Time to Hang Up on RIM?
In RIMM's case, this was a momentary phenomenon for a company that has had its share of troubles in recent years.By my calculation, the company never actually traded below net current asset value, and investors reacted swiftly, rescuing it from net/net land by scooping up shares that appeared to be priced for an early demise. Since that column was published, shares are up more than 60% through Wednesday's close. RIMM data by YCharts
Certainly, all is not well with RIMM. Given increased competition, declining revenues and margins and some public relations fiascos related to user outages, the company has faced increasing headwinds.
At one time, the BlackBerry was a phenomenon, but now seems to be yesterday's news. The company is pinning its hopes on reviving the business, however, with the release of the BlackBerry 10, which it hopes will compete with Apple's (AAPL) iPhone and other smartphones.There are some in the analyst and investment community who believe BlackBerry 10 will be the shot in the arm the company needs. That optimism was was driving shares higher Friday in pre-market trading.
Thursday, shares rose more than 17% on the Toronto Stock Exchange after a National Bank analyst increased the price target from $12 to $15.
From a fundamental perspective, not much has changed since my last column on RIMM: The company is still extremely liquid, ending last quarter with $2.065 billion, or $3.93 per share, in cash and short-term investments, and no debt. As of Wednesday's closing price, shares were still trading at a relatively low multiple of net current assets, $1.65, and at just 0.87 times tangible book value per share. The reception of BlackBerry 10 will help determine whether this company is truly cheap, or in decline.