Looking at the numbers coming out over the past couple of months, Research In Motion doesn’t seem to be in such a good shape. This year the Ontario based Canadian firm reported their first drop in quarterly sales in nine years as market share was lost to Apple’s iPhone and Google’s Android based smartphones. The pressure on management is such that major investors have been bailing out; Jaguar Financial Corp. suggesting that RIM either split up the firm or merge with someone.
Right now RIM’s market capitalization is lower than the net value of its assets. Despite all the doubt surrounding the company’s future, though, one hedge fund manager, Leon Cooper, thinks that RIM has yet a whole lot to offer consumers. “People think it’s a melting ice cube,” he said in a recent interview according to Bloomberg, “We think the new operating system is going to surprise people†and that RIM is going to meet its projections.
Cooperman works at Omega Advisors Inc. who purchased 1.43 million shares in RIM last quarter. “The company, which helped create the smartphone market a decade ago with its first e-mail device, would be worth more than its current market capitalization if it combines with another company,” Cooperman said. “Why do people buy a stock? They buy a stock because they think it is undervalued,†he said. “The merger value is worth more than the market value.â€
RIM’s current top executives, namely co-chairmen and co-CEOs James Balsillie and Michael Lazaridis, hold a combine stock of $1 billion between themselves, so making sure that RIM is doing its best is also in their interest. Of course, a merger could well mean that the two bail out via a golden parachute and sell their stock options as soon as a merger takes place and current stock value goes up.
Currently RIM has a user base of over 70 million customers worldwide, and in the growing threat of iOS and Android smartphones, the latest BBX operating system seems to be the company’s final stand to regain public interest.
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