Net income in the nine months to November was just over half that of the same
period a year earlier. The stock price is off by nearly 80 per cent this
year. This reflects the expectation that, as bad as things are, they can get
worse. Recent trends suggest they will.
Falling volumes of handset sales meant that gross margins in the three months
to November were more than a third lower than a year earlier, while high R&D
and marketing costs continued to pinch the bottom line.
RIM’s management needs to provide clearer signals on the ways in which the
company is changing, if it wants to see any improvement in the stock price.
Growth markets
First, investors deserve to know more about the economics of RIM’s exposures
in emerging markets. In the developed world, and particularly in the US, the
company’s business gives every appearance of being in permanent decline. But
sales outside North America and the UK were up by over 60 per cent in the
six months to the end of August.
Knowing what unit volumes, prices and margins RIM is realising in its growth
markets is essential to get a sense of what the company will look like a few
years down the road.
No disclosure
Yet management discloses nothing. It also says little about whether a more
emerging market-oriented company will continue to generate about a fifth of
its revenues from services such as web browsing and email. And then there is
the balance sheet.
Cash and short-term investments on hand have fallen by almost a third since
February, to $1.3bn; much of the money has gone toward buying intangible
assets.
Management needs to start giving better guidance on when hard financial ratios
stop deteriorating. If investors are not given more information, they can be
forgiven for assuming the worst.
Dit artikel is oorspronkelijk verschenen op z24.nl