Research in Motion (RIMM, Financial) has received a lot of arguments whether it is the value play, when the $80 billion company in 2008 becomes just a little over $11 billion today. The largest shareholders and co-CEOs, Jim Balsillie, Mike Lazaridis, have lost the status as billionaires from the stock this year due to the plunge in the share price.
In September, RIMM has held the conference call for its Q2 2012 earnings; Jim still showed the growth in the company. It has shipped around 10.6 million smart phones in the Q2 and the subscriber base of the Blackberry is now over 70 million. With the operating performance of $4.2 billion in revenue including more than $1 billion in service revenue, that reflects more than 40% growth in the subscriber base over the past year.
One of the new product drives growth of RIMM across the regions are Blackberry 7. The early results from Blackberry 7 are quite strong and RIMM is rolling these devices out to all the RIMM’s network, its full network to global partners including broadening the launches in its strongest global regions. Jim expected that the guidance for sequential unit shipment increase of 27% to 37% in Q3. For its playbook as the first tablet, Mike stressed on the unmatched security of the product. It was the first tablet certified for deployment within US Federal Government agencies and the Australian Federal Government. I think it is actually the key and the competitive advantage of RIMM with the top security of its server. Whether it can be matched by iPad or other tablets in terms of security, it would affect its share price over the long run and it is still very questionable.
The financial result for the second quarter has come with the net income was $329 million or $0.63 per fully diluted share, which includes the $118 million associated with the cost optimization program. Excluding the charges, the EPS would rise to $0.8 per fully diluted share. During Q2, RIMM was part of the group of companies which bid successfully for Nortel patent portfolio. That has caused that large cash outflow in the quarter with the investment of $780 million from patent acquisition. Nevertheless, RIMM still got $1.4 billion sitting on its cash with no interest-bearing debt on its liabilities side.
Looking at the free cash flow of RIMM over the last 10 years, it still keeps increasing rapidly with some fluctuations, and now the TTM (including the most recent Q2) has stayed with $1.8 billion, and the book value per share rose even more rapid rate of $1.85/share in 2002 to $16.6/share at the end of fiscal year 2010 and at nearly $19 TTM.
Whether RIMM is the good stock to buy in today? With strong balance sheet, still got growth in its subscriber base, creating a lot of cash flows, any value investors would like any stock with those fundamentals. However, it is involved with technology, fast changing, and with new trend of tablet, competitors has come up with new products of consumer-favor stylish way such as iPad, Galaxy etc. The situation can change in technology field just over night. If RIMM sticks to its main business competitive advantage, which is security system to be unmatched by any competitors, it would be very well-served to its shareholders over the long term.
In September, RIMM has held the conference call for its Q2 2012 earnings; Jim still showed the growth in the company. It has shipped around 10.6 million smart phones in the Q2 and the subscriber base of the Blackberry is now over 70 million. With the operating performance of $4.2 billion in revenue including more than $1 billion in service revenue, that reflects more than 40% growth in the subscriber base over the past year.
One of the new product drives growth of RIMM across the regions are Blackberry 7. The early results from Blackberry 7 are quite strong and RIMM is rolling these devices out to all the RIMM’s network, its full network to global partners including broadening the launches in its strongest global regions. Jim expected that the guidance for sequential unit shipment increase of 27% to 37% in Q3. For its playbook as the first tablet, Mike stressed on the unmatched security of the product. It was the first tablet certified for deployment within US Federal Government agencies and the Australian Federal Government. I think it is actually the key and the competitive advantage of RIMM with the top security of its server. Whether it can be matched by iPad or other tablets in terms of security, it would affect its share price over the long run and it is still very questionable.
The financial result for the second quarter has come with the net income was $329 million or $0.63 per fully diluted share, which includes the $118 million associated with the cost optimization program. Excluding the charges, the EPS would rise to $0.8 per fully diluted share. During Q2, RIMM was part of the group of companies which bid successfully for Nortel patent portfolio. That has caused that large cash outflow in the quarter with the investment of $780 million from patent acquisition. Nevertheless, RIMM still got $1.4 billion sitting on its cash with no interest-bearing debt on its liabilities side.
Looking at the free cash flow of RIMM over the last 10 years, it still keeps increasing rapidly with some fluctuations, and now the TTM (including the most recent Q2) has stayed with $1.8 billion, and the book value per share rose even more rapid rate of $1.85/share in 2002 to $16.6/share at the end of fiscal year 2010 and at nearly $19 TTM.
Whether RIMM is the good stock to buy in today? With strong balance sheet, still got growth in its subscriber base, creating a lot of cash flows, any value investors would like any stock with those fundamentals. However, it is involved with technology, fast changing, and with new trend of tablet, competitors has come up with new products of consumer-favor stylish way such as iPad, Galaxy etc. The situation can change in technology field just over night. If RIMM sticks to its main business competitive advantage, which is security system to be unmatched by any competitors, it would be very well-served to its shareholders over the long term.
