what do you think of the RIM stock ? (research in motion==blackberry) Im really looking at it now and want to put a big amount of money in it by EOD
Well, I don’t have time to dig into the balance sheet, but from the surface looks like it has a very low PE compared to competitors. Who the competitors are is a bit tricky. Apple competes via iPhone and iPad, but has many other product offerings, and is probably an outlier company anyway. Nokia is a a phone handset company, but isn’t really about the smartphone aspects, so it’s not really a direct competitor. Still, the PE of RIMM is substantially lower than either. The challenge is that RIMM is clearly losing market share as more people go to iPhone and Android. It’s losing its uniqueness factor in that it used to be pretty much the only phone that could “do everything.” It still has a reasonable foothold on the corporate market, but even that is shrinking as iPhone and Android figure out how to release stuff that works there. So the right model to use here, I think would be to look at the franchise growth model (taught in L2). You’d value ongoing business, and then figure out how much of the PV incorporates the present value of growth opportunities. If you are losing market share, those growth opportunities might be negative… but it’s hard to tell if they are priced in or not. So basically, it looks cheap on a PE basis, but you have to figure out if the cheapness is because of its future market share issues or not. Remember also, that you are going to have a fair amount of market risk, too. According to Yahoo, Beta is 1.8. So you’re taking on that risk regardless of whether RIMM is expensive or cheap. You could be right that it’s cheap, but the market tanks, and you’re still in a hole. Now if you ace that interview talking about this stuff, I want 2% of your first year’s compensation, please. 
thanks Bchadwick for your interesting analysis…hahaha, it’s not for an interview, it’s for my own personal portfolio Anyway it always great to read analyst giving their opinion like that on a company. Effectively I think the stock price is cheap and that it will probably do better in the next few months. I read some analysts earning expectations and that’s not so bad. Now the point is as you said the market shares. Even if they released their new tablet and are still the favorite supplier of corporate for hansets, I think things gonna change. However are they gonna achange this year so quickly ? I don’t think so, that why i want to bet and gamble that from the 42$ as of today, it might jump to 60$ that will be good for me (it has been under 50$ for 2 weeks now). still thinking…will see by EOD
bchadwick I think that RIMM has disconnected from the market performance for a few months now, so I believe that beta is not reliable/relevant anymore, at least for short/medium term
RIMM is going to zero. If a company isn’t selling phones, do you really care what their historical earnings are?
Going to zero is a bit extreme, I think. It’s likely at some point they would be bought, if only because the existing customer base could be rolled up into someone else’s. One thing to remember with declining companies is that even companies in decline have a price at which they are undervalued. At the very least, they can be liquidated and sold for tangible book value per share (though in financials this is a bit different). To try it, just use the gordon growth model, but assume that dividends (and by extension, earnings) are shrinking by 5% per year because it is in a declining industry. You’ll find that there is still a price below which it is undervalued, even though earnings are in permanent decline. Obviously you may want a more nuanced valuation model than GGM for that, but it demonstrates the point.
they are still selling a lot of phones, a lot of kids that text a lot like BBMing and like phones that have keyboards. corporations still buy their phones. they just need to execute a lot better, they need to be at least with the trend not always behind it
Very little upside to RIMM. Their tablet has to do well in the corporate world for them to survive. Anything less than outstanding sales and the company is doomed. I think it’s a value trap. Most cheap stocks are cheap for a reason.
currently looking at domtar (UFS), havent made a decision on it yet
bank of america is very down now, i think at his 52week down
that doesn’t mean anything
former trader Wrote: ------------------------------------------------------- > INTERTAINMENT MEDIA INC (Public, CVE:INT) this is the best company ever. basically just a free translator with gene simmons as the advertiser somehow equals a nine-figures company. i was laughing my arse off when this company had a valuation in excess of 400M… though the laughing only lasted for a matter of minutes.
Sweep the Leg Wrote: ------------------------------------------------------- > Very little upside to RIMM. Their tablet has to > do well in the corporate world for them to > survive. Anything less than outstanding sales and > the company is doomed. > > I think it’s a value trap. Most cheap stocks are > cheap for a reason. Looking at their earnings today and the the after mkt reaction, you made a right call… It dropped to a 5 yr low.
So Miss*Yiota, how much did you lose on RIMM ?
very smart question sunny… not