I know that probably you have heard and read a lot of opinions about Research in Motion over the last months but why not just one more?
Well, everybody wants to know how to get rich during the night and, if you're one of those persons, you may stop reading right here.
I don't know if buying RIMM will make you rich or poor but I like to check the facts about a company and try to take advantage of short term market movements that seem exaggerated.
The present value of a company is what it has right now plus what it can earn in the future. Checking the latest numbers, we have a book value per share of $19,45, more or less $10B of total equity, and almost zero long term liabilities.
Also, even with a bad current quarter, this year's result will be the second best ever, having already earned $2,64 per share with one quarter left.
So, I think its fair to say that RIMM has a very healthy balance sheet and is still making money.
But, as I write this article, the current share price is around $13 so there must be something I'm missing. Is it the product? Will BlackBerry disappear in the near future? Are the numbers false? Are there no benefits of owning a Blackberry phone?
Well, I'm no specialist but I agree that there must come a new range of phones (BlackBerry 10?) quickly, accompanied by a strong marketing plan, but until then, the current phones are still selling well and are still making the company profitable. Also, I understand that there's no safest way of communicating than with a BlackBerry so there's a big competitive advantage for RIMM.
So is this a good investment opportunity?
The company is profitable, there are no hidden risks on its balance sheet, there are new products coming, they have very good technology, global presence...
It's just that currently the company is out of fashion.
Just a few years ago everybody felt that they needed to have a BlackBerry, now everybody feels that they need to have an iphone.
Meanwhile, stock prices get overoptimistic and pessimistic.
We just have to try and take advantage of them, checking the numbers, having good sense and hoping we are right.
Disclosure: I am long RIMM.