RIM (RIMM) Patent Portfolio Could Be Worth Much Less Than Expected - Analyst
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Price: $14.64 +12.36%
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 21 | Down: 24 | New: 29
Rating Summary:
0 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 21 | Down: 24 | New: 29
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Shares of Research In Motion Ltd. (NASDAQ: RIMM) are higher Monday as investors are reminded of the company's treasure trove of patents after AOL's $1 billion patent sale to Microsoft.
Sterne Agee's Shaw Wu had a well-timed research report discussing the value framework of RIM, including the patent portfolio - and things don't look entirely rosy for investors holding out hope.
Wu said while there is intrinsic value in RIM, upside is limited at the current $7 billion valuation. He estimates a total value of $5-7 billion meaning a stock price of $9.50-$13.50. This assumes $3.50 in net cash + $2-$3 for patents + $2-$4 for BBM + $2-$3 for its BB10 OS and push network.
On a potential sale, Wu said potential logical buyers of the company are Amazon (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), Samsung, HTC, Nokia (NYSE: NOK), and possibly Facebook (Nasdaq: FB). However, he notes, the Canadian government may not allow an acquisition by a foreign company due to national security interests. Also, Microsoft and Nokia have already made their bets on Windows Phone 7.
On the value of the patent portfolio, Wu said it may not be worth as much as previous thinking. He said that while many have used the price an Apple-led team paid for Nortel assets and Google (Nasdaq: GOOG) for Motorola Mobility (NYSE: MMI), given the mixed record Android has had in defending against AAPL as well as RIMM getting sued by NXPI, they would argue that $2-3 billion value for RIM's patents is optimistic. He said a more appropriate value for RIM's patent portfolio is $1-1.5 billion or $2-$3 per share.
Wu maintained his Neutral rating on RIM and continues to be concerned with its fundamentals.
For an analyst ratings summary and ratings history on Research In Motion Ltd. click here. For more ratings news on Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $12.67 yesterday, with a 52 week range of $12.45-$57.32.
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Sterne Agee's Shaw Wu had a well-timed research report discussing the value framework of RIM, including the patent portfolio - and things don't look entirely rosy for investors holding out hope.
Wu said while there is intrinsic value in RIM, upside is limited at the current $7 billion valuation. He estimates a total value of $5-7 billion meaning a stock price of $9.50-$13.50. This assumes $3.50 in net cash + $2-$3 for patents + $2-$4 for BBM + $2-$3 for its BB10 OS and push network.
On a potential sale, Wu said potential logical buyers of the company are Amazon (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), Samsung, HTC, Nokia (NYSE: NOK), and possibly Facebook (Nasdaq: FB). However, he notes, the Canadian government may not allow an acquisition by a foreign company due to national security interests. Also, Microsoft and Nokia have already made their bets on Windows Phone 7.
On the value of the patent portfolio, Wu said it may not be worth as much as previous thinking. He said that while many have used the price an Apple-led team paid for Nortel assets and Google (Nasdaq: GOOG) for Motorola Mobility (NYSE: MMI), given the mixed record Android has had in defending against AAPL as well as RIMM getting sued by NXPI, they would argue that $2-3 billion value for RIM's patents is optimistic. He said a more appropriate value for RIM's patent portfolio is $1-1.5 billion or $2-$3 per share.
Wu maintained his Neutral rating on RIM and continues to be concerned with its fundamentals.
For an analyst ratings summary and ratings history on Research In Motion Ltd. click here. For more ratings news on Research In Motion Ltd. click here.
Shares of Research In Motion Ltd. closed at $12.67 yesterday, with a 52 week range of $12.45-$57.32.
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