RIM's publicity is priceless; Will it weather the Storm?

Research in Motion executives have to be downright giddy now that President Obama won his battle to keep his BlackBerry. That kind of publicity is worth millions, and RIM is getting it for free.

And it comes at a good time, given the fact that the Ontario Securities Commission is seeking to levy a record fine that may be as high as $79 million against Research In Motion executives for their role in a stock-option backdating controversy dating back to 1996. The OSC is reportedly in advanced settlement discussions with lawyers from RIM's co-CEOs, Jim Balsillie and Mike Lazaridis, over the fine. The securities watchdog began investigating RIM in 2006 and has been in settlement negotiations since 2007.

Moreover, Tuesday is D-Day for the BlackBerry Storm, Verizon Wireless' response to Apple's iPhone. Verizon Communications is reporting its fourth-quarter results tomorrow, and investors are sitting on the edge of their seats wanting to know how the Storm fared in the Christmas-selling season, amid a $100 million marketing campaign but a down economy.

iPhone 3G sales were down during the Christmas season. During the first fiscal quarter of 2009, which ended Dec. 27, Apple sold 4.4 million iPhone 3G devices in the quarter, compared with 6.9 million phones in the previous quarter, representing a more than 36 percent sequential decrease. Were sales impacted by the the Storm, the economy or both?

The Wall Street Journal is reporting [1] that the Storm has gotten off to a rocky start, with complaints of technical glitches stemming from the desire of RIM and Verizon Wireless to get the device in the market in time for the crucial Christmas selling season. Verizon and RIM provided a software update for the Storm in December that resolved some user concerns, and Verizon Wireless said it is addressing some of the complaints, which include sluggish performance, in future releases.

Interestingly, Balsillie said software glitches are part of a "new reality" of making more complex devices in large volumes. That has to be an uncomfortable feeling for an operator like Verizon Wireless, which has always prided itself on rigorously testing all of the devices that run on its network. --Lynnette [2]