Potential Rebound: Are investors rooting for underdogs RIM and Nokia?
Apple and Google appear to have the mobile phone market locked down, but not all investors have shunned the ailing decliners, RIM and Nokia.
Both are big companies going through tough times—but some people love cheering on the underdog. It's interesting to note that, while RIM and Nokia's stocks have both plunged more than 40% this year, they're up 20% and 16% this past month.
If there is space for a third mobile phone platform, these two are best-positioned to claim that spot.
Most are betting on RIM as the better hedge bet—with a crisp, clean balance sheet featuring billions in cash and its own hardware and software, the Waterloo company can remain relatively agile and stave off death. Nokia, meanwhile, is looking bloated and burdened. Its survival appears to lie in the hands of Microsoft, who forged a strategic partnership with the wounded phone maker earlier this year.
With RIM's 2012 launch of QNX-powered superphones that will run Android apps, the mobile Windows 7 platform may never take flight in the way Microsoft and Nokia had hoped. Plus, RIM is just small enough (around $16 billion) that, if it fails to rebound in share price, a takeover is possible (though not likely). Nokia, on the other hand, is much larger (about $24 billion) and a considerably less desirable acquisition target of any sort. By the time its shares fell to a value worth considering, the vultures would already be picking out its entrails.
In the end, though, a risk is still a risk. Neither company may pull off the underdog scenario, and both Google and Apple remain safe bets for the foreseeable future. (Which, it's worth noting, is never very long in the tech world.)
