RIM Falls as Survey Shows BlackBerry Corporate Loyalty Fading
Research In Motion Ltd., maker of the BlackBerry smartphone, fell the most in two months in U.S. trading as a Sanford C. Bernstein Ltd. survey found more companies opting for rival devices such as Apple Inc.’s iPhone.
Of 200 companies in the U.S. and U.K. surveyed, 74 percent now let their employees use devices other than BlackBerrys, Sanford Bernstein analyst Pierre Ferragu said in a report today. For the U.S. alone, the figure was 83 percent.
“This phenomenon is very new and we expect it to put increased pressure on RIM’s performance,” Ferragu wrote.
The iPhone and devices based on Google Inc.’s Android software are making inroads into RIM’s dominance in corporate mobile e-mail. The European Commission, the executive arm of the 27-country European Union, this month opted for the iPhone and Android handsets made by HTC Corp. over the BlackBerry, after a similar move by Standard Chartered Bank Plc.
He reiterated his “underperform” rating on Waterloo, Ontario-based RIM’s shares and cut his price target to $40.
RIM fell $2.75, or 6 percent, to $42.84 at 4 p.m. New York time in Nasdaq Stock Market trading, for the shares’ biggest daily slide since June 29. They have declined 37 percent this year, as Apple gained 15 percent.
Some other studies also suggest BlackBerry loyalty may be fading among bankers, lawyers and government workers, who drove RIM’s initial success. Only 42 percent of BlackBerry users say they want to stick with the brand when they buy a new phone, according to an August survey by Nielsen Co. The rate is 89 percent for iPhone owners and 71 percent for Android devices.
“The idea that BlackBerry isn’t the only alternative to offer employees mobile e-mail has gone a long way,” Ferragu said.
RIM also faces questions about the security of its e-mail system after the Indian government said yesterday it wouldn’t ban BlackBerry service while it tests the company’s solution to allow monitoring of the service. The United Arab Emirates, another country concerned about how the RIM devices may be used to disrupt social order or plan terrorist attacks, has said progress is being made in negotiations with the company to avert a halt of the BlackBerry service starting Oct. 11.
RIM held talks this month with clients including Goldman Sachs Group Inc. and JPMorgan Chase & Co. to reassure them about the security of the BlackBerry service, two people familiar with the situation have said. At least one corporate customer told RIM it wasn’t satisfied with the explanations at that point and sought an additional meeting, according to one person.