EV38 (99.89)

Why RIMM’s glory days are coming to an end

July 10, 2007 – Comments (0)

RIMM is one of the few supremely overvalued stocks that have avoided my infamous short list and bashing on caps (GOOG and AAPL being the others), and judging by their stock performance, correctly so. However this all comes to an end today as the pieces have been put together to finally end its run up. 

I’ve avoided the short until now because it has basically had the licence to print money in Canada – it has been absolutely raping its customers Bell, Telus and Rogers (I should know I work for one of them). Each one of these companies subsidizes between $500 and $600 per client that signs to a Blackberry contract – every penny of that goes to RIMM. There is also a ridiculously high per customer monthly licence fee and if a Blackberry needs repair – BAM! RIMM charges us $200 just for the right to look at it in addition to the actual costs of repair. Data plans are actually much, much less profitable that cell phone plans to us despite the higher revenue per client, and if Data is the wave of the future for the powerful telecommunications industry, you better believe that they are gonna do whatever it takes to get those margin numbers increased by controlling the costs. 

Thus, in comes AAPL’s iPhone. This is causing a great stir in our industry as something that could finally eliminate RIMM’s virtual monopoly. The marketers will push this thing like crazy until RIMM prices their products more fairly, and they will see their profits decline greatly from there.

All this being said, I really hope their CEO gets a hockey team back to Canada!