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Despite a little pullback today, shares of Research in Motion (RIMM) are trading 5% higher since the company reported its fourth quarter results on Thursday. The company lost money in the fourth quarter, for the first time since 2006.

Fourth Quarter Results

Research in Motion was forced to announce its first quarterly loss since 2006 after its new CEO Thorsten Heins announced initial steps for a strategic overhaul and a possible sale of the entire company. The company lost $125 million ($0.24 per share) after making a write-down on its BlackBerry 7 Phones and taking a goodwill impairment. Excluding these one-offs, the company earned $418 million, or $0.80 per share.

Revenues fell from $5.56 billion last year to $4.19 billion this year, missing analysts' expectations of around $4.54 billion. The company sold about 11.1 million BlackBerry's and 500.000 of its Playbook tablets, most likely at steep discounts.

The new CEO Heins, who took charge in January, says it is clear that Research in Motion needs "a substantial change". After firing both co-CEOs Lazaridis and Balsillie, the company continues its management shake-up. It appointed Dan Dodge as the company's top software architect and is actively looking for a new Chief Operating Officer and a Chief Marketing Officer.

Outlook

The outlook for the company remains very uncertain after it seems like the company can no longer effectively compete with the likes of Apple (AAPL) and Android, which is owned by Google (GOOG). One thing is certain, the company expects to see a continued decline in BlackBerry sales until its next-generation phones will be launched - which some analysts label as crucial for the long-term viability of the business.

The increasingly uncertain environment in which the company operates has led to the decision to no longer issue financial forecasts. A string of earnings misses last year has most likely contributed to this decision as well. Analysts are concerned about the pace of change within the company and point out that reorganizations need to be more drastic as the window of opportunity for the company to reform and revive is rapidly closing down.

Valuation

The fiscal year of 2012 marked the first year in which the company saw its revenues decline, after years of double-digit revenue growth. For the full year of 2012, the company generated $18.4 billion in revenue, down 7.5% on the year. Net income fell 66% to $1.16 billion after the company saw its net margins shrink to 6.3%.
With a valuation of a mere $7 billion, the operating assets (excluding the cash balance of $2 billion) are valued at 0.3 times annual revenue and 4-5 times earnings.

These metrics are largely irrelevant if the competitive pressure continues to erode RIM's business through till fiscal 2013. Fortunately, the company has over $2 billion in cash and equivalents with no long-term debt, which gives it some financial flexibility to survive these harsh times. Any stabilizing signs of its current business, until the new line of phones is being released, would be very welcomed.

Investment Thesis

The company has gradually become much more of a speculative investment case as there is less room for executives to make strategic maneuvers. Its previous CEO's saw the downturn simply too late and the company has not reorganized deep enough.

Consequently, the company depends completely on a successful launch of the new series of phones for its long-term survival, unless the new CEO Heins, who is not an insider, decides to sell the company.

With shares down 75% on the year and the possibility of a takeout or even a takeout rumor, I am a speculative buyer.

Source: I Will Be A Speculative RIM Buyer On Buyout Rumors