RIM stock sinks as legal fears grow
Research In Motion Ltd.’ s stock dropped $ 1.75 to a 52- week low yesterday as investors worried an injunction that prevents the BlackBerry maker from selling its popular wireless e-mail devices in the United States will soon be enforced.
The Waterloo, Ont.-based company was denied a request for a rehearing in a four-yearold patent-infringement case against NTP Inc., the tiny firm suing RIM for patent infringement, on Friday. The decision, though expected, furthered investor fears RIM won’t be able to sell BlackBerrys in the United States, where it generates about 70% of sales.
The stock closed at $74.20, down 2.3%, in Toronto trading yesterday. On the Nasdaq, RIM shares fell US$1.29, or 2%, to US$63.02.
Analysts say RIM may now increase a US$450-million settlement offer, announced in March, to NTP. The deal fell apart three months later under disputed circumstances.
RIM will first try to plead its case before the U. S. Supreme Court, but few people believe the company’s efforts will bear fruit.
Peter Misek, a Canaccord Capital analyst, says RIM may have to pay up to US$ 1- billion to end the patent infringement case, under a worstcase scenario. “ In our opinion, this would still be seen as a positive by the market, simply from the elimination of this persistent overhang,” he said. “ In the end, we think that NTP’s negotiating position has improved, which could warrant a settlement further in NTP’s favour.”