At What Point Does Research in Motion (RIMM) Become Cheap?

By: ispeculatornew
Date posted: 06.20.2012 (5:00 am) | Write a Comment  (1 Comment)

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RIMM, the Canadian technology jewel has been losing its luster very quickly for the past 2-3 years as it continues to fall behind heavyweights Apple ($AAPL) and Google ($GOOG). I wrote about the fact that it was a falling knife. I’ve made some wrong calls but I was certainly right about calling RIMM as a falling knife to avoid while saying that BP and Netflix could be trusted. So RIMM continued to fall as you can see in the chart below:

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What Is $RIMM Worth?

I’ve been staying far away from RIMM in the past few years. I’ve had it near the bottom of my 2012 Tech Stock Power Rankings. Despite that fact, I’ve been scared of shorting the stock for fear of a rebound or worse, an acquisition. It’s one of those stocks that I’ve stayed away from trying to short. Thus, I kept looking at the stock fall, unable to profit from it.

The problem with valuing for RIMM is that I have to say that it’s beyond my ability to value a stock like this. Why? I trade based on P/E ratios or on future expected P/E ratios. In RIMM’s case, I don’t expect the company to become profitable anytime soon, if at all. Just look at the trend in terms of revenues and earnings per share.

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The company has already confirmed that it would be losing money in the very near future. Its market share is shrinking very quickly with no end in sight as it is now losing many of its more loyal, corporate clients.

So What Is RIMM Worth?

The company has tons of assets. It has clients, it has models, it has patents and phones that could be used. Some companies such as Facebook or Microsoft have been rumored to have interest but it’s far from a done deal. I don’t have any doubts that RIMM has many valuable assets as well as what will soon be growing debts. Is the net worth $1? 2$? 10$?

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1 Comment

  1. Pingback by Top Links From The Week — June 22, 2012 @ 4:01 am

    […] 1. At What Point Does Research in Motion Become Cheap? @ IS. […]

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