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Yet Another Reason to Buy Research In Motion Ltd (BBRY)?

Within the last hour, we’ve come across some breaking news regarding Research In Motion Ltd (NASDAQ:BBRY). According to sources at Reuters, a shareholder lawsuit that the tech company wrongly hid its declining market position has been thrown out. The decision came via Judge Richard Sullivan, who, in the U.S. District Court for the Southern District of New York, allowed Research In Motion/BlackBerry’s motion for dismissal of the class-action suit, which had been proposed in May 2011.

In the original claim, the plaintiffs–shareholders–asserted that Research In Motion Ltd (NASDAQ:BBRY) made “materially false and misleading statements regarding the Company’s financial condition and business prospects,” which were at least partially related to market share placement compared to peers like Samsung and Nokia Corporation (ADR) (NYSE:NOK).

Research in Motion Ltd. (BBRY)

Sullivan’s decision indicates that there was no convincing proof that RIM/BBRY execs had purposefully made significant misleading statements. The Judge said that the company has “paid a price for their mistakes by way […] sizable financial setbacks,” though he added that “corporate failings alone do not give rise to a securities fraud claim.”

Nonetheless, this decision caps off a very solid week for Research In Motion Ltd (NASDAQ:BBRY), which impressed investors with its earnings report on Thursday, reporting solid 2013 fiscal results, and despite the fact that subscriber growth shrank and is expected to continue to do so at least for the next quarter, some analysts think that this, frankly, doesn’t really matter.

According to an earlier story we did this afternoon, the key numbers to pay attention to with this stock are gross margins, which improved substantially–to near 40%–this past quarter. They clocked in close to 31% one quarter earlier, and as Morgan Stanley (NYSE:MS) analyst Ehud Gelblum likes to say, “When gross margins are going up in handset companies, stocks work, when they’re going down, the stocks aren’t working.”


Research In Motion Ltd (NASDAQ:BBRY), meanwhile, has had a solid 2013, and hedge fund activity–which we track here at Insider Monkey–may have indicated that a pop was due. Heading into the year, our database of 13F filings from the SEC indicates that capital inflows into BBRY improved by 56.8% in Q4 2012. Now, this increase only encompasses the top 450 hedgies we track, but they’re by far the best and brightest of the smart money, so it’s worth paying attention to their sentiment.

Disclosure: none

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