The valuation seems somewhat obscene when the company is coming off a year that showed a 38% improvement in profit. However the mob is fickle and RIM's once prized Blackberry is falling behind the phones of other companies. Google's android phone sometimes features a QWERTY keyboard and Apple and Googles devices are seen light years ahead of RIM's in terms of quality and applications.
Given the bottoming share price of RIM there has been speculation that it will be bought out. Some say by Microsoft. However this would be a confusing merger, after Microsoft already struck a deal with Nokia to use their hardware, to purchase RIMM now would be a contradiction. The company is pursuing their own technology and is unlikely to be interested in a new model pf phones. Two years ago the company was likely more interested.
Google and Apples, likely see themselves as miles ahead of RIM and they are unlikely to purchase the company for any price.
It is possible a company like HP would consider the purchase. HP has been integrating PALM technology into its devices and RIM technology is miles ahead of that of PALM. HP would also gain more exposure into the phone market. Though with the recent drop in HP share price and the companies bidding wars in the past, the company is probably less likely to throw out a bid.
Which leaves RIM by itself. It is possible the company will merge with another but this is also unlikely. Meaning RIM will need to show improving results going forward or their stock will continue declining.
The company reports on June 16. The stock is down 40% year to date.
To read the full RIM report click here.
I work in a store in the UK that sells all smartphones, and don't agree with this analysis at all. The BlackBerry brand doesn't seem to be getting any weaker, and easily outsells any of the other handset makers.
ReplyDeleteBlackBerry may be seen by hardcore techies as 'miles behind', but not by the regular consumer. The handsets themselves are high quality and sell well. Most people aren't too interested in the software, and are happy with a phone that will give them BBM and all their social networking apps.
If my experience of selling this stuff is anything to go by, then the analysts are dead wrong on RIM and have got a bit too excited about Android and Apple.
I don't know what world he lives on but I do a lot of traveling. Where one used to Blackberrys and Dell one now sees MacBooks and iPhones. Everywhere. There are the occasional Blackberry but I see less and less as a percentage with each trip. The lack of any useful apps other than e-mail makes this phone a non-started with just about everybody except for, I guess, a small smartphone store in the UK.
ReplyDeleteYour anecdote is interesting, but clearly isn;t reflected in sales. In the UK, BlackBerry far outsells iPhone, and has recently beaten the entire Android offering in terms of sales.
ReplyDeleteThe 'small smartphone store' in question is the biggest smartphone retailer in the UK.
I also do a lot of travelling and have an iPhone and a BlackBerry. Love my iPhone 4 but it couldn't fully replace my BlackBerry. No way.
I agree, I have both an iPhone4 and Blackberry Bold and the BB is still my primary device. I truly thought when I bought the iPhone it would be the end of the BB for me, but the iPhone is (I'm sorry to say) awful for typing on. Just plain awful. So, if I'm looking to play angry birds, or use one of the many apps I've downloaded, I'll grab the iphone, but if I had to choose one today, it would still be Blackberry.
ReplyDeleteThese analysts are full of shit frankly!!!. They sway with every bit of information and upgrades and downgrades are part of the norm. Blackberry is not plam and the analysts (mainly from the US) clearly have an inherent bias towards the phone. Let's be clear the President of the US has,still and has always said he loves his BB. I got the torch and I love it. I love the keyboard. RIM just needs to stay true to its core business values and keep producing quality products.
ReplyDeleteI don't know how you can compare RIM with Nortel. RIM made $6 last year, and yet Nortel never had any profitable quarter. I agreed that there may be some others going to scoooop up RIM. I believe it will be ORACLE. If RIM is out for sale, I can tell you that there will be a lot of Asia buyers, especially those from Taiwan and Singapore. Good luck for those shorters.
ReplyDeleteHere in Canada, Blackberry used to be the rage. Nowadays, I know a couple people with Blackberrys but I don't think they'd consider getting a new one. I haven't heard anyone in the last year mention buying a blackberry. I think their only clientele will be older business people who don't care about apps. I also want to mention that to see this stock decrease in price when pretty much every stock I look at has increased, even Nokia, is a bad sign.
ReplyDeleteThe stock is either talked up or talked down. It seems it must be undervalued greatly by now yet it still goes lower! Why? 6x earnings and still a pretty good growth rate. I thought management was getting its act together.
ReplyDeleteThe Playbook fiasco is weighing down on RIM. Investors are not optimistic that Blackberry's move into international markets is going to make up for declining share in the U.S. Still, the stock seems obviously undervalued. Considering how much it has been hammered after earnings the past couple of times, I'm staying away.
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