Here’s a tech stock pop quiz: Who has had a better quarter on the stock market? Apple? Or Research In Motion?
The answer may surprise you. Apple’s stock, which peaked at more than $700 per share in September, has lost nearly 25 percent of its value. But shares of RIM, which reported strong earnings Thursday, have more than doubled from their abysmal September price of $6.30 per share. On Thursday, the stock closed at $14.12 and continued to climb in after-hours trading.
It’s a strange role reversal for the companies, which compete heavily in the smartphone market but have been on opposite trajectories for the past three years.
Since iPhones passed RIM’s BlackBerry in U.S. market share two years ago, Apple has become the dominant player in the smartphone market. Meanwhile, RIM’s grip on security-conscious government workers and corporations began to wane, and it fell hard on complaints that it wasn’t innovating quickly enough.
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Now the Canadian company is the underdog, scrambling for a foothold in the market, while Apple is the tech titan fighting worries about its ability to innovate.
Analysts have tried to pinpoint a reason for Apple’s declining share prices, citing everything from a stock-market correction to supply constraints for its most popular products to concerns that Apple’s pace of innovation may be flagging.
The “fiscal cliff” negotiations are also hanging over Apple’s shareholders — namely rules that would increase the capital-gains tax, Motley Fool analyst Andrew Tonner said. Some lawmakers have proposed raising the capital-gains tax rate to 20 from 15 percent, which could spur longtime investors to sell now and avoid a bigger tax bill.
“Investors could be looking at themselves and saying, ‘Apple had a great run, but maybe I want to get out now at a lower rate of taxation,’ ’’ said Tonner, who holds Apple stock.
But those decisions could also show that investors are not sure Apple has much higher to go, said Colin Gillis, a technology analyst for BGC Partners. So many people have iPhones that the company may be nearing a saturation point.
“Even with the capital-gains tax, if you thought it had a lot of legs in it, you’d probably want to hold on to it,” Gillis said. “But how many more doubles does it have in it?”
Meanwhile, RIM is enjoying something that has become scarce since it lost its hold in the U.S. smartphone market — hope. Under new leadership, the company has excited investors with plans to launch a slick, high-end smartphone operating system next month.
RIM beat analysts’ estimates, reporting $2.7 billion in revenue for the third quarter, above expectations of $2.65 billion. The company reported a loss of $114 million, or 22 cents per share, but that was also better than expected.
Still, analysts’ focus remains on the future.
“I don’t see RIM being out of business in a year,” Gillis said. “But they may need to live on a much smaller expense base and volume of handsets shipped.”