Research in Motion reamed on downgrade as mobile air war heats up
"Simply put, there is an invasion of new phones, applications, and competition," Citi Investment Research analyst Jim Suva wrote in a note to clients.
"The revolution of product and application service offerings is going to start to crack open the enterprise door and pose a risk for BlackBerry," Suva wrote. RIM shares closed at $55.74 -- down considerably from a 52-week high over $88 per share. "Much of RIM's growth recently has been driven by the consumer, who will soon have more choices with more compelling software and hardware features."
Suva cited increased competition from Motorola, which this month is releasing its Droid phone powered by Google's (GOOG) Android system. The analyst upgraded Motorola to buy from hold. Motorola shares were up 4.2 percent at $8.93 in New York Stock Exchange trading Monday afternoon.
Suva's downgrade comes as the mobile wars are starting to heat up as new challengers emerge to challenge Apple's wildly popular iPhone for smart-phone supremacy.
Analysts at Deutche Bank expressed concern over whether RIM would continue to receive strong marketing support from Verizon Wireless, the largest cell phone company in the country.
"We think the original Storm did well in large part thanks to Verizon's marketing support," the analysts wrote. "This time around it looks less likely that Verizon will step up, not with the Motorola Droid primed to ship, and the Palm Pre in the batter's circle warming up for Q1. While RIM may be able to eke out a good quarter filling the channel at Verizon, we think the outlook for RIM is worsening."
Cit's Suva expressed similar concerns. "We believe Verizon accounted for as much as 28 percent of RIM's sales, which is indeed a marketing shift not to be taken lightly," he said.
RIM is also facing pressure from the resurgent Palm (PALM), as well as Taiwanese cell phone giant HTC, which has just launched an advertising campaign designed to increase brand awareness of the company in America. Although the company is a mobile giant in Asia, it is little known in the United States and is trying to increase its profile.
HTC's "Quietly Brilliant" global advertising campaign, its first, is being rolled out across 20 countries and features the tagline, "You don't need to get a phone. You need a phone that gets you."
"This represents HTC's commitment to focus on people, their needs and how they work and live to ensure that HTC devices suit them," according to the company.
"Quietly brilliant is doing great things in a humble way, with the belief that the best things in life can only be experienced, not explained," John Wang, chief marketing officer, HTC Corporation, said in a statement. "The YOU campaign is the perfect embodiment of 'quietly brilliant' and is core to HTC as a company, innovator and partner."
HTC worked with Los Angeles-based advertising agency, Deutsch LA to create the campaign. "We've come to have a very emotional relationship with our phones. Many of our key experiences in any given day come through this one device and yet most of the advertising in the category is still about utility," Eric Hirshberg, co-CEO and chief creative officer, Deutsch LA, said in the statement.
The HTC Dream was the first handset to employ Android, Google's open-source mobile operating system. The company recently launched its Hero phone, which Wall Street Journal's gadget guru Walt Mossberg called "the best Android phone I've tested."