“Research In Motion Ltd. (RIMM)’s stock fell below its book value for the first time in nine years, a signal investors consider the BlackBerry maker to be worth less than the net value of its property, patents and other assets,” Hugo Miller and Matt Walcoff report for Bloomberg.
“RIM fell 3.3 percent to $18.66 at 1:31 p.m. in New York, below the book value per share of $18.92 at the end of last quarter, according to data compiled by Bloomberg data,” Miller and Walcoff report. “Book value comprises a company’s assets including cash, inventories, real estate and intellectual property minus its liabilities.”
Miller and Walcoff report, “‘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.”
“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,” Miller and Walcoff report. “‘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.'”
Read more in the full article here.
MacDailyNews Take: Amateur hour, indeed.
[Thanks to MacDailyNews Readers “Dow C.” and “qka” for the heads up.]