Shares in Research In Motion ended 2 percent higher in yo-yo trade on Tuesday after rival Apple hinted at threats to RIM's core corporate market, but failed to wow fans and investors with its latest iPhone.
The BlackBerry maker's stock started the day with a surge of nearly 10 percent on talk that it had hired an investment bank revived speculation could be a takeover target.
But the stock then reversed course, slumping to its lowest in almost six years, as Apple CEO Tim Cook said major corporations were mulling a switch to the iPhone and iPad and spoke about iMessage, a real-time instant messaging service that could threaten the popular BlackBerry Messenger.
Cook said 93 percent of Fortune 500 companies are testing or deploying the iPhone, and 92 percent are considering or using the iPad - developments that could give Apple an edge in the corporate market where RIM's BlackBerry made its name.
Apple also said iMessage would be available on suddenly cheaper iPhone 4 and 3GS models.
But with Apple launching only an incremental iPhone improvement, RIM shares recovered and closed 2.4 percent higher at $21 on the Nasdaq. Apple stock ended lower.
Both Messenger and its secure corporate email system have been big draws for RIM in the past. But the company has rapidly lost market share in the United States as customer switch to sleeker models from Apple or powered by Google's Android operating system.
Avian Securities analyst Matthew Thornton said traders likely exited RIM short positions - bets that RIM's share price would fall further - on the morning's takeover speculation and then shorted the stock again ahead of the Apple event.
You figure Apple is going to tout things that are going to reflect negatively on RIM, and they did, he said.
RIM shares have come back a couple of points because they (Apple) didn't announce an iPhone 5 and it wasn't as exciting as people thought, Thornton said.
RIM's shares fell as low as $19.29 on the Nasdaq, the first time the shares have dipped below $20 on a stock-split adjusted basis since late 2005.
RIM's shares have slumped more than 60 percent this year after a series of profit warnings and dismal sales of its PlayBook tablet computer, which the company had hoped would compete with the hugely popular iPad.
That depressed valuation has made RIM shares more volatile, and they move wildly on any type of speculation.
The shares jumped last week on chatter that activist investor Carl Icahn had taken an interest in the company and would agitate for change.
RIM faces other threats as well, with carriers in North America willing to subsidize Apple's iPhones to a greater degree than other handsets. That means consumers can get an iPhone at a similar cost to cheaper BlackBerry devices.
Also on Tuesday, Canada's largest wireless carrier, Rogers Communications, said it was launching a program to enable corporate customers to use Apple and Google Android devices to send secure business email.
Separately, RIM has registered 3 million shares for use in an employee stock plan, a six-fold increase on its existing program, the company said in a regulatory filing to the U.S. Securities and Exchange Commission.
Having more shares available as employee compensation may help morale at a challenging time for RIM, which said earlier this year it was cutting 11 percent of its workforce.
The company ran into trouble with both the SEC and the Ontario Securities Commission over its stock option plan for the period between 1996 and 2006.
(Reporting by Alastair Sharp; editing by Janet Guttsman)