Problems for BlackBerry-maker
Research In Motion Ltd.
) continue to mount after the Canadian company was ordered to pay a
$147.2 million fine to New Jersey-based technology firm Mformation
Technologies for patent infringement.
It all began in 2008, when Mformation Technologies, which is
renowned for providing Mobile device management software solutions
to its clients, dragged Research In Motion to the U.S. District
Court for the Northern District of California for infringing its
Mformation asserted that Research In Motion used its unlicensed
technology in BlackBerry Enterprise Server, which the the Waterloo,
Ontario based handset manufacturer had picked up during a meeting
related to this technology with Mformation.
Research In Motion was found guilty by the court and was asked
to pay a royalty of $8 for each of the 18.4 million units, hence
amounting to a total of $147.2 million.
A large number of legal cases regarding patent infringement are
already pending against Research In Motion, which we believe will
not only affect the company's normal workflow but will also
adversely impact its margin going forward.
Recently, Research In Motion Ltd. reported poor financial
results for the first quarter of fiscal 2013 where both its top and
bottom line missed the Zacks Consensus Estimate. Moreover, its
smartphone and Playbook tablet device sales fell by 40.9% and 48%,
respectively, from the previous year quarter. Stiff competition
) iPhones and
) Android-based devices has resulted in such grim results.
The company has also delayed the launch of its upcoming
BlackBerry 10-based smartphones and followed it with a job cut of
at least 5,000 employees. Taking into consideration all these
headwinds, we believe the company's future looks bleak.
Research In Motion shares currently retain a Zacks #4 Rank,
which translates into a short-term Sell rating. Longer term, we are
maintaining our Neutral recommendation on the stock
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