RIM is dead ?

Research in Motion, the formerly dominant cellphone maker giant and currently just flailing to survive, has anounced its expected new generation of smartphones will be delayed to early 2013. This anouncement has been accepted by many as the final nail in RIM's coffin. The possibility of bankruptcy is already mentioned.

RIM's delay is a horrible blow to the prospects of the company. However one looks at it, loyal costomers will not wait forever, and RIM must has lost in this delay many a professional customer who waited and waited, but will wait no more... The real problem with getting on the delay-again-train, is that trust is lost, and on the bottom line, all that RIM had left at this stage of the game was trust of veteran customers.

And still, despite all, I do not agree that it is definitely the end. Despite the current lack of a real smartphone product, RIM has some over 7 million units sold. RIM has a hefty cash pile. And most important - RIM's management is aware of the meaning of its getting on the negative cash flow wagon, and its management has committed to a serious budgetary change.

It is not serious to talk about bankruptcy without doing the math: how much cash in the register? how much is spent each quarter ? these two parameters define the time-window the company has.

The real key is the quarter after the promised cuts. If RIM is able to regain profitability or minimize loses for the next quarters, until the product's arrival to the market, it may very well survive 2013, enjoy profitability in developing markets and get with a competitive product to the US and Europe sales seasons of late 2013.

Still, however one looks at the long term, in the short term, RIM's stock is going down for the next 6 months, and it is very reasonable to assume that it is going down with a smack!

Worse, with a stock price that is most probably going to the 3-5$ because of the market's expected reaction, it is hard to assume RIM can withstand a hostile takeover. The only question that stands is - are there any competitors interested ? Or has HP's bitter experience with Palm taught all market lions that it is better to stay away from a tempting prey, lest the stomach ache one would experience afterwards be much worse than any possible gain ?

Considering the fact that the market cap of RIM at ~9$ per stock was already setting a price tag to the company which more or less equaled the higher-end estimates of RIM's patent portfolio. at 2$ per share, it will be an opportunity to buy this patent portfolio in a bargain, and the buyer could also use the company's own cash to break it down immediately, an expected step considering HP's lesson with Palm.

My guess is that Google is the most probable buyer. The remains of RIM may very well be synergetic with Motorola Mobile. Both patent-wise, and lets not forget the security advantages ownership of RIM can bring.

And with all that in my mind, is it a wonder that I am no longer a RIM's stock owner ? There are times when stock investments requires a hard look at the reality. RIM might not be dead yet, but as its stock is going do decline in the coming months, the predators will come, and with them - this company's end.

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