RIM and BlackBerry have been in the media all too often lately and mostly for the wrong reasons. There has been lots of speculation as to the future of the company, and there is certainly a negative sentiment surrounding the organisation. Why? It has a lot to do with them not taking the competition seriously and adapting to the industry’s biggest changes. But now they’re in the midst of a major transition. Will it see them rise to the top and prove the media wrong? It all boils down to “Can they execute?”
RIM essentially invented the smartphone and back in 2007 was sitting at the top of the industry. Then came along Apple with the iPhone, and then there was the Android operating system backed by Google. These new entrants changed the game by focusing on the consumer market instead of business clientele, and offered features that RIM ignored such as cameras, easy third party integration and better web browsing. And to top it off, they were generally easier to use and nicer to look at.
It may seem that the entire world is up in arms with Research in Motion (RIM.TO) and its executives.
What should RIM do in the upcoming months.. any thoughts?
At the moment RIM.TO is trading below the bookvalue. The last retained earnings of $9,917 (in millions) over 520.60 million shares, give the book value of the shares at $19.0459. However, it is not always necessary that the past earnings will reflect in future earnings as well.
Just today (November 14th), RIM got the backing of hedge-fund manager Leon Cooperman, who believes that the company will comeback from faltering share price and loss in customers. However on the other side of the spectrum, Highfields Capital sold 1.44 million shares of RIM on November 14th.
The company has sufficient cashflows to meet any obligations, it has no debt, $1 billion in cash and it invested almost $2 billion on capital expenditures (purchase of investments, other companies etc) for the 6 months ended August 2011. The market has been punishing the company due to customer loss, but to my understanding, Research in Motion’s BlackBerry devices are immensly popular in non-North American markets, and that is where the company is going to see majority of its revenues for the next little while.
The company has been focusing away from the short-term into the long-term horizon, which is great for the long-term shareholders. If the price drops any further, I would be increasing my steak in the company.
More analysis to follow.