RIM stock falls to lowest level in eight years on bearish trading

Posted:
in General Discussion edited January 2014
Embattled Canadian smartphone maker RIM saw its stock dip into single-digits on Monday to end trading down 5.85 percent at $9.66, a price not seen since December 2003.

Shares of the Waterloo, Ontario company dropped below the $10 mark on a flurry of bearish options trading and the announcement that competing smartphone maker Samsung would launch its anticipated Galaxy S III on America's four largest wireless networks later this month.

The BlackBerry maker may continue to hemorrhage value when trading resumes on Tuesday as active put buying and call selling of weekly options signal a further slide downward, reports Forbes. During the first half of Monday's trading session, RIMM saw 1,250 puts at the $10 strike set for Jun. 8 yielding an average premium of $0.23 each. This places put buyers ing the position to see profits as long as the stock stays below the $9.77 breakeven price when the options expire later this week.

Upside call sellers also stand to profit from a continuation of poor trading performance as 6,200 calls traded at the $10 strike against open interest of 648 positions. Over 2,100 calls were sold at the Jun. $10 strike at an average premium of $0.28 each.

Monday's bets against the company come on the heels of chief executive Thorsten Heins' May announcement of plans to cut some 40 percent of RIM's workforce by early 2013. Further compounding the company's troubles are a number of high-profile resignations including former co-CEOs Mike Lazaridis and Jim Balsillie, with the latest departure being RIM's Chief Legal Officer Karima Bawa.

RIMM
RIM stock fell into single-digits on Monday for the first time since 2003. | Source: Google Finance


The once-dominant BlackBerry platform experienced a brisk decline following the introduction of Apple's iPhone and handsets running Google's Android mobile operating system. The latest IDC data shows that BlackBerry only accounts for 6.4 percent of the global market while Apple's iOS and Android took 82 percent combined.

It was reported in May that the company's inability to sell BlackBerrys and PlayBooks inflated the value of unsold inventory to over $1 billion at the end of the last quarter.

RIM is looking to its next-generation BlackBerry 10 OS to salvage the company, though some analysts see the delayed platform is too little, too late.
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Comments

  • Reply 1 of 40
    tallest skiltallest skil Posts: 43,399member


    I don't think they'll see 2013, but that's me.


     


    RIM.jpg

  • Reply 2 of 40
    solipsismxsolipsismx Posts: 19,566member
    "$1, Bob."

    I think RiM's value is now lower than Apple's was when they were at their worst. I'd like to think they have a chance to crawl back up and carve out a useful niche but I see absolutely no avenue where they succeed independently of being bought out and just having their brand name in use for enterprise services.
  • Reply 3 of 40
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post



    "$1, Bob."


    If if trades under a $1 for more than 30 days it will be delisted from Nasdaq


     


     


    Key stats and ratios











































     

    Q1 (Mar '12)

    2012

    Net profit margin

    -2.98%

    6.31%

    Operating margin

    -3.39%

    8.08%

    EBITD margin

    -

    16.97%

    Return on average assets

    -3.61%

    8.75%

    Return on average equity

    -4.94%

    12.23%

    Employees

    16,500
  • Reply 4 of 40
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    If if trades under a $1 for more than 30 days it will be delisted from Nasdaq

    I'm pretty sure they will get bought before that. At $1 per share they are worth $500 million dollars.

    My prediction: Dell will show interest in buying them when they hit about a $3-4 billion dollar market cap.
  • Reply 5 of 40
    tallest skiltallest skil Posts: 43,399member

    Quote:

    Originally Posted by SolipsismX View Post

    My prediction: Dell will show interest in buying them when they hit about a $3-4 billion dollar market cap.


     


    HP bought Palm and that went well. Time for Dell to take the lead in copying! image

  • Reply 6 of 40
    sunspot42sunspot42 Posts: 93member


    IBM might buy them, for the network and not the hardware (which let's face it, is worthless).

  • Reply 7 of 40
    gazoobeegazoobee Posts: 3,754member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    HP bought Palm and that went well. Time for Dell to take the lead in copying! image



     


    In all fairness HP has a long history of buying firms and then mismanaging them into the ground.  


    We still don't know what would have happened if someone competent had bought Palm and actually stood behind the product for more than a nanosecond.  :)

  • Reply 8 of 40
    rhyderhyde Posts: 294member

    Quote:

    Originally Posted by SolipsismX View Post





    I'm pretty sure they will get bought before that. At $1 per share they are worth $500 million dollars.

    My prediction: Dell will show interest in buying them when they hit about a $3-4 billion dollar market cap.


    Naw, Mikey will just say that they ought to sell the company and give the money back to the shareholders.

  • Reply 9 of 40
    wizard69wizard69 Posts: 12,692member
    gazoobee wrote: »
    In all fairness HP has a long history of buying firms and then mismanaging them into the ground.  
    We still don't know what would have happened if someone competent had bought Palm and actually stood behind the product for more than a nanosecond.  :)

    Talk about hitting the bullseye! It really is too bad Palm had to go that way.
  • Reply 10 of 40
    sockrolidsockrolid Posts: 2,788member

    Quote:

    Originally Posted by AppleInsider View Post



    [...] It was reported in May that the company's inability to sell BlackBerrys and PlayBooks inflated the value of unsold inventory to over $1 billion at the end of the last quarter.

    RIM is looking to its next-generation BlackBerry 10 OS to salvage the company, though some analysts see the delayed platform is too little, too late.


     


    Oh woe is me.  What to do?  What to do?


     


    One word: arson.

  • Reply 11 of 40
    wizard69wizard69 Posts: 12,692member
    solipsismx wrote: »
    "$1, Bob."
    I think RiM's value is now lower than Apple's was when they were at their worst. I'd like to think they have a chance to crawl back up and carve out a useful niche but I see absolutely no avenue where they succeed independently of being bought out and just having their brand name in use for enterprise services.

    If it gets to around a dollar it might be worth a gamble. Obviously a big gamble.

    A few years ago Corning went through a bad spell and their stock was in the single digits, I kicked myself for not buying a block of stock back then. Of course Corning suffered from fixable ills and was diversified enough have at least a bit of income. RIM is far worst off now and I don't see anywhere for their stock to go except for down. Honestly they aren't worth $100 million. They will likely get picked over in bankruptcy.

    Still playing a long shot does have its pay offs from time to time. This is just a very very long shot.
  • Reply 12 of 40
    paulmjohnsonpaulmjohnson Posts: 1,380member

    Quote:

    Originally Posted by SockRolid View Post


     


    Oh woe is me.  What to do?  What to do?


     


    One word: arson.



     


    That made me smile!


     


    I will miss Blackberry if they die.  Theirs is one of the few products that when it first came out, genuinely made my job easier and more efficient.  It's sad that they have lost their way so much.  I saw a chap on a flight a month or so ago with one of the Blackberry tablets and I felt sorry for him.

  • Reply 13 of 40
    island hermitisland hermit Posts: 6,217member

    Quote:

    Originally Posted by wizard69 View Post





    If it gets to around a dollar it might be worth a gamble. Obviously a big gamble.

    A few years ago Corning went through a bad spell and their stock was in the single digits, I kicked myself for not buying a block of stock back then. Of course Corning suffered from fixable ills and was diversified enough have at least a bit of income. RIM is far worst off now and I don't see anywhere for their stock to go except for down. Honestly they aren't worth $100 million. They will likely get picked over in bankruptcy.

    Still playing a long shot does have its pay offs from time to time. This is just a very very long shot.


     


    You're joking, right?


     


    Nortel was worth $4.5 billion for its patent portfolio. MotoMobile was worth $12.5 billion for its patent portfolio. RIM has to be worth at least $800 million to a $ 1 billion for the same reason.

  • Reply 14 of 40
    christophbchristophb Posts: 1,448member
    solipsismx wrote: »
    "$1, Bob."
    I think RiM's value is now lower than Apple's was when they were at their worst. I'd like to think they have a chance to crawl back up and carve out a useful niche but I see absolutely no avenue where they succeed independently of being bought out and just having their brand name in use for enterprise services.

    Or HP after their remarkable suckcess with the Palm acquisition?

    I reckon we'll see a bidding war for their IP since the customer base will be all but gone in 2013.
  • Reply 15 of 40
    solipsismxsolipsismx Posts: 19,566member
    You're joking, right?

    Nortel was worth $4.5 billion for its patent portfolio. RIM has to be worth at least $800 million to a $ 1 billion for the same reason.

    Maybe, but I hear Nortel had a lot of useful patents in their portfolio, specifically to LTE. What critical current or future tech patents does RiM hold? I'm certainly not aware of any.
  • Reply 16 of 40
    island hermitisland hermit Posts: 6,217member

    Quote:

    Originally Posted by SolipsismX View Post





    Maybe, but I hear Nortel had a lot of useful patents in their portfolio, specifically to LTE. What critical current or future tech patents does RiM hold? I'm certainly not aware of any.


     


    I'd have to research that but I've read estimates as high as $3.5 billion and as low and $1.5 billion in patent value.


     


    RIM didn't just appear on the scene yesterday. To the best of my knowledge even Apple has licensing deals with RIM.

  • Reply 17 of 40
    macbook promacbook pro Posts: 1,605member


    "Research in Motion currently about holds about 2,000 patents with the U.S. Patent Office." (1)


     


    "Canaccord Genuity’s Mike Walkley, for one, thinks the number is less than the $4.5 billion Nortel’s patents recently fetched. “RIM did not build wireless networks and was not an industry pioneer” says Walkley. “As such, we do not believe RIM’s portfolio is more valuable than Nortel’s,” Walkley also believes that the super-premiums being paid are unsustainable and IP purchases will flatten out, price wise now that Google has acquired Motorola Mobility." (1)


     


    "... Kris Thompson of National Bank Financial thinks that Google’s acquisition of Motorola Mobility and the surprising $4.5 billion for number for the acquisitions of Nortel’s patents works the other way, and actually sets a floor for the price of RIM’s patents. He now believes they could be worth as much as $10 billion. Thompson thinks the breakup value of RIM could be significantly higher than its current market cap, which recently dipped under the $20 billion mark. Thompson says the value of the company’s current business even if it becomes a “niche enterprise business and perhaps a fringe consumer segment,” would generate annual cash flow of about $1.5-billion. He therefore values the business at $15-billion. Thompson gets to $18 billion by adding $3-billion for cash and investments, leaving the value of the patents to push the price well over its current market cap." (1)


     


    “Goldman Sachs evaluated RIM's business components in order to come up with a book value - the value at which an asset is carried on a balance sheet. Consequently, based on this value, Goldman calculated a "fair market price" for RIM's stock. It does not surprise me that the debate about RIM's future stock price recommendations were heavily influenced by valuing RIM's patents - by far their most important and highest-valued assets. Jeffries, the global securities and investment banking group, came up with a liquidation value of $1B, if RIM sells off its patents, and $2.5B if RIM continues to use its patents. These two numbers, however, are well below RIM's estimated book value of $10B.” (2)


     


    “RIM's roughly 2,000 patents are probably worth a lot more than $1B - $2.5B. But RIM's stock has plummeted since the Goldman Sachs and Jeffries reports.” (2)


     


    “Currently, RIM's valuation stands at a forward P/E of 4.7. While this is low, there is a significant chance that the company will continue to guide down as earnings fall. However, I do believe that after sometime the earnings will stabilize. This is due to multiple reasons. While this past quarter, RIM beat on bottom line they still gave a poor outlook EPS and revenue for their next quarter. The one thing the market fails to see is that the company is still making a significant amount of cash. The market is already discounting a massive drop, but the drop that is expected may not be that likely.” (3)


    “The BlackBerry subscriber base is now almost 75 million, which is up 35% from 1 year ago. The base is expected to grow by millions each quarter as newer customers arrive. Another thing that RIM has going for them is the future release of their QNX O/S system, which is expected to revolutionize the way customers use smart phones.” (3)


     


    “RIM still has plenty of value. Goldman Sachs analyst Simona Janiskowski believes that the break-up value of the company is $18 per share. This valuation considers patents, distribution, branding, and cash on hand.” (3)


     


    “I ["Kraken," the author of the article, who claims to be an associate at a Fortune 500 investment bank whose expertise is in mergers and acquisitions] would expect them to sell for a minimum of $10 billion, which is almost 40% higher than its current market cap. At this price, RIM is worth a buy as the market has been extremely negative to a company that still generates plenty of free cash flow.” (3)


     


     



    1.  Unattributed.  Posted October 1, 2011.  http://www.cantechletter.com/2011/10/what-are-research-in-motions-patents-worth/.  Cantech Letter  Retrieved June 4, 2012.


    2. Mark Terry.  Posted March 27, 2012.  http://www.floridapatentlawyerblog.com/2012/03/research-in-motion-rim-fairly.html.  floridapatentlawyerblog.com.  Retrieved June 4, 2012.


    3. “Kraken.”  Posted December 27, 2011.  http://seekingalpha.com/article/316052-research-in-motion-s-valuation-creates-opportunity.  SeekingAlpha.com.  Retrieved June 4, 2012.

  • Reply 18 of 40
    solipsismxsolipsismx Posts: 19,566member
    I'd have to research that but I've read estimates as high as $3.5 billion and as low and $1.5 billion in patent value.

    RIM didn't just appear on the scene yesterday. To the best of my knowledge even Apple has licensing deals with RIM.

    Maybe they are but I can also see their patents, expect for their recent QNX acquisition, to put them closer to being a Kodak with very little going for them from an IP standpoint.

    I still think their brand name is solid which is I referenced it specifically in an earlier post just as Apple's brand name was solid even when they had a similar valuation 15 years ago. I hope they can pull themselves up out of this as an underdog story is always great but I also have no love or interest in the weak being carried along to create false competition.
  • Reply 19 of 40
    mac.worldmac.world Posts: 340member
    RIMM won't be sold to a foreign company. Canada has a law that prevents such sales unless it's in the interest of Canada. RIMM can be sold outright for patents and dissolved, but it's highly doubtful the Canadian gov't would allow a company like Dell to buy it and continue operations.
  • Reply 20 of 40
    aaarrrggghaaarrrgggh Posts: 1,569member
    A consortium with HTC and RIM might make a lot of sense. HTC has a better business, but is more dependent on Google. RIM could help them diversify there, and get a more solid footing for the future. They also have reasonable designs and room to regain share. I am sure there would be a huge clash in cultures, but that is about the best combination I can think of. LG could be a suitor as well, but I think that would raise more issues regarding Korean dominance in the phone business.
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