can claim the following: "I'm not dead! I'm getting better!"
The good news for RIM is that it did grow its subscriber count and it also boosted its cash position. So this does not look like a company that's destined for oblivion anytime soon.
However, is RIM really doing enough to make a comeback against Apple (AAPL) and the numerous gadget makers whose phones run on Google's (GOOG) Android? Can RIM even stay ahead of Nokia (NOK), now that Nokia is allying itself with Microsoft (MSFT) and its Windows Phone operating system?>
RIM may have gotten itself a stay of execution from nervous investors. But the company still has to convince skeptics that the lonnnnnnng wait for new phones running on RIM's upcoming (and repeatedly delayed) BlackBerry 10 operating system in early 2013 will be worth it. Many traders on StockTwits are still not sold on a RIM turnaround story.
To be fair, BlackBerry 10 is more than one product. It's an entire operating system that, if successful, could lead to big sales of all new devices. However, it's interesting to see that "Rollover" is shorting the stock now. A lot of bearish investors have bet against RIM. And that's probably one reason why the stock popped Friday.
The number of RIM shares being held short is nearly 17% of the float. So many short sellers probably rushed to cover their position, i.e. buying back they borrowed and sold with the hopes of returning at a lower price, because RIM's news was not as awful as feared. That's known as a short squeeze. And it's often only a temporary boost for struggling companies.
Traders know that poorly performing companies can have days where their stocks are studs merely because results exceeded expectations. But long-term investors should not confuse relatively "less bad" sales to mean that RIM has a viable strategy to regain much of the market share it has lost.
Exactly. RIM opened Friday up as much as 15%. But shares had pulled back to about a 6% gain by mid-afternoon and had fallen below the $8 level. So traders were still enthusiastic, but not as euphoric as they were at the start of the morning.
Still, there was one brave soul who thought RIM might be able to stage a sustainable comeback -- even though the odds are against the company.
True. People do tend to dismiss the fact that RIM still has a lot of users. But until the company can turn that into strong sales and profit growth, RIM stock may continue to slump. I'm not giving up using #bleakberry as a moniker on Twitter just yet.
And speaking of another tech company that I often poke fun of on Twitter, Yahoo (YHOO) made news this week by hiring a new chief financial officer and announcing a new strategy from CEO Marissa Mayer. There have been a lot of executive shake-ups at Yahoo in the past few years, a trend that one Twitter follower pointed out in my Reader Comment of the Week.
Y - Yes,
A - Another
H - Head
O - Officer
Ha! Yet Another Hilariously On-point Observation!
Remember all the investor disappointment about Apple's latest earnings report? That's no longer an issue. Shares of Apple (AAPL) were up nearly 1.5% Monday to about $625. The stock has rebounded more than 8% since a 4% pummeling the day after it missed forecasts and guided lower. In fact, the stock is now just 3% below the all-time high of $644 it set back in April.
It appears that any lingering MOREPaul R. La Monica - Aug 6, 2012 1:19 PM ET
Green Mountain Coffee Roasters (GMCR) issued some decaf guidance. But that didn't matter to investors. Shares popped nearly 30% Thursday morning even though the company provided a near-term earnings outlook Wednesday that was less than stellar. It appears investors are excited to hear that the company is boosting its inventory ahead of what it hopes will be strong demand next year.
That's dangerous. Many companies have been burned by boosting inventory MOREPaul R. La Monica - Aug 2, 2012 10:41 AM ET
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