RIM: A Strong Buy or A Sell?

Is Research in Motion a good buy or bad one right now?

It’s looking like things could get pretty bad for the makers of the BlackBerry Bold and BlackBerry Storm this year. Competition is heating up, while sales are slowing. But analysts are offering very different views on the matter.

In research notes released Jan. 20 RBC Capital analyst Mike Abramsky raised his rating to the equivalent of a strong buy, suggesting the company’s stock could soar to $75 from about $50 today. Abramsky notes the company’s margins should stabilize thanks to new products and improved execution following months of delays and shortages in getting those products to market.

Meantime, Todd Rosenbluth, an analyst at Standard & Poor’s (also owned by BusinessWeek parent McGraw-Hill) downgraded his rating to hold from buy. He agrees RIM’s results do not appear to have been hurt much by slackened demand for consumer electronics and the impact of massive job cuts in the financial services sector. But with the economy in a tailspin, the risk remains, Rosenbluth says.

One thing they both may have overlooked is whether corporate belt-tightening will have a big effect on devices already deployed. American Express recently issued a company-wide memo to employees that as part of its effort to reduce costs by $1.8 billion this year it no longer will pay for certain employees’ BlackBerrys.

An American Express spokeswoman said she did not know how many employees would be affected by the new rules. Senior executives, salespeople and those in a “client management” role will still be able to expense the device and monthly charge, she said.

With a cool down in the red-hot smartphone category expected to last throughout the year, if other companies also are cutting back in the same way, RIM and other email providers could be in for a rockier 2009 than anybody would have expected.

Longer term, RIM as the market leader for corporate email clients might be a great buy, but the near-term global outlook makes one wonder whether anyone has the stomach for investing in the wireless market right now.

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