I am simply stunned to learn of the steep drop today from $ 14.90 to $ 13.00 based on some loud mouth interview on CNBC. What truly amazes me is that this drop occurred at a time when the company RIMM has put out it most bold and bullish news investors could ever have wanted to hear which is "that they are opening up their secure network to iphones and google platform around the world".
RIMM has 77 million members, Apple has 100 million members and Google phones have about 200 million members.
In one strong scoop, RIMM has grown its consumer base from 77 million members to 377 million members, each paying $ 4 per month to RIMM. RIMM has gone from being an enemy of Google, Samsung and Apple to being a friend in providing security backup for their phones.
Google, Samsung and Apple will no longer have to worry about security and will not be interested in developping any as they have RIMM, now their friend.
In terms of revenue, RIMM will generate $ 4 per user, with a possible 377 million members or $ 1.3 billion in revenue per month. This will equate to $15.6 billion per year. One would argue that sales would drop from their current $ 18 billion to $ 15 billion doing this.
In reply I would say that the security side of the business has an 80% gross margin compared to a 35% gross margin on the sale of phones. So 80% of $ 15 billion in sales will give a gross profit of $ 12.5 billion. Remove some costs of operations and you find yourself with $ 10 billion in profit per year or $ 20 per share.
Security firms have stable income so one will give RIMM a multiple of 30x so we are looking at a stock price of $ 600 per share compared to the measily $13 per share now.
Also, RIMM will most likely unload their phone business which would generate billions in cash and, license out its BB10 to a company like Samsung whom would pay another $ 10 per phone that is sold.
Overall I am truly at a loss of words to describe what I feel at this moment except to say that the market is full of dum investors whom can`t tell when an golden opportunity has been given to them.
Watch as revenues and profit margins soar. I would not be surprised to see firms like Apple, Goog, Samsung, MSFT buy a stake in RIMM as they know that it will be critical to any company.
bullish news?they wont even give a forward guidance....are you kidding me?now they are kissing the enemies butt too?you think its bad now wait till all you longs figure out that bb10 wont do a thing just like your game changing playbook..for god sakes forget about any sale till single digits....bb10 vs.iphone 5 with 4g?its not even fair is it?
Once a company losses its market edge it usually never rebounds - just look at: Xerox, RCA, Eastman Kodak, Zenith, etc. RIM is no different - it is still trying to stabilize its market share with the same set of products that have a slight upgrade over previous product. The market has moved on. RIM needs to license Android and Windows platforms for its new generation phones. They need to imitate rather than innovate but with a style that is unique to Blackberry – otherwise in a year or two that company will dissolve into oblivion.
This stock is truly hated. I am still long and do think that they will turn it around and have lots of hope with the QNX platform. Anyway, I am hoping that people come to their senses in the next few days and start buying back the stock