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Today Research in Motion (RIMM) revealed two new phones, well over due for the market and the saving of the company, after over two years of excuses as to why they couldn’t produce. Well, I won’t necessary call them excuses, more so “we couldn’t get the job done in time as we lose our bottom line” but the lag time has definitely not done well for the company’s staying power. The question that remains is, will this bring them back into the game? Competitors like iPhone and Android have been enjoying their surge in market share as they have launched slicker products and phones and RIM hasn’t. Apparently, RIM (who also stated they will be changing their name to Blackberry) has a lot to prove as many consumers have long jumped ship. Nevertheless, the company still has a global presence and hopes to rebuild their brand with newer phones which are set to hit the market mid March.
Today, RIMM loss 12%, closing at $13.86/share. Net income growth for the prior year of 2012 surged 66.84%, with sales growth down almost 10%. There are some positives about the company’s balance sheet for the past year and one of them is debt. There is no short term or long term debt on the books for 2012 and their liquidity looks strong. This is proven by their 1.78 quick ratio and 0.52 cash ratio (the two most conservative liquidity ratios). They also have strong retained earnings as well as solid equity left over for the year.
With the cash flow statement, there appears to be a problem with their net investing cash flow and this proves itself under capital expenditures. But, as we know the negative capital expenditures in “other assets” should benefit the company for the future. With that said, lets just call this a positive (only time will tell).
Gross margin for 2012 was 32.92% and Apple’s was 42% (not bad for a company that has waited two years to put a product out and it’s market share thrown to the sharks of the new world order of technology). Operating margin for 2012 came in at almost 12%, with it’s current 2013 P/E ratio at a little over 7%. Analysts estimated EPS for February 2013 has it down $0.29 for the 1st Quarter of the year, but is nothing compared to last years report which was up $0.81!! Currently, the estimate for growth for February 2013 is a horrible -136%, more than half of the hit the industry is taking which is nearly -67%. Even with an approximate positive growth of 76% for the company, the industry will topple it with more than 40 times better growth at 3,025%!!! Clearly, you can see the estimated growth for the industry will grow substantially in the next quarter, the question is who will be taking most of that growth?
Analysts are calling this stock a 3.4 out of 5, with 1 being a strong buy. That would put this stock in the category of “hold” if you still are holding shares. If you’re a big option player, then you could place more than a few option plays on this stock in the coming months and also hedge your money. I’m not much of a gambler, so I wouldn’t come near this stock. Globally, RIM (soon to be Blackberry) could gain some strength and I would look there for their momentum to sprang into action, but definitely not here in the US. I would strongly say if their strategy for restructure works, sales will be based on a global affair with consumers; a definite divorce of US sales would remain solid on their bottom line.
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