BB10 Bust

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Research In Motion Changes Name, but Not Long-Term Trajectory

Research In Motion (NASDAQ:RIMM) finally raised the curtain on its new line of BlackBerry 10 devices on Wednesday. And it also raised the curtain on a new name — BlackBerry, with the new ticker BBRY.

But a new name doesn’t mean much. What investors really need to pay attention to is the BB10 line … and the public’s reception of these gadgets.

The initial reception by investors has been pretty poor. RIMM stock was down as much as 8% intraday, though they’re beginning to bounce a bit after the end of the event.

So is this classic “sell the news” behavior and profit-taking, or a sign of trouble to come? I think it’s the latter. The new line of BlackBerry devices including the Z10 touchscreen and the Q10 with a tactile keyboard didn’t really break any new ground.

And more important, there was zero time spent on the Playbook or a tablet running BB10. What, does BlackBerry not care about the tablet craze — or the nascent phablet craze that has many wondering if even smartphones are obsolete?

I’ll save the horseracing of BB10 features to tech blogs. But a new ticker symbol isn’t enough to “reinvent” the company and change the stock’s long-term descent. Today’s event featured a bunch of early self-congratulation and pandering about how BlackBerry will offer a tactile keyboard still — as if we had any doubt! Or how execs touted the depth of apps without a hint of self-awareness that Facebook (NASDAQ:FB) and Angry Birds and Reuters apps are already ubiquitous on any other device and offer BlackBerry equal footing at best and not a competitive advantage.

The bottom line is that RIMM had its back against the wall after sliding market share and the rise of the Apple (NASDAQ:AAPL) iPhone and more recently Google (NASDAQ:GOOG) Android devices. The event at RIM headquarters was so important because it had to show something new and different.

And what it showed? Basically the same company, with the same apps everyone else has, and the same pie-in-the-sky hopes of enterprise adoption. There’s the same overuse of the buzzword “secure” and the same blissful ignorance of the tablet market and the same naivety that it’s easy to convert iOS or Android users if they just imitate or offer incrementally better features.

It’s not that simple. And since everyone agrees its make-or-break time for Research In Motion stock, the sales of these new devices will either be the next chapter in a resurgent RIMM … or the beginning of the end.

Given that nothing looks all that new, it seems unlikely that investors will be willing to stick around if BlackBerry 10 gadgets don’t come out of the gate strong and stick. And I don’t see that happening — even if an initial push of dedicated BlackBerry fanatics allows for a decent debut that meets expectations.

Admittedly, I remain bearish long-term on the stock and have been wrong the whole way up these past few months. But I just don’t get it. Android has a 70% global market share of the smartphone business. Sure, Apple is losing its luster but remains very dominant in the tablet space, and its iPhone remains very profitable. And while the space can support a third mobile player, why does that have to be BlackBerry? Why not Microsoft (NASDAQ:MSFT), which is equally desperate to figure out mobile now that a post-PC age is threatening Windows and the company has a rich cash flow and some $66 billion in the bank to throw at smartphones and tablets?

I recently postulated that buying 17-strike puts on RIMM could be an interesting way to play the downside if you expect the first wave of sales to be weak. If you took my advice, you are pretty close to profitable already.

But it’s still early, and I guess things could change. The flip side of that is to buy call options around $17 expiration in the next few months and hope for a big pop. Sure, you can go long on RIMM stock … but responsibly buying call options could limit your downside risk should the position crash.

Of course, if you’re truly bullish on RIMM stock long term — or I guess “BlackBerry” after its ticker change to BBRY after this event — then by all means buy today’s pullback and continue to ride it.

But I’m not touching that trade. And frankly, given the volatility an options trade may be less risky than dabbling in a short or long position right now.

Related Reading

Brad Moon takes a look at the nitty-gritty under the hood. (InvestorPlace.com)

Jonathan Geller has reviewed the Z10 and he is not impressed. (BGR)

Adrian Covert says BB10 feels “a generation late.” (CNNMoney)

A glimpse at the many apps BB10 will host. (CNET)

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing he held a long position in Apple stock.

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