Facing renewed competition in the smartphone segment it owned for many years, BlackBerry-maker Research in Motion (RIMM) has seen its share price drop by 30 percent since it reported quarterly earnings in September. Today, believing such competitive concerns are overblown, the company said it will buy back up to $1.2 billion of its common stock, representing about 3.6 percent of its shares.
Wall Street reacted favorably: RIM’s shares were up more than 2 percent in midday trading on the Nasdaq.
The share repurchase program was a clear signal to investors that RIM executives and directors think the stock has been overly pummeled in recent months. The popular BlackBerry has faced some promising new entrants into the smartphone market recently, including Motorola Inc.’s (MOT) Droid device, due to be released this week, as well as ongoing consumer interest in the iPhone, from Apple (AAPL).
“We think RIMM has an attractive portfolio including the Storm II that should allow it to see continued solid demand,” wrote Standard & Poor’s equity telecom analyst James Moorman in a research note today, according to Tech Trader Daily.
Moorman raised his rating on the stock to Buy from Hold.