Research In Motion Ltd (BBRY) Will Rise Again: Nokia Corporation (ADR) (NOK)

The slide

The stock has slid by almost 28% in the last week. I believe this slide is a market over reaction and investors selling on the news. One must understand that the stock has pushed up from a low of $7 to almost $18, which is approximately a 160% return. Therefore despite the large upside potential of BB10 there were always going to be investors selling the stock to take profits and this is exactly what has happened. There was also negative market sentiment due to the unprecedented delay in BB10 availability in the US. This however is a short term concern and doesn’t represent any fundamental weakness of BlackBerry stock.

Carrier support

A primary concern of the Street has been carrier backing and support for the new Microsoft’s Windows and BlackBerry operating systems. I believe that carriers have a lot to lose with market domination of only two major players. The telecoms have different concerns with both Android and iOS. The iOS is only found on Apple devices and carriers are sort of blackmailed into paying huge subsidies on Apple devices. This is because high demand for the iPhone forces carriers to sell it despite losses in order to attract contracts. On the other hand Google is a constant threat for telecoms because it has shown ambitions of starting its own alternative to telecom services.

The carriers have already shown a lot of favor to Nokia’s WP8 loaded Lumia. Carriers such as AT&T have given a lot of marketing and shelf support to the phone. The initial sales have not been tremendous, but they have shown that a third player can break into this market. BB investors should also take heart from the sales of Lumia and I believe the new OS will see a lot of backing by US carriers. Although this might seem trivial, the amount of advertisement and subsidies carriers provide to new BB devices will likely decide the fate of BlackBerry.

Bottom-line

The road ahead is not easy for Blackberry and it will take a lot of effort to retain former glory. That said I retain my bullish stance on the stock. I think the BB10 will enjoy a lot of support from carriers in their bid to find a third OS.

The article This Smartphone Company Will Rise Again originally appeared on Fool.com and is written by Mohsin Saeed.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.