Surfing with Crackberries

If you owned Research in Motion (RIMM) over the last twelve months, you probably made a killing. The company has done incredibly well over the last 12 months, rising from split adjusted price of 45.89 to today’s closing price of $112.15, a gain of 244%.

But more money could’ve been had over the last twelve months, through the ups and downs of the stock. A trader could have done very well by selling after earnings, and then buying on dips such as what we had in the last three months. From November until today, there has been five successive dips in the stock price, and each followed by an a move up on the stock.

Overall, RIM is a great company. Sure, they’ve had their problem including service outage that was broadcasted nationwide, but the coverage is indicative of just how dependent businesses are on Blackberries. RIM gets its revenue from the devices they sell, as well as a flat subscriber fee for each customer it has through wireless providers such as Verizon and AT&T. So, the more corporate accounts and users RIM has, the more money they make.

They are so dominant in terms of the business of smart phones that the next closest player is Apple with the iPhone, and the iPhone is more oriented toward consumers right now. Although Steve Jobs may be trying to change this, he is a long way from being able to compete with RIM directly.

So, with RIM earnings coming out next Wednesday, I think the play should be to get into the stock before the report. Given RIM has raised that subscriber addition forecast for the quarter, the only question is how good the forward looking statement will be. Unless the recession significantly affects business and that is reflected in the forward looking statement, RIM should do very well after their earnings come out, making it a prime candidate for good short term gain.