Share price blues

Research In Motion has become the Rodney Dangerfield of the stock market: “It can’t get no respect.” Coming out of a global recession, the financial results announced yesterday looked strong. Year-over-year, revenue was up 35 per cent to $15 billion, the subscriber account base grew 65 per cent to 41 million, smartphone shipments grew more than 40 per cent to 37 million, and earnings per share were up 30 per cent to $4.31.

Analysts, however, were expecting better. As soon as the numbers became available after the market closed, share price began falling in after-hours trading. By early evening, share price on the NASDAQ was down $3.42 or 4.6 per cent. By noon today, the price seemed to have settled in around $71 on the TSX, down 6 per cent from yesterday’s close.

All this despite the fact that BlackBerry is the number one selling smartphone brand in the world’s biggest market, the United States. Nor has RIM been resting on its laurels in North America. International customers now make up half of total sales for the first time.

What’s the explanation? Is there a deficiency because RIM is a Canadian company and Apple gets all the buzz? Are short-sellers aiming at the market leader, hoping to make a killing? Is RIM’s future behind it?

The answer is none of the above.

Whenever I start researching a book on a company, I always buy shares in that company for my RRSP. I did so with RIM and I remain a shareholder. But as for what will happen next, I defer to J. P. Morgan, no slouch as an investor. When asked the direction of the stock market, Morgan replied: “It will fluctuate.”