Research In Motion Looks To Be In Trouble (RIMM, AAPL, GOOG)

Yesterday, Research in Motion RIMM debuted its new touch screen Blackberry device, Torch. In addition to a touchscreen, the smartphone features a slide out keyboard and updated operating system. The Torch is RIMM's response to increased competition from Apple's AAPL iPhone and Google GOOG Android operated devices. In some ways, however, the new Blackberry is a let down. Its microprocessor is relatively underpowered at 625 MHz compared to the iPhone's 1GHz. The phone's screen is on the small side at 3.2 inches and its resolution at 360x480 is less than some competitors' comparable devices. Analysts also cited the lack of HD video capture and native video chat features as weaknesses of the Torch. The price action in RIMM shares surrounding this release is also suggesting that the market is underwhelmed and sees more downside ahead for the company. During Wednesday's trading session, RIMM has fallen 3.89% to $53.37. Year-to-date, the shares have lost almost 21%. On a valuation basis, the stock looks downright cheap, but given recent earnings misses, increased competition, and the lukewarm reception of the Torch, this may be a trap. There could still be plenty of downside left in RIMM, and a short position, even at these levels, could pay off handsomely. One only has to look at the story of Palm and its Pre launch to see how this could potentially turn out. Palm, if you recall, was unsuccessful in gaining traction with its Pre smartphone and the stock was subsequently crushed in the months after the device's launch. The company was eventually acquired by Hewlett-Packard HPQ at a bargain basement price. Research in Motion still has a way to go before it turns into the next Palm, but the writing may be on the wall.