Special Feature
RIMM UPDATE Blackberry 10 launch imminent, will it carry the stock price higher? We first covered RIMM in our inaugural January issue in which we looked at 10 contrarian plays for 2012. RIMM was tipped to be a potential takeover target and although there have been sporadic bouts of takeover speculation at various stages, as yet no acquirer has actually made a move although Samsung’s name has been in the frame on numerous occasions. The shares were originally tipped at $13 and we doubled down in the early $7s just ahead of their 2Q results and bringing our average down to a shade over $10. With CEO Thorsten Heinz surprising to the upside with the 3Q results at September end in which he unveiled rising subscriber numbers in emerging markets in particular where RIMM remains extremely popular and also a stable cash balance of $2.3bn due to tight working capital management; the shares have responded with upside momentum in recent weeks, in fact reaching a high of just over $9 in early November.
Scepticism about the company’s future prospects remains embedded in the analyst community, but with RIMM showing signs of stabilisation and preservation of their strongholds in the emerging markets of Nigeria, India and South Africa, should Blackberry 10 actually prove to be a hit with the West’s consumers, the discount to book value ($18) could narrow dramatically. With 80 million subscribers, Research in Motion still remains a solid player in the industry and veteran investor Prem Watsa, described by many as the Canadian Warren Buffet, has been a big buyer of the stock during the summer months and now holds just under 42m at the last regulatory filing, just over 10% of the company — not an insignificant bet.
38 | www.financial-spread-betting.com | December 2012