Research In Motion Ltd. (RIMM), maker of the BlackBerry smartphone, fell to a 26-month low on the Nasdaq after Morgan Keegan & Co. downgraded the stock, citing a new threat from Apple Inc. (AAPL) to RIM’s instant-messaging service.
Morgan Keegan’s Tavis McCourt, who had had an “outperform” rating on RIM since September 2008, cut his rating to “market perform” and lowered his price target to $49 from $71.
Apple’s iMessage service unveiled yesterday is “a major shot across the bow of RIM,” Nashville, Tennessee-based McCourt said today in a note. BlackBerry Messenger, or BBM as it’s known, “has over 40 million users globally and is one of the keys to RIM’s success outside the U.S.,” he said.
RIM fell $1.09, or 2.8 percent, to $37.82 in Nasdaq Stock Market trading at 4 p.m. New York time, the lowest since March 2009. Waterloo, Ontario-based RIM’s shares have lost 35 percent this year, while the Nasdaq 100 Stock Index gained 2.3 percent.
RIM is counting on sales growth in Latin America and East Asia, where lower-priced models such as the BlackBerry Curve with free, built-in BBM have gained popularity. Apple’s iMessage function neutralizes BBM’s strengths, McCourt said.
“Apple has knocked down all of RIM’s advantages with iMessage,” he said. While iMessage probably won’t be released for a few months and is still untested by consumers, “given Apple’s history, we suspect it would not be launching unless it had a competitive delivery time and overall performance.”
Battle for Teenagers
The large base of customers with Apple devices and its youth brand loyalty will be a test to BBM’s own popularity with teenagers, said RBC Capital Markets analyst Mike Abramsky.
The arrival of iMessage may only raise investors’ “uncertainty regarding RIM’s long-term competitive position for BBM,” said Abramsky, who cut his rating on the stock to “sector perform” in April.
Apple didn’t say yesterday how much customers will have to pay, if anything, to use iMessage. RIM’s BBM costs users nothing as the messages are carried over its own server computers.
RIM’s share of U.S. smartphone subscribers dropped 4.7 percentage points to 25.7 percent in April from three months earlier, according to ComScore Inc. Apple gained 1.3 percentage points to 26 percent and devices using Google Inc. (GOOG)’s Android software advanced 5.2 percentage points to 36.4 percent.
Outside the U.S.
Revenue growth in markets such as Latin America may also be threatened as Android catches on outside the U.S., UBS AG analysts said last week as they lowered their price target on RIM to $45 from $60.
Apple’s tendency to trigger technology copycats poses a further threat to BBM given Android’s surging growth, said McCourt. Google will need to begin working on a similar instant messaging type solution for Android, he wrote.
“We would be shocked if Android ultimately did not attempt to replicate iMessage/BBM, which ultimately would be a much greater threat to RIM’s long term success than iPhone specifically,” McCourt said.
Separately, RIM said today that it bought Scoreloop, a Munich-based company that makes software for mobile-game developers. No price was given for the purchase of Scoreloop, which was founded in 2008 and also has offices in the U.S. and Asia.
RIM plans to tap Scoreloop’s expertise in creating software that developers use to build social and collaborative games such as “Greedy Pigs” and “Hungry Shark,” Tyler Lessard, RIM’s vice president of global alliances and developer relations, said in a blog post.
[ via Bloomberg ]
