RIM Shares Fall Through Book Value Floor

Research In Motion crossed a grim threshold on Wall Street recently.

The BlackBerry maker’s shares closed at US$19.02 Thursday, less than a third of their $66.20 high for this year, attained in February, and lower than they’ve been since May of 2004, when they hit $19.99.

Thursday’s share prices were below the company’s book value, which stands at $19.05 per share, according to Standard and Poor’s Capital IQ.

A company’s book value consists of its total assets, including intellectual property, minus intangible assets and liabilities.

There’s fear that RIM’s value could sink even lower. Jaguar Financial, a self-described merchant bank in Canada that invests in undervalued small capitalization companies, has repeatedly called publicly for the mobile device vendor to break itself up in order to increase shareholder value.

RIM did not respond to the E-Commerce Times’ request for comment.

Flailing to Be Free

Just last week, RIM offered business customers a special on its PlayBook tablet that raised grim reminders of HP’s flailing about with its ill-fated TouchPad device last summer.

Until Dec. 31, customers can take advantage of a buy-two-get-one-free PlayBook tablet offer. They can also get a premium accessory for each of those tablets. Their choices are a leather sleeve, a charging pod or a six-foot cable.

It’s not yet known how many business customers have been swayed by the offer.

RIM’s Two-Left-Foot Approach

RIM’s beset by a host of problems. Last month it suffered a four-day cascading network outage that eventually hit customers worldwide. Also last month, the company agreed to let authorities in India monitor BlackBerry users’ communications.

The company’s also under pressure from governments in the Middle East and China to allow surveillance of their citizens’ communications over BlackBerries.

RIM began shipping its newest BlackBerry smartphones in the third quarter, but sales consisted mainly of older and less expensive models, leading to its first quarter of year-over-year decline, according to IDC statistics.

RIM is now in fifth position in the global smartphone market.

Further, the company last week announced that it’s delaying the launch of BlackBerry PlayBook OS 2.0, initially expected last month, until it’s happy with the product. It’s set February as the new release time frame.

RIM is also working on a new operating system for BlackBerries — QNX.

The company is “trying to juggle a lot of balls in the air,” working on PlayBook OS 2.0 and preparing to transition to QNX, while maintaining BlackBerry OS 6 and OS 7, Michael Morgan, a senior analyst at ABI Research, told the E-Commerce Times.

“RIM’s fate is in their own hands,” said Richard Shim, a senior analyst at Display Search. “These product delays are diminishing their potential.”

With its large installed base and high profile in the enterprise and government market, though, RIM “has assets that are valuable, but it keeps tripping itself up,” Shim told the E-Commerce Times.

Drowning or Just Suffering Cramps?

The network outage and the capitulation to India’s demands to monitor its citizens using BlackBerry services are “starting to erode RIM’s core value propositions — dependability and privacy,” ABI’s Morgan said.

However, it may be too early to set up a death watch on the company yet.

RIM has been in this position before — nine years ago, its share prices fell below its book value. However, the company pulled out of those doldrums and emerged stronger than before.

The company might be able to repeat that performance.

RIM “has a lot of potential because of its installed base and its high name brand recognition,” Display Search’s Shim pointed out.

Also, it “has plenty of opportunities, particularly in emerging markets, and with consumers who want a physical keyboard,” Shim added. “I was recently in Europe and all the kids I saw had BlackBerries because they like its physical keyboard.”

Still, RIM has to make a push into the high-end consumer market, which is where the growth is, ABI’s Morgan said.

A little pizzazz won’t hurt either.

“They also need to get a bit of magic to draw people to the platform, otherwise it’ll just be iOS and Android and everybody else,” Morgan remarked.