Research In Motion (RIMM) Is Not Dead Claims Barron's
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Research In Motion (NASDAQ: RIMM) shares plunged 12 percent the night after it reported its most recent earnings, as investors concentrated on the company's forecast for the current quarter, with some proclaiming the demise of the once burgeoning company.
However, an article from Barron's over the weekend pointed out that the BlackBerry smartphone maker is not dead and in fact needs to be given a second look.
Barron's points out that RIM now sell for $54 roughly, which is just 7.8 times analyst estimates for the coming year. This is about half that of rival Apple Inc. (NASDAQ: AAPL) at 14.4 times and even below the 11.2 times of beleaguered Nokia (NYSE: NOK).
Apple's iPhone has put RIM under the guillotine in the eye's of investors since its 2007 introduction, but Barron's said that this "simply isn't true." RIM has continued to increase revenue and profits at a rapid pace, despite all of the inroads Apple and others have made in the U.S. smartphone market.
The article shows that RIM has never had a single quarter of net global subscriber loss, with sales volumes nearly 20 percent higher than that of Apple, adding that RIM has vast overseas growth potential.
"RIM's valuation remains the theater of the absurd," Tavis McCourt, an analyst with Morgan Keegan, told Barron's. The analyst added he is expecting 40 percent revenue growth for RIM over the next few years, while projecting the stock price to climb to $91 in the next year.
According to recent data from U.S. research firm ComScore, the BlackBerry line held 29 percent of smartphone subscribers in North America, which is down from 29 percent in the same quarter last year. In comparison, Apple held 25 percent and Microsoft 8 percent. Google (NASDAQ: GOOG) Android-powered phones had 33 percent of the market, but that accounts for devices from numerous makers.
Barron's said RIM will continue to hold on to its lead in the business world, which the company has dominated since the late 1990s. Currently RIM outnumbers the iPhone in the business world 10 to 1.
"RIM still owns the enterprise market, and will own it for a long time to come. The iPhone is not a big threat," according to Barclays Capital analyst Jeff Kvaal.
RIM is continuing to grow in the international market with its lower-end offerings pushing overseas' revenue to 60 percent of the company's total last quarter. "If 60% of your revenues are growing 100% year over year," McCourt says, "it is hard not to be a growth company."
The article comes just ahead of RIM releasing the PlayBook tablet on Tuesday, a device that many of the tech talking heads are calling dead on arrival. The device has not been given an initial vote of confidence to compete against Apple's dominate iPad.
RIM is projecting earnings for the current year of $7.50 per share, which is well ahead of the Street's view of $6.88 per share, which Barron's said "is odd, given RIM's good prospects and its history of delivering strong results."
The article also notes RIM could quickly become a takeover target, as Microsoft may not find success in its recent tie-up with Nokia and turn to the BlackBerry maker. A dividend could also bring a rise to the company's stock if one is initiated. Nokia currently has a dividend yield of 6.3 percent.
With all of the naysayers climbing on RIM it may only make the rebound that much more remarkable.
Shares of RIM are up 1.80 percent to $54.36 in premarket trade on Monday.
However, an article from Barron's over the weekend pointed out that the BlackBerry smartphone maker is not dead and in fact needs to be given a second look.
Barron's points out that RIM now sell for $54 roughly, which is just 7.8 times analyst estimates for the coming year. This is about half that of rival Apple Inc. (NASDAQ: AAPL) at 14.4 times and even below the 11.2 times of beleaguered Nokia (NYSE: NOK).
Apple's iPhone has put RIM under the guillotine in the eye's of investors since its 2007 introduction, but Barron's said that this "simply isn't true." RIM has continued to increase revenue and profits at a rapid pace, despite all of the inroads Apple and others have made in the U.S. smartphone market.
The article shows that RIM has never had a single quarter of net global subscriber loss, with sales volumes nearly 20 percent higher than that of Apple, adding that RIM has vast overseas growth potential.
"RIM's valuation remains the theater of the absurd," Tavis McCourt, an analyst with Morgan Keegan, told Barron's. The analyst added he is expecting 40 percent revenue growth for RIM over the next few years, while projecting the stock price to climb to $91 in the next year.
According to recent data from U.S. research firm ComScore, the BlackBerry line held 29 percent of smartphone subscribers in North America, which is down from 29 percent in the same quarter last year. In comparison, Apple held 25 percent and Microsoft 8 percent. Google (NASDAQ: GOOG) Android-powered phones had 33 percent of the market, but that accounts for devices from numerous makers.
Barron's said RIM will continue to hold on to its lead in the business world, which the company has dominated since the late 1990s. Currently RIM outnumbers the iPhone in the business world 10 to 1.
"RIM still owns the enterprise market, and will own it for a long time to come. The iPhone is not a big threat," according to Barclays Capital analyst Jeff Kvaal.
RIM is continuing to grow in the international market with its lower-end offerings pushing overseas' revenue to 60 percent of the company's total last quarter. "If 60% of your revenues are growing 100% year over year," McCourt says, "it is hard not to be a growth company."
The article comes just ahead of RIM releasing the PlayBook tablet on Tuesday, a device that many of the tech talking heads are calling dead on arrival. The device has not been given an initial vote of confidence to compete against Apple's dominate iPad.
RIM is projecting earnings for the current year of $7.50 per share, which is well ahead of the Street's view of $6.88 per share, which Barron's said "is odd, given RIM's good prospects and its history of delivering strong results."
The article also notes RIM could quickly become a takeover target, as Microsoft may not find success in its recent tie-up with Nokia and turn to the BlackBerry maker. A dividend could also bring a rise to the company's stock if one is initiated. Nokia currently has a dividend yield of 6.3 percent.
With all of the naysayers climbing on RIM it may only make the rebound that much more remarkable.
Shares of RIM are up 1.80 percent to $54.36 in premarket trade on Monday.
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