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I've never written specifically on Research in Motion (RIMM). But, given the all commotion and today's news revolving around the possible value of its patent portfolio, I feel I need to throw in my two cents.

The basic problem regarding RIMM is that you cannot use traditional valuation metrics to try and value it. It is a mistake to try and value it using discounted cash flow, forward P/E multiples or even a sum of the parts trying to ascribe value to patents and whatnot. RIMM will instead behave like a binary option. Either it will have a lot of value if a given event happens, or it will be a zero in time, if it doesn't.

And what event is that? RIMM will need to carve out a sustainable ecosystem, to battle Apple's (AAPL) iOS, Google's (GOOG) Android and perhaps even Microsoft's (MSFT) Windows 8 in due time. A sustainable ecosystem is one that basically attracts developers into it - there's no use to even try and remain in the market, if RIMM tries to do the app development on its own. There's no way to compete with hundreds of thousands of independent programmers and companies working to enlarge your ecosystem.

The odds, however, are truly stacked against RIMM. This is so not just because the BB10 OS is too late (still scheduled for the tail end of 2012), but also because it will be next to impossible to establish a new platform in the market, if all it does is look and act like everything else that's already out there. Even Microsoft, with all its might and well-known PC platform, has its work cut out for it, and that's with a radically different user interface (that can thus promise to bring something different to the table).

So instead of going around trying to establish if RIMM is cheap or expensive, all the efforts need to go into trying to guess whether RIMM will be able to pull off a position that's sustainable over the long term. Or at most, whether it can convince someone to buy them -- Amazon (AMZN), maybe? -- before that long term arrives.

My final take on RIMM's position right now, is that it has about as much chance to survive in the market, as Nokia's (NOK) Symbian OS. Both were dominant leaders yesterday, but the market has now moved forward, and there's little to salvage in them even if they still command large revenue numbers.

Any other possible outcome?

Perhaps RIMM could try the same solution as Nokia - Ally itself with an ecosystem that's sure to endure (Android) or that might have the resources to put up a fight (Microsoft's Windows 8). RIMM's uniqueness in the business e-mail world would live on as software, and RIMM's somewhat tarnished brand would still adorn handsets made to Windows or Android specifications. This way, RIMM's chances over the long term would no longer be such a binary outcome.

Disclosure: I am short AMZN.

Source: RIM's Odds Are Truly Stacked Against It