To be fair, RIMM is sitting on lotsa cash. Whether stockholders get any of that, remains to be seen.
I think RIMM could be a good acquisition for a firm that’s looking to enter the space. The only other way to enter the space is to develop your own new OS with an ecosystem, which is too hard.
Someone like say Panasonic…Sony…Dell etc.
expecting a takeout is certainly a value investing catalyst…read Greenberg on replacement value…
technically, a takeout is basically a private buyer valuing the asset based on business fundamentals…
Maybe I missed something, but Watsa himself is not buying all of RIMM or taking it private (is he?)
Hoping that some white knight would come along and do it for him is “hold and hope” investing, not value investing.
If he is in fact taking over RIMM then you may be right, he likes how cheap the assets are.
Value is based on fundamentals. Buying something that has is an attractive acquisition is based on their fundamentals. Who cares whether the market starts buying the stock, or a single indvidual buys it all and goes private? The point is you bought a company that was undervalued and the plan is that a person (or people) will realize that its undervalued and buy it for a price that wil make you some money.
I have never looked at this stock so I don’t really have an opinion, but I’m wondering for you longs / supporters – if it’s such a good deal, why hasn’t it been bought out already? Surely Microsoft of whomever must have looked at RIMM and either passed or been rebuffed on their offer. I’m not saying it won’t get sold eventually, but you have to think discussions have already taken place and a deal could not be reached, so if you’re long, why now?
To be a true value investing catalyst, the company needs to be accreting value in some way, which means you could hold it at the current price whether it gets bought out or not. Is RIMM growing its value? I’m guessing no. Excluding all of the cash, what is the vlaue of RIMM, discounting that they may do something stupid with the cash? And that’s assuming the business is not terminal (I don’t know).
The main problem holding back a possible acquisition of RIMM is possibly the lack of a strategic plan - what will they do with RIMM? The only possible entities I think are electronics firms who want to move up the value chain and make their own smartphones with software integrated, rather than simply making commoditized hardware for Android phones. That will not be easy however, but I do think that will make RIMM to valuable too fail, and an acqusition likely.
I think RIMM will have some short term upward momentum in Q4 2012 but over the long term of the next 5 years I would rather be holding goog or msft. Due to a higher s&p and improving unemployment numbers I think will be seeing higher consumer spending in 1Q calendar 2013 which should help the BB10 sales in the US. Also by this time, RIMM should have implemented all of its CORE program expense reductions and taken the one time $350 million restructuring charges. The timing should result in a new product with improved operating margins. It would be stupid to sell just their service business because they need steady revenues that will likely follow gdp growth. The other positive I took from them was that overall subscriber base in fiscal 1Q 2013 grew everywhere except North America and they are going to focus on growing internationally. I’m not sure what the barriers are but i’d imagine eventually apple or samsung will focus more on the regions. If they can improve in the US and steadily grow internationally then they should be ok. I don’t fully understand the forces against RIMM but if the stock is trading around $5 in mid Nov I’ll buy it.
i read the annual report over the weekend…the company is making improvements (cost cutting plan)…however, i have noticed the company has a way of burning cash as well (they always spend their free cash)…i won’t delve into the business specifics as i’m sure you’re all aware of its position
…i’m not buying at the moment…the best thing about the company in my opininon is that Watsa is the biggest shareholder and on board…he can help them avoid dong dumb things which is what this company has been doing…
Funny how Jim Balsillie wanted to buy a NHL team a few years ago and now all he can afford is a CFL team if he’s lucky.
arrogance is the downfall of a lot of companies…they could have problably sold RIM for $10+ billion a year or so ago…too bad…
Here is an interesting contrarian perspective on RIMM
I think that it is more and more likely that RIMM will be bought out. Now that MSFT has started to break from OEMs by developing its own tablets, and Google buying Motorola, perhaps some of the OEM’s could see an opportunity to move up the value chain by snapping up RIMM. Someone like HP, Dell, Samsung etc. Dell has the cash to buy it outright.
i think they’re all waiting for how the BB10 turns out…why not wait it out until the bb10 comes out crashes and burn so they can save a few billion on the purchase price…?
i imagine that if the bb10 sucks, the stock could possibly drop to 5 or lower as there will be absolutely nothing in the near term horizon to pick them up…we’ll wait and see.
i want to see how prem did his analysis on this company. he bought in some in the 20s so its interesting to see how he defends against this one…
Hmmm…perhhaps OOTM calls? According to the CEO BB10 is aimed at corporates which is exactly what most commentators have been calling for…
i’m tempted tbh…very tempted…i have learned i should put the project aside and revisit in some time to not get too emotional…one day it’ll make sense or i will continue forgetting about it…
BB10 is an all-in bet by RIM. But a new phone isn’t want corporations want. They want the security of knowing the operating system will be around next year. Given the additional options, what possible reason would a company choose BB over Android or iPhone? It’s not going to be a better phone and it’s more than likely RIM will no longer exist next year. If you were in charge of your company’s handheld policy, would you do it?
F that.
RIM below $7. It’s getting tempting.
Ok, I do love picking on RIMM but they make it so easy. What a mess. A blackout on the day the iPhone 5 launches? Epic.
http://www.marketwatch.com/story/rim-shares-down-following-service-outage-2012-09-21