Shares of RIM Down on Concerning Barron's Article (RIMM, AAPL, PALM)
Shares of Research In Motion (Nasdaq: RIMM) are trading lower this morning following a somewhat bearish article published in this weekend's edition of Barron's. While the main point of the article focuses on Wal-Mart's (NYSE: WMT) recent decision to sell Apple's (Nasdaq: AAPL) iPhone in its stores, the column has negative overtones for other smartphone makers such as Research In Motion, Palm (Nasdaq: PALM) and Nokia (NYSE: NOK).
Barron's believes that if Apple's push into Wal-Mart stores goes successfully, it will be creating a situation "to sell a relatively complex piece of computing to folks who may never have touched a computer, or who didn't think they'd ever want to carry one around with them." Further, the article also notes that such a development could likely "drive a wedge between" Apple and competitors Research In Motion and Palm, as the latter two have so far had a tough time selling their smartphones to non-corporate consumer types, a market which, for the most part, is dominated by Apple.
Also, according to the Barron's article, a recent demographic shift in smartphone users from corporate users to individual consumers has created a margin issue at Research In Motion. As more than half of RIM's new subscriptions are now coming from consumers, the company now sees its gross profit falling from 45.6% to in the range of 40-41%.
Shares of Research In Motion are now down nearly 3% to $39.70. Elsewhere in the sector, shares of Palm are down 3.4% to $3.10 and Nokia stock is also down 3.4% to $14.93. Meanwhile, shares of Apple, which initially traded up as much as 2%, are now up about 0.5% to $86.23.
Research In Motion Limited engages in the design, manufacture, and marketing of wireless solutions for the mobile communications market worldwide.
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