Two separate brokerage firms downgraded Research In Motion Tuesday, both citing threats to the company’s BlackBerry platform from Apple’s iPhone and the army of Android devices being made by OEMs around the planet. Gleacher & Co. dropped its rating from a “Buy” to “Neutral,” while Canadian firm CLSA lowered its rating from “Buy” to “Underperform.”
While Research In Motion brought the smartphone market to life, both CLSA and Gleacher & Co. believe that the market is now dominated by iPhone and Android. RIM is in a battle for third place with cellphone heavyweight Nokia and has-been model Windows Mobilephonewhatever.
The Associated Press reported that Gleacher & Co. analyst Mark McKechnie believes that RIM still has two or three strong quarters ahead of it in the near-term future, as the company’s base of customers upgrades to upcoming devices. Sales will begin to slow over the next two years, however, as competition heats up.
“We see increased competition in 2011 as smartphones move to the mid-range, alternative solutions penetrate the enterprise, and RIM’s bandwidth efficiency has not yet translated to the consumer,” the analyst said, according to Routers.
CLSA’s concern is with the expected (but not announced) launch of the iPhone on Verizon’s network in 2011. The firm also believes that the migration to QNX, the replacement operating system RIM acquired earlier in 2010, will weigh down profits for the company.
Despite the downgrades, Mr. McKechnie raised his price target on RIMM to US$70 per share, up from $60, while CLSA raised what it calls its “fair value” target on RIMM from $65 to $68.
Shares in RIMM closed lower in Tuesday’s trading, ending the day at $62.12, down $1.208 (-1.91%), on moderate volume of 12.7 million shares trading hands.