RIM now literally worth more dead than alive

RIM’s share price has declined so much, the once great smartphone giant is now worth less than the sum of its parts if asset stripped and sold as pieces.

With a market cap of only $9.85 Billion, the company is now worth little more than Skype which Microsoft purchased for $8.5 billion earlier this year.

“This is a wounded puppy,” Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, said in an interview. “They’ve been losing business, there’ve been operating technology problems. There isn’t a lot of customer loyalty anymore.”

RM’s market share was acknowledged to be only 9.2% in recent numbers released by Canalys, dropping precipitously from 24% a year earlier.  The trend has investors afraid to touch the walking dead company.

“The market, at book value, seems to be saying not only is RIM going to not get bigger in the future, but it’s actually going to shrink,” said Richard Fogler, of Kingwest & Co. in Toronto, who personally manages about C$1.5 billion. He sold his RIM shares in the third quarter. “Everyone’s frightened of what’s going to keep happening tomorrow.”

If a private-equity investor were interested in buying RIM, book value would be a useful indicator to gauge the company’s worth if the buyer then sold the assets, said Matt Thornton, an Avian Securities LLC analyst in Boston.

“It really comes into play for somebody looking for downside protection,” said Thornton, who rates RIM “neutral.” “If we liquidate or sell off the assets, what’s our downside protection, that’s when it becomes a more meaningful metric.”

“The market has no faith in its current model, that is what the market is telling you,” said Neeraj Monga, an analyst at Veritas Investment Research Corp. in Toronto. Monga, who has a “sell” rating on RIM, says there’s a 50 percent chance the stock will drop below $10 within 12 months.

RIM has already lost its position as the third ecosystem, with the Windows Phone Marketplace already having more apps than Blackberry’s much older App World. If Nokia is able to covert a substantial chunk of their Symbian buyers to Windows Phone, they will lost the position due to sales also.

When Nokia was reorganizing, RIM had its chance to establish itself as the third. It may have lost the opportunity, said Veritas’s Monga.

“Eighteen months ago, RIM was fighting but had a fighting chance,” he said. “Now, the problems RIM has on its software platform seem to be insurmountable.”

Read more at Businesweek here.

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