RIM Stock Drops Below Book Value on BB Market Share Slump

BlackBerry maker Research in Motion’s (RIM) stock fell to seven-year low on Wednesday as the market digested further evidence of the company’s declining share of the lucrative U.S. market.

Dropping as low as $18.37 during the day, RIM stock price closed at $18.91 Wednesday, which is just under the book value per share of $18.92 at the end of last quarter, according to data compiled by Bloomberg.

“The market, at book value, seems to be saying not only is RIM going to not get bigger in the future, but it’s actually going to shrink,” Richard Fogler, of Kingwest & Co. in Toronto, told Bloomberg. He sold his RIM shares in the third quarter. “Everyone’s frightened of what’s going to keep happening tomorrow.”

According to a report by Canalys, RIM’s share of the U.S. market was 9% in the third quarter compared with 24% a year earlier, marking a 58% decline.

“RIM’s market share has fallen below 10 percent for the first time, and the current outlook for it in the U.S. is certainly bleak,” said Tim Shepherd, senior analyst at Canalys.

Globally, the report placed RIM in fifth place among competitors, with 10% market share, compared with 15% a year earlier. It was the latest in a string of data points tracing RIM’s dwindling global market share.

RIM’s humiliating stock performance over the past year – a 66% decline on the year (seen in the chart below) – is evidence that investors have little faith in the company’s turnaround plan, which hinge on the introduction of the new BBX operating system next year. RIM’s image was also severely damaged by a worldwide 3-day outage in October this year.

“There’s no disputing that RIM are in a really difficult place at the moment,” said Pete Cunningham, another analyst at Canalys.

research in motion rim-stock below book value 2011
via Bloomberg