A RIM rally to remember

November 1, 2012

If you've lost faith in Research In Motion Ltd.'s ability to compete in the smartphone market, then news of an upcoming revamped BlackBerry might not be enough to change your opinion. But it appears that many investors remain optimistic.

RIM shares rallied 10 per cent on Thursday, as of late afternoon, sending them to their highest level since July. The jump followed an update on its BlackBerry 10 device on Wednesday: RIM is testing the new smartphone among 50 wireless carriers, marking a big step toward launching the product early next year – likely some time between January and April.

This isn't just any new RIM smartphone, though. The BlackBerry 10 is redesigned with a different operating system. As my colleague Iain Marlow explains, "The new full touch-screen BlackBerry will run entirely on new software that marks a dramatic departure from the current BlackBerry 7 models. The new software has increased functionality, including the ability to move more easily between a central e-mail inbox and various apps running in the background."

And while delayed, it is widely seen as the company's best shot at a comeback – or at least stirring up enough interest among potential buyers of the company – after Apple Inc.'s iPhone and devices using Google's Android operating system have taken most of RIM's market share in North America.

According to comStock, the BlackBerry's market share among U.S. smartphone subscribers at the end of August had fallen to just 8.3 per cent – down from 11.4 per cent as recently as May – versus a combined 86.9 per cent for iPhone and Android.

Meanwhile, the company has had to wrestle with a series of high-profile defections. Bloomberg News reported in October that the Pentagon was planning to open its network to the iPhone and Android phones, in addition to the current BlackBerry. That sends the signal that RIM is even having trouble keeping government clients, long seen as the company's hardest-to-budge customers because of security issues.

In other words, RIM faces big obstacles in its comeback. Intrepid investors, seeing the share price fall more than 50 per cent over the past year alone, can sense a turn in its fortunes. Let's see how long this optimism lasts: Previous rallies haven't favoured late-comers.

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