RIMM

Stock Talk Update: $RIMM Research In Motion play cost me 18.5%

Posted by Investing Freak on June 28, 2011
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I last wrote about $RIMM a day or two before their 6/16 earnings “Research in Motion near 2009 Lows” and at the end of that article I mentioned that I had an intention of Buying some RIMM within the week.
Well ladies and gents in honor of full transparency I did create a small position on 6/15 at 35.43 and closed it the day after earnings at 28.86 for a loss of -18.5%.

Plenty of things I wrote in the previous article including the charts were a clear warning for me to steer clear especially near earnings but my fatal flaw of chasing risk got the better of me.

Once again here is the chart I posted on the 15th at midnight (after which I acquired shares right before close that trading day). Clearly this is a downtrend with the major moving averages on top which naturally become resistance (plenty of gap-downs too).

I also mentioned that in the SEC filings the company made it clear that one of their biggest risks is being too slow to roll out competitive products and they have patent infringement aplenty which haven’t been settled. And as soon as I acquired my stake even before earnings came out I missed this news:

Dolby Laboratories said Wednesday it has filed patent infringement lawsuits against Research In Motion in the United States and Germany and is seeking to halt sales of devices made by the Blackberry maker.

RIM is using Dolby’s patented technologies in its Blackberry smartphone and Playbook tablet computer without having obtained licenses, Dolby said.

Dolby said all of the other major smartphone makers have agreed to license the Dolby technologies.

Source: Associated Press (Jun 15, 2011) “Dolby files patent infringement lawsuit against RIM”

What blinded me the most in this case is the magically low PE ratio which I mentioned being at 5.63 and even here I laid it out in the article i wrote to the world!

“P/E ratio isn’t always indicative of an undervalued stock and it might well be the case that RIMM has lost its edge.” I don’t listen to myself too well it seems and that cost me dearly.

Of course now that the PE is at 4.48 and the stock suffered another gap down isn’t it time it fills them all? This is a good long term investment now right? Well dear trader/investor/friend that is up to you and your trading rules. Nobody can predict the future of a stock or anything in life but educated guesses lead to better probabilities. Alas this is the end of RIMM coverage from the freak. 🙂

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Stock Talk: $RIMM Research In Motion near 2009 Lows

Posted by Investing Freak on June 15, 2011
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Upon the nightly stock pondering I decided to repay my old pal RIMM a visit at FINVIZ.com

I had last checked this stock out in early April and was in for a surprise. it has since gone south around 45% and its sitting at a low PE of 5.63 (although to be fair it has had a decently low PE for a while). P/E ratio isn’t always indicative of an undervalued stock and it might well be the case that RIMM has lost its edge.  I got rid of my Blackberry device in favor of android back in April hence why I forgot about this until now.

Reading their SEC filings it is obvious that the company is failing due to it being too slow to roll out competitive products and also because it has infringed on many patents there are dozens of Litigation’s going back to 2007 until recently March 2011 that are still work in progress.

 

Ran the annual income statements and balance sheets for the past 3 years through my valuation worksheets and the 3 year average Z-Score is very healthy, net profit margin has still remained in an uptrend and so is the total Asset Turnover. Return on equity and Return of Assets are also in a 3 year uptrend while gross profit margin has dropped 4 percent. The liquidity ratios are mixed but for the most part also good and the company has no debt, $288 million in cash and a total of $2.6 billion in cash/cash equivalents and investments so at the current $19 billion market cap they have 10% cash.

Here is a weekly chart with the $35.05 low from back in March of 2009.

If we were to go back even further there is support to the downside at 34.65 area in the weekly and at that point $RIMM might as well be done but fundamental and technical play this deserves a short term move to the upside so I will watch closely and might initiate a position on the long (BUY) side in the next 7 days. Already have a buy limit in at a lower price in case I sleep in or forget to check it for a few days.

Update:  RIMM has Earnings on 6/16/2011 Afterhours

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