updated 04:50 pm EDT, Wed November 2, 2011
RIM stock dips below worth of company itself
RIM crossed a symbolic point illustrating its troubles Wednesday after its stock dropped over three percent. Falling as low as $18.66, the BlackBerry designer was expected by Bloomberg to close below its "book value" of $18.92, or a market cap equal to what the company itself is worth in buildings, cash, device inventory, and patents, but without debts. Analysts typically see dipping under book value as a sign that the market has lost confidence in a company or its leadership.
"The market has no faith in its current model, that is what the market is telling you," Neeraj Monga of Veritas Investment Research said.
The book value could also affect any prospect of selling off the company. If below the threshold, companies might be hesitant to buy in as the consequences of having to sell it off may see the buyer take a financial hit.
A sell-off of the sort comes after a string of bad news for RIM, some of which wasn't directly in its control. It has had to delay PlayBook 2.0 to February, leaving its tablet without vital features for almost a year, and has seen steep drop-offs in sales across all its lineup. The company had its most severe BlackBerry Internet Service outage at the worst possible time, losing access for almost four full days and getting access back the very day before Apple launched the iPhone 4S, which is known to have spurred at least some to switch from the BlackBerry to the iPhone that same weekend.
RIM has been staging a minor comeback with BlackBerry 7 devices like the Bold 9900 but has been accused of complacency for much of the four years since the launch of the iPhone. Insiders have claimed that RIM staff thought that the iPhone was impossible. Publicly, RIM has at times been dismissive of touch-only phones and has repeatedly issued fiscal and product outlooks that proved overly optimistic, presuming that it would ship more phones or that the established BlackBerry market guaranteed a large base of PlayBook buyers, even without basics like native e-mail.