Jefferies Says Research in Motion (RIMM) Patents Are Weak, Sees Salvage Value of $21

Jefferies reiterated its Underperform rating on Research In Motion Ltd. (NASDAQ: RIMM) and cut its price target from $25 to $21, citing limited patent value.

Analyst Peter Misek believes RIM's patents are " relatively weak," with most in security rather than in wireless.

"We believe the liquidation value of RIM's patents is only ~$2.5B. We believe the security patents are worth approximately $500M, RIM’s wireless patents are worth approximately $1.2B ($400M LTE plus 3G, etc.), and we add the $770M worth of patents acquired from Nortel. Combining the various patents, we arrive at the patent portfolio value of approximately $2.5B."

Misek notes that even though the patents may be worth $2.5 billion, keeping an on-going handset business, RIM's patent monetization likely caps out at approximately $1 billion.

The firm sees a "cash cow salvage value" of $21 per share. Calculation: net cash ~$1.5B + patents ~$1B - restructuring ~$700M + subscription business.

For more ratings news on Research In Motion Ltd. click here and for the rating history of Research In Motion Ltd. click here.

Shares of Research In Motion Ltd. closed at $22.73 yesterday.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Jefferies Upgrades Medpace (MEDP) to Buy, 'Big Margin Improvements'
• Jefferies Upgrades Ingevity Corp (NGVT) to Buy, 'Activated Carbon Solid, Intermediate Chemicals Rebound Likely'
• JPMorgan Downgrades Five Below (FIVE) to Neutral