[balding1]

RIM shares hit 9-year low as Apple enjoys all-time high
Darcy Keith | Columnist profile | E-mail
Globe and Mail Update
Published Thursday, Apr. 05, 2012 1:17PM EDT
Last updated Thursday, Apr. 05, 2012 2:15PM EDT

RIM shares hit 9-year low as Apple enjoys all-time high - The Globe and Mail


Following all the commotion last week after Research In Motion Ltd. reported disappointing earnings but seemingly left the door open to a possible future takeover, it�s back to this: RIM has sunk to another nine-year low on the TSX, while rival Apple Inc. broke another record for an all-time high today.

RIM (RIM-T12.57-0.13-1.02%) in early afternoon trading on the TSX was last quoted at $12.62 (Canadian) after hitting a low of $12.53, the lowest since 2003. On the Nasdaq, RIM (RIMM-Q12.65-0.11-0.85%) is trading just a whisker above its multi-year low of $12.45 (U.S.) reached in December. Apple (AAPL-Q632.528.211.32%) reached a high so far today of $634.66, eclipsing its last high of $632.21 from earlier this week.

Market speculation over RIM possibly being sold - which helped boost the stock the day after earnings last week - has subsided. Apple, meanwhile, has seen a number of recent analyst price target hikes, including a couple that project a climb to $1,000 (U.S.) or more over the next year.

Today, Jefferies analyst Peter Misek raised his price target to $800 from $699, partly on the belief that Apple�s widely anticipated television product launch could prompt even more consumer interest in iPads and iPhones. He thinks the Apple TV product may arrive before the year is out and could be called �iPanel� because of its potential to be a hub for gaming and other media, according to Forbes.com.

Supporting his belief are checks Mr. Misek conducted that indicated specialty components have begun to ship to Apple�s Asia panel suppliers.

So, here�s where the two companies stand right now in the analyst community, according to Bloomberg. The average price target on Apple is $688.86 (and has been rising quickly of late), with 50 buys, 6 holds and 1 sell rating. The U.S. listing of RIM has an average price target of $14.27, with 5 buys, 32 holds, and 16 sells.

[PineappleUnderTheSea]

I'm starting to believe that you can't just be a handset-making company to be successful, you need a much broader portfolio of consumer goods to draw people into your ecosystem. Just look at Nokia, the handsets aren't cutting it anymore, but they don't really make anything else for consumers.

If that is truly the case, RIM will likely never regain all its losses.

[anthogag]

I'm not interested at all in Apple TV and I own an apple product, the mac mini running lion.

Now they're into books, music, tv, movie rental, ...when are they going to sell clothing and some groceries (apples) in Apple stores

[sinsin07]

I'm not interested at all in Apple TV and I own an apple product, the mac mini running lion.

Now they're into books, music, tv, movie rental, ...when are they going to sell clothing and some groceries (apples) in Apple stores

Would you be interested in a RIM TV?

It appears more and more that you can't just be a mobile handset manufacturer. To a varying degree of success, companies in the mobile game are trying to expand the functionality of their mobile space. Tablets, linking to game consoles, TV appliances, music stores, video stores, book stores etc. Are all successful? No.

Being just a handset manufacturer may no longer cut it.

[grunt0300]

I'm not interested at all in Apple TV and I own an apple product, the mac mini running lion.

Now they're into books, music, tv, movie rental, ...when are they going to sell clothing and some groceries (apples) in Apple stores

It's called DIVERSIFICATION. It's also why Apple and RIM, are where they are, in the world market.

[balding1]

I'm not interested at all in Apple TV and I own an apple product, the mac mini running lion.

Now they're into books, music, tv, movie rental, ...when are they going to sell clothing and some groceries (apples) in Apple stores

Appletv2 is not bad for 100 bucks after you jailbreak it.lol

Edit:Appletv2 is GREAT for 100 bucks after you jailbreak it..lol

[greatwiseone]

WHO CARES. They are different companies at different stages. I hate people always comparing the two of them. RIM's tiny compared to Apple. If you check wikipedia, RIM only has 17,500 employees as of July 2011 (probably much fewer now) and Apple has 60,400 (again, from wiki and as of July 2011).

They should be comparing stock prices between Apple and Samsung or HP or Dell or Google. It's idiotic that these people in the media keeps comparing stock prices of two companies that are very different. Yes, they both make phones and tablets. That's pretty much the only similarity.

[Thunderbuck]

Back to the original topic, though, that of valuation.

It's still kind of puzzling to see RIM's valuation where it is. It's trading at somewhere between 2 and 3 times earnings, which is pretty close to unheard of for a profitable company.

Even putting emotion aside I have to ask exactly what is wrong with this picture? RIM has data center and network assets that are conceivably worth hundreds of millions of dollars, and proprietary network compression patents that you'd think have SOME value.

They continue to add subscribers--yes, slower every quarter, hence the urgency in moving to a new platform--but they ARE continuing to grow.

Some analysts have suggested RIM could go "bankrupt"; this happens when liabilities outweigh assets... but RIM carries no debt and has upwards of $2bln in the bank, so I'm not sure how that can happen. Since the current market cap amounts to only about $6.5bln, are we really saying that all of the company's assets (network, real estate, intellectual property) amounts to only maybe $5 billion dollars?

[sinsin07]

It's called DIVERSIFICATION. It's also why Apple and RIM, are where they are, in the world market.

I realize that. From your earlier comment you seem to have a problem with.

[ccbs]

This shows the market cap growth of the companies in this segment. It is quite telling.

[app_Developer]

It's still kind of puzzling to see RIM's valuation where it is. It's trading at somewhere between 2 and 3 times earnings, which is pretty close to unheard of for a profitable company.

It's not puzzling when you consider that earnings are on a clear downward slope. That downward slope will continue until BB10 is launched, and will continue even after that unless RIM actually has their first really successful launch in a few years.

So from that perspective, I think the valuation is not surprising to me.

[CrackedBarry]

Back to the original topic, though, that of valuation.

It's still kind of puzzling to see RIM's valuation where it is. It's trading at somewhere between 2 and 3 times earnings, which is pretty close to unheard of for a profitable company.

Even putting emotion aside I have to ask exactly what is wrong with this picture? RIM has data center and network assets that are conceivably worth hundreds of millions of dollars, and proprietary network compression patents that you'd think have SOME value.

They continue to add subscribers--yes, slower every quarter, hence the urgency in moving to a new platform--but they ARE continuing to grow.

Some analysts have suggested RIM could go "bankrupt"; this happens when liabilities outweigh assets... but RIM carries no debt and has upwards of $2bln in the bank, so I'm not sure how that can happen. Since the current market cap amounts to only about $6.5bln, are we really saying that all of the company's assets (network, real estate, intellectual property) amounts to only maybe $5 billion dollars?

It's not that puzzling... Think about it this way... RIM's datacentre and infrastructure: For the most part its just commodity servers that get cheaper every year.

Their patents and intellectual property? Hardly RIM's strong side. (Remember : Their patents haven't been enough to keep RIM out of patent litigation cases, and they usually lose those) RIM is a fairly young company, so they haven't had time to build a strong patent portfolio. The patents they DO have are limited to cell phone technology as opposed to a more broad range of technology patents for example. And unlike Nokia or Qualcomm their patents don't concern basic cellular technology, but primarily things like email delivery or compression. Those patents are relatively worthless since they're either largely irrelevant (compression) or easy to work around (email).

That's not to say that their patents are completely worthless, f�r from it. They're just not as valuable as you seem to think.


RIM's other intellectual assets would be their employees and organization, but is anybody seriously itching to acquire those!? Hardly... RIM is widely seen as far behind their competitors, and haven't delivered anything that impresses people in years. The only assets they have that ARE interesting is BBM and TAT /QNX. And only BBM is really worth anything in this regard...

[Economist101]

It's not puzzling when you consider that earnings are on a clear downward slope. That downward slope will continue until BB10 is launched, and will continue even after that unless RIM actually has their first really successful launch in a few years.

So from that perspective, I think the valuation is not surprising to me.

Exactly. It's the trend that's problematic, from unit sales to ASP, subscriber additions, profit, etc.

[CrackedBarry]

There's also a real risk that the sales will drop off sharply. Off the proverbial cliff. Declining Market share and revenue in the tech sector rarely follow a gentle sloping curve.

[[email protected]]

..when are they going to sell clothing and some groceries (apples) in Apple stores

When consumers indicate they would by in large numbers if they did.

I would be VERY interested in iPanel.

if that's what they choose to call it.

[RIMvanWinkle]

It's not puzzling when you consider that earnings are on a clear downward slope. That downward slope will continue until BB10 is launched, and will continue even after that unless RIM actually has their first really successful launch in a few years.

So from that perspective, I think the valuation is not surprising to me.

Right. Plus the cash is misleading, it's running operating losses that are expected to increase. They have inventory, that's going to have to be sold at a loss (It could only be more Playbooks and BB7 phones, heavy discounts haven't worked, major markdowns are coming). If RIM's revenue losses don't decrease, the cash could be gone in one year.

With Thor courting the world to find an acquirer, and no one showing up, the sale is going to end up somewhere at or below today's stock price. Possibly far below, since the remaining goodwill will be written down over the next few quarters. That's an accounting thing, no point in arguing. The goodwill fails impairment tests just as it did this quarter.

No reason to consider EPS when it is declining, the balance sheet deteriorating, the stock price reflects a likely sale.

Not to worry for me, RvW. I live five years in the past, May 5 2007, where the iPhone is just an announced product no one believes they can build, and it won't sell anyway. RIMM stock is at about $50 and ready to go on a tear, and I get to read articles like these:

Research got its Motion back - Apr. 5, 2007 w00t