Is Research In Motion Ltd (BBRY) A Long-Term Investment?

Future outlook and Recommendation

A big concern for Research In Motion going forward, is perhaps, the management’s decision to change the revenue model. The new model may reduce the operating margins considerably, as only subscribers that choose advanced services, including greater security will pay the service fees. This might dent the company’s overall revenue from its services. However, the management believes, this initiative will enable it to retain the current subscriber base and add new ones in the future.

Moving ahead, the company plans to invest aggressively in marketing and estimates an increase of 50% sequentially, in order to promote the all new BB10 series. This may curtail the margins in the near term.

Another area for concern is heavy reduction in the R&D spending. In today’s competitive smart phone space coming up with radically innovative products can enable Research In Motion Ltd (NASDAQ:BBRY) to compete with Apple Inc. (NASDAQ:AAPL); however, spending cuts on R&D may hurt BlackBerry in the longer run.

Although, Research In Motion has taken huge hit on its dwindling hand held devices during the past few years, nonetheless, with the new line up for BB10 on the horizon coupled with zero leverage and restructuring of cash equivalents ($2.9 billion), should enable the company to survive in this lean period of transition.

I firmly believe, in the ever changing, and rather fickle, mobile computing industry, Research In Motion Ltd (NASDAQ:BBRY) is certainly a hold, at least for now.

The article Is BlackBerry a Long-Term Investment? originally appeared on Fool.com.

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