RIM Shares Drop Below Book Value

Struggling Blackberry manufacturer Research in Motion’s (RIM) stock value is lower than its book value for the first time since 2002, when the company was actually losing money.

RIM’s share price dropped to $18.91 (£11.80), below the book value of $18.92 (£11.81) a share at the end of the last quarter, according to Bloomberg, which measured assets such as cash, inventories, real estate and intellectual property, minus its liabilities.

Declining Market Share

Disappointing second quarter results detailed how weak sales had resulted in a significant 54 percent reduction in income as the value of the company dropped to $9.91 billion (£6.2bn). Several major shareholders have sold their stock this year due to a series of difficulties and declining market share.

Research conducted by Canalys revealed that RIM had lost major ground on rivals HTC and Samsung in the US smartphone market, where its market share dropped to just 9 percent in the third quarter of 2011 from 24 percent last year.

“RIM’s market share has fallen below 10 percent for the first time, and the current outlook for it in the US is certainly bleak,’ commented Canalys senior analyst, Tim Shepherd. “While Apple can for now get away with not having a 4G smart phone, no other vendor in the US can. RIM must deliver a competitive high-end 4G smart phone in early 2012.”

By the Playbook

Shepherd warned: “RIM needs to deliver new, fresh, exciting products to the market and increase its pace of innovation and execution if it is going to have any chance of reasserting its position in North America.”

RIM’s Blackberry Playbook has struggled to compete with Android devices and Apple’s iPad in the tablet market, despite offering business customers three Playbooks for the price of two and some retailers slashing prices in response to the announcement of Amazon’s Kindle Fire.

The company’s reputation for reliability also suffered when Blackberry data services crashed across Europe, the Middle East and Africa before spreading to Asia, South America and North America, leaving some users without access to their email for up to three days.

However Shepherd did not think that this would have any long-term effect on RIM’s prospects outside the US, “The picture for RIM in other parts of the world is clearly more positive. It grew 59 percent in EMEA and 56 percent in APAC over a year ago, largely driven by the continued popularity of BBM, its BlackBerry Messenger service.”

He continued, “The Middle East and Africa and Southeast Asia were particular bright spots, and while October’s outage, focused on EMEA particularly, has hurt RIM’s reputation for reliability we do not expect it to have a substantial impact and expect a decent Q4 performance there.”