September 22, 2011 | In: Technology

RIM Is Worth More than Its Market Cap

I have written about RIM as a company and as a stock so many times before, and I’ve always bashed it. I always thought it was too expensive, that the company has no future, that it will go bankrupt soon, that it won’t recover, etc… I did say though, at one point, that RIM could be a target for takeover. I think all investors should be thinking about a takeover potential more than ever at the moment, mainly because RIM’s total assets are about $12.875 billion (see here), which is around $1.6 billion more than its current market capitalization of $11.29 billion!

RIM’s goodwill is only valued at half a billion, and we all know that RIM’s goodwill value is much more than that at the moment, especially outside the US. The thing is that US customers have little loyalty to brands, unlike people in Europe and the Middle East. RIM has no debt whatsoever, and is only trading at a P/E of 3.94. It really only takes one good product to turn the company around, failing that, RIM is a very, very cheap company at the moment, and whoever buys it will benefit from its market and its customers’ loyalty to blackberry.

Waiting until the dust settles for RIM means that you will lose an opportunity of making about 50% of your investment in a few days. I have always made money on RIM, and I’m sure right now that it’s really, really cheap, regardless of their bad products and their stupid marketing strategies.

RIMM is currently trading at $21.54. In my article about RIM’s takeover, I said that the takeover could happen at the $20 level, so it still have to go down around 7%, which can only be a couple of trading days away at the current trend.

1 Response to RIM Is Worth More than Its Market Cap



October 2nd, 2011 at 9:37 pm

I think your understanding of the term “goodwill” is wrong. Goodwill refers to the value above/below of a company that RIM might have acquired. It has nothing to do with RIM itself. Goodwill is purely an accounting term – so lets say RIM buys another company they have incorporate its book value into its balance sheet – if they pay more than the acquirec companies BV they have to carry the difference on their own balance sheer under the category Goodwill – which they will right down over the years.

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