Research In Motion lost 21 per cent on the TSX on Friday — plunging to the lowest level in five years — as investors responded to slower BlackBerry sales and analyst downgrades.
The Waterloo, Ont.-based company's stock sank $7.13 on the Toronto Stock Exchange, to close at $27.24 with more than 16 million shares traded — making it the second-most active issue on Canada's largest market. RIM shares haven't been below $30 on a split-adjusted basis since August 2006.
RIM faced a rocky day on the stock markets after the company posted disappointing earnings after North American markets closed on Thursday. Friday was the first chance for investors to react to the poor showing.
Jarislowsky Fraser Ltd., the fourth-largest holder of RIM shares after co-CEOs Jim Balsillie and Mike Lazaridis, revealed Friday that it had sold off half of its RIM holdings.
Stock widely held
RIM co-CEOs Jim Balsillie and Mike Lazaridis each own more than five per cent of RIM's shares, but besides that there is no single institutional investor with an excessively large clout. The stock is likely a part of every Canadian equity or technology mutual fund.
Canada's major pension plans all own stakes. The Caisse, the public sector pension plan, OMERS, Ontario Teachers Pension Plan and CPP all own in the neighbourhood of one per cent of RIM's shares. Even factoring out its presence in mutual funds, CPP's ownership of almost two million shares means that effectively, every single Canadian citizen has a stake in the company.
The money management firm owned more than 10.2 million shares — enough for almost two per cent of the company. Chairman Stephen Jarislowsky confirmed the firm had sold off more than 50 per cent.
"They are resting on their laurels. Steve Jobs is a much better marketer than RIM," Jarislowsky told Bloomberg, referring to Apple’s chief executive officer Steve Jobs, who is perceived to have his finger on the pulse of what consumers want.
National Bank Financial said BlackBerry handsets sales were worse in the company's first quarter than anticipated and guidance for the current quarter and fiscal year was "very weak."
"We're lowering our estimates significantly," wrote National Bank analyst Kris Thompson.
"We believe the smartphone sector is moving into a new paradigm of lower margin pricing as Android handsets attack the high, mid and low-end market segments. We do not expect the company's gross margins to rebound."
'They are resting on their laurels' —Stephen Jarislowsky, RIM shareholder
National Bank Financial lowered its price target for RIM stock to $25 US per share and maintained its underperform rating.
"We do not expect the stock to trade on meaningful valuation metrics given the uncertainty in the company's operating model. We'd avoid this stock until there is some evidence that a sustainable turnaround is achievable," Thompson wrote.
On Thursday, RIM said it earned $695 million US or $1.33 per diluted share for the quarter ended May 28 on $4.91 billion in revenue. That compared with a profit of $769 million or $1.38 per diluted share a year ago on $4.24 billion in revenue.
RIM had lowered its financial guidance for the quarter in April.
Before those numbers came out, the consensus call for the company was $45 per share.
Research In Motion said Thursday it plans to cut jobs as it works to roll out a new generation of products to stay competitive. RIM did not provide any details on where those job cuts might come from, or how many there may be, when asked for comment by CBC News Friday.