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Research in Motion: Oversold, But I’m Not Buying

“Control + Alt + Delete”. That’s what one downgrade report had to say about Research in Motion’s earnings report.

Last week I recommended avoiding the tech sector for the time being. Nothing has changed since then. I would continue to steer clear of tech, and that position was reinforced by the sector’s performance last week (down -1.2%). But as tech struggled, Research in Motion (RIMM) tanked.

RIM shares plummeted in a dashed sell-off (to its lowest level since 2006) following a report that was “beyond disappointing” and guidance for the upcoming quarter that was worse, according to CNBC.

Revenue fell -12% from the previous quarter, and now the company is facing “a lower than expected outlook” for the next quarter…with revenue, profits and gross margins all declining, according to co-CEO Jim Balsillie.

But that’s nothing new. RIM has been struggling for a while now, losing market share to Apple and Google (U.S. smartphone market share fell from 30% in January to 26% in April) …and the company hasn’t introduced a major new Blackberry model since last August.

And the stock is down -52% year-to-date (the tech sector is down -1.4%). And while shares have been overpunished after last week’s action (down -24% for the week), and valuation fell to a record low…this is not a buy. The stock has been a sell since April, according to Market Trend Indicators, and is in a long-term downtrend.


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