After a terrible Friday of trading for Research In Motion (RIMM), when the stock dropped 10%, it went green Monday and has continued to move upward this morning.
Is Armageddon priced in?
It appears that -- despite the mainstream media continuing to want to slam RIMM and its co-founders for being idiotic at each change they get -- contrarian investors continue to want to step in and call the bottom. In their defense, when a stock is trading below book value, the downside is pretty limited.
Just last week -- before the latest profit warning -- people were bidding RIMM up because Lee Cooperman of Omega Advisors was putting his muscle behind the stock.
Lee was asked about his position in RIMM and revealed that he was amazed at all the calls he and his firm have received over it, given that it's such a small percentage of his overall portfolio. He said he's basically making a small bet that the worst is over and the stock will soar on good earnings on the 15th or on their next earnings call.
With the stock down 71% year-to-date, I can understand why Cooperman thinks now is a great time to enter a position in RIMM -- especially when mainstream sentiment is so against the company. However, I'm still not ready to buy into RIMM because of a big bomb I still see in front of them: the rollout of its QNX smartphones. This is really the last announcement on the horizon that investors and observers are waiting for.
We don't know when the phones will come. RIMM has been deliberately vague about this, only saying that it would be sometime "early next year." However, RIMM's fiscal year starts in March -- not January. I believe management is using that ambiguity to their advantage.
So, early next year could in fact be June rather than January -- at least in the warped minds of the RIM co-CEOs. So, expect a long delay and finally a few demo phones.
When the phones finally ship (which might not be until September), expect a final dumping of RIMM shares. Even great products such as Apple's (AAPL) iPad have been met with initial snark and revulsion – at least by the so-called experts and investors.
That could be the time to buy into a RIMM contrarian play. But we're talking almost a year from now -- not today.