British celebrities often complain about facing too much media attention, in part because there just aren’t that many of them in comparison to their counterparts in the United States. Madonna fled the U.K. for that reason, following a split with former husband Guy Ritchie.
It’s a conundrum that Research in Motion Ltd. (TSX: T.RIM, Stock Forum) (NASDAQ: RIMM, Stock Forum) might identify with, just because in Canada there aren’t that many big technology companies with a multi-billion dollar market caps and products that sell in 91 countries.
So far this week, for example, there have been six articles in Canada’s Globe and Mail, all of them with a focus on the Waterloo, Ont.-based company’s well documented problems, including competition in emerging markets from Google Inc.’s (NASDAQ: GOOG, Stock Forum) Android operating system and Apple Inc.’s (NASDAQ: AAPL, Stock Forum) iPhone.
Not to be outdone, Canada’s other national newspaper, the Financial Post had eight. One of them noted ominously that RIM’s share of the U.S. smartphone market fell to 9% in the most recent quarter from 24% a year ago.
This doesn’t seem to bode well for shareholders of the blackberry maker which has seen its stock price fall from a 52-week high of US$70.54 to a multi-year low of $16.20 on NASDAQ this week, giving the company a market cap of $8.5 billion, based on 524.1 million shares outstanding.
Some of those shareholders might be reminded of Nortel Networks Corp., another Canadian technology giant, which once boasted a market cap of $400 billion, and almost 100,000 on the payroll, but folded in 2009.
Barb Richardson, an assistant branch manager, private client services with TD Waterhouse Canada Inc., wouldn’t be a buyer for that reason. “I think they might be going the way of Nortel,’’ she said.
In fairness to RIM, its current problems are not comparable to those of Nortel, which saw its stock price plunge to C$124 to 47 cents, before the telecommunications equipment maker filed for protection from creditors in January 2009.
But the level of coverage seems to be remarkably similar, especially in the Canadian media.
Paul Sullivan, a former western editor with the Globe and Mail, and now a partner with BreakThrough Communications Inc. in Vancouver attributes “the obsession with RIM” to the fact that it is operating in an incredibly high profile market, both in Canada and the United States, where it is in direct competition with Apple.
“Anything that pertains to Apple is big news,’’ he said.
Sullivan says the amount of media coverage can also be attributed to the fact that RIM is one of the most prominent stocks on the TSX, one that appears to be going south.
“Today I wouldn’t be a buyer of RIM stock unless they tell us where they are going,’’ he said.
These comments came on the day after the Financial Post served up another reminder of RIM’s problems by noting in the November 23rd edition that the company is set to enter the multi-billion payments market with the launch of a “digital wallet” pilot.
In doing so, it is betting that its BlackBerry devices will be used to pay for groceries and open a locked door. “Too bad the first profits will flow to wireless carriers and RIM’s chief rivals,’’ noted the Post’s technology writer Jameson Berkow in his report.
That didn’t seem to do much for the stock price, which lost almost 4% of its value on November 24.
“It’s a good idea, but [Apple iPhones] are already there,’’ said Sullivan.