Dead BlackBerry bounce

Normally sober Rich Karlgaard of Forbes says it’s time to buy Research in Motion stock:

Research In Motion, much despised now, will enjoy share price bounce backs, as predictions of the company’s death will prove to be premature. In other words, RIMM is a good stock to buy now, even if its future is the cloudiest of the big four. Invest in Apple, Google and Microsoft. Be a trader with RIMM.

Even more so than some of us, Karlgaard re-interprets the contemporary world through the lens of the PC, Internet and dot-com booms. His argument is that the penetration of smartphones today is like PCs in 1989, with plenty of upside left to go.

The problem with the analogy is that the winners after 1989 were Compaq and Dell, commodity makers of the commodity standard PC. In today’s world, that would be LG, HTC and Samsung.

As a card-carrying PC historian, I’ll bite. The problem is, in this analogy the RIMM BlackBerry is much like the Commodore Amiga — a highly differentiated product with a loyal following that got swamped by the economic and psychological bandwagon effects behind the IBM PC that nearly drowned Apple too.

Atari, Commodore, Digital Equipment and many other once-great computer companies never came back.

Nowhere is it written that trouble cellphone companies will someday rebound. (Exhibit B: Motorola. Exhibit C: Sony Ericsson).

RIM is on the losing side of a 3- or 5-sided standards war. Its great hope, the Playbook tablet, has failed to capture the public attention or interest. (I tried to use one at my local Office Max but gave up when I couldn’t figure it out.)

RIM peaked at $144 in June 2008 and now languishes below 30, almost where it was 5 years ago before America learned what a smartphone is. Absent an acquisition, I don’t see how it will ever visit $100 ever again — and Nokia’s alliance with Microsoft seems to have eliminated the only possible acquirers.

Since the iPhone came out 4 years ago, Apple stock is 2.67x the June 2007 price while RIM is at 49%. Despite a huge advantage in installed base, distribution (and enterprise integration), the great smartphone boom has left RIM shareholders by.

So RIM’s long-suffering shareholders should take note of Karlgaard’s advice — and sell on good news or even a dead cat bounce. RIM tested $70 on Feb. 18 and it’s been steadily downward ever since. Even if this is a temporary bottom, prices above $50 will bring out a lot of itchy buyers, so anything beyond that is pure gravy.