Two of the Four Horsemen Stumble

There has been much discussion over the past two weeks about the sagging fortunes of Research in Motion (RIM). RIM's stock price took a real hit dropping from a few cents short of $ 70 US on February 18, 2011 to $25.89 on June 20. RIM's June 16 press release reported strong revenue growth between 2010 Q1 and 2011 Q11, but also reported an expected slowdown in sales through at least Q2 and possibly beyond. Expected sales slowdowns in the fast paced tech sector is not what investors want to hear. RIM's press release came at an unfortunate time, because information technology as a sector has been weak since February 2011.


RIM is one of the "New 4 Horsemen". RIM along with Apple, Amazon, and Google constitute what many to consider as the 4 essential companies of the current information technology age. For a perspective on how the stock prices of the 4 Horsemen have fared over the past five years, look at the chart below.

RIM was clearly the leader in stock appreciation up until the middle of 2008. Then the Great Recession hit and RIM's stock price fell quickly as business spending on IT and communications dried up. Notice that today, two (Google and RIM) of the four horsemen have share prices only slightly higher than they were five years ago. RIM is having a tough time right now and I expect them to pull through (see here), but investors in Google have not had much to cheer about either. To me, this looks like a transition for some information technology and communications companies from growth companies to value companies.