If RIM Execs Don't Want Its Stock, Who Does?

By Dan Radovsky | More Articles
October 7, 2011 | Comments (8)

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When a company's own insiders won't buy its stock, what does that tell you? To me, it screams that they have lost faith, something that should make investors very wary.

That point certainly has been proved by the non-buying-actions of Research In Motion's (Nasdaq: RIMM ) top executives. None have reported buying RIM shares on the open market since 2010. Is it a coincidence then that its share price has fallen 60% since? Indeed, the only transactions they have made with RIM stock is to sell, at least 11 times in that time frame.

Given the problems that Research In Motion has had in keeping its customers from rushing off to the Apple (Nasdaq: AAPL ) iPhone and to smartphones that use Google's (Nasdaq: GOOG ) Android operating system, this does not inspire confidence.

Frankly, with RIM's price falling so much, it would seem like the perfect time for RIM insiders to pick up shares in their company at bargain prices. Executives from other companies have taken advantage of such opportunities. Dell (Nasdaq: DELL ) CEO Michael Dell saw his company's shares fall by more than half in 2008. What did he do? He bought shares.

But wait …
There's a wrinkle in this scenario. Something made RIM shares shoot up 18% on Wednesday, and it certainly wasn't euphoria over sovereign Greek debt. Could a takeover be brewing? That could be one reason there's been no executive buying lately. Insiders are barred from such action if takeover talks are going on.

The U.K.'s Independent newspaper reported yesterday rumors that Vodafone (Nasdaq: VOD ) could be "one of the potential aggressors" targeting RIM and that there were also "vague rumors" that RIM had asked "an investment bank to consider various strategic options."

Is there a bottom line here?
Those are just rumors, mind you. And I have to ask what another company -- especially a wireless carrier like Vodafone -- would see in the BlackBerry maker. Becoming a phone producer doesn't sound like a good fit.

RIM is still profitable, thanks to its longtime corporate customers, but its efforts to compete with the iPhone and the Android phones have been too little, too late. Unless it can come up with a killer reason why those clients should stick with the BlackBerry, RIM's future is murky. At least that's what Research In Motion executives are signaling to me.

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Fool contributor Dan Radovsky has no financial interest in the above-mentioned companies. The Motley Fool owns shares of Apple, Google, and Research In Motion. Motley Fool newsletter services have recommended buying shares of Dell, Apple, Vodafone Group, and Google and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Report this Comment On October 07, 2011, at 6:44 PM, InfoThatHelp wrote:

No one wants Rim.
Report this Comment On October 07, 2011, at 7:08 PM, seriously1000 wrote:

Public company executives have stringent regulations around the buying and selling of their company's stock.
If any exec has sold company X's shares within the past six months then they cannot buy company Xs shares without being forced to disgorge the profits to the company they work for. This means that they're essentially precluded from purchasing stock for six months +1 day from their last sale (whether that's a simple sale or the result of the exercise of stock options).
RIM execs may fully believe that the stock is a screaming deal, but have their hands tied for this very simple reason.
Report this Comment On October 07, 2011, at 7:42 PM, RandomMeaning wrote:

"RIM execs may fully believe that the stock is a screaming deal, but have their hands tied for this very simple reason."
Not buying it. The time period is over a year and I doubt they would all be trading at the same time. Also, they managed to sell 11 times. Seems they achieved what they wanted to, bailing out.
Report this Comment On October 07, 2011, at 9:00 PM, InfoThatHelp wrote:

Rim's ultra aggressive stock buyback program had suddenly died also since mid-February this year. Before February this year, the Rimm buyback program had spent over $2.9 Billion of hard earned Rimm investor money only to have suffered severe losses every time. Rim's late stage cancer-infested life has come to an end, it's all too obvious.
Report this Comment On October 08, 2011, at 11:48 AM, deemery wrote:

What if: MSFT bought RIMM???
Report this Comment On October 08, 2011, at 3:07 PM, InfoThatHelp wrote:

No one would buy the Rim company because Rim has no residual value whatsoever. No one would be foolish enough to acquire 17000 totally clueless and non-productive managers and employees. Rim faces three insurmountable death sentences: millions of unsellable Blackberry and Playbook inventories going back from vendors to Rim; irrepressible losses of business to increasingly vaunting competition; huge expenditures to operations, R&D, acquisitions, and a gargantuan payroll to a huge non-contributing workforce.
Report this Comment On October 08, 2011, at 3:17 PM, InfoThatHelp wrote:

Think, there are thousands of hamstrung vendors who have unsold Blackberrys and Playbooks on hand with absolutely no ways of being cleared from their inventories. These Blackberrys and Playbooks have nowhere to go. These vendors have no alternatives but to return these Blackberrys and Playbooks to Rim for credits. Now, these returns to Rim number in the hundreds of millions, not counting the huge number of defective Blackberrys and Playbooks which Rim must fix under warranty. Hundreds of millions of Blackberry and Playbook returns to Rim is going to drain Rim down severely, very likely killing Rim as Rim is trying to fight two fronts at the same time - old Blackberrys and the apparently stillborn QNX. Rim's business prospects were hopeless, now, Rim's business survival is hopeless, and there are no buyouts ahead.
Report this Comment On October 08, 2011, at 7:43 PM, MINNION wrote:

No one wants a Rimm phone or a playbook that is useless without the phone, not even for free.
The execs are smart enough ,they want to make money too . Why buy it here when you can get it for six bucks. Remember palm.

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