RealD (Ticker: RLD) shares currently trade around $7 per share, down 50% in just 3 months time. Simply stated -- the company has problems -- and there is still more downside to come. Absent new management or a takeover -- both of which are highly unlikely -- I believe the fair market value for RealD shares is 30% - 50% below the current market price.
In my view, RealD is challenged by five very large problems:
Problem 1: New unit installations since FY2011 have negative profitability (and worse ROI given ~$9,000 cost)- but management continues to press forward with new installations and associated operating expenses (S&M + G&A). Said another way - revenue is flat to declining, and operating...
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