Research In Motion's Insane Rally Rolls On

Suddenly, tech rallies are all the rage.

The latest: Research In Motion (NASDAQ: BBRY  ) . Shares are up more than 21% over the past week on all sorts of bad news.

First and worst: Nokia (NYSE: NOK  ) is pursuing RIM for royalties due from using its designs for Wi-Fi radios in BlackBerry handsets. AllThingsD reports that could amount to $2 to $5 each on a thus-far indeterminate number of handsets.

Second, but also awful for how it continues a trend: The National Transportation Safety Board is switching to Apple's (NASDAQ: AAPL  ) iPhone ahead of the launch of the BlackBerry 10, an ambitious handset due in January that's supposed to reverse RIM's fortunes. Or at least stop the bleeding for a while.

NTSB officials don't seem to care. The agency will instead work with Verizon (NYSE: VZ  ) to replace existing handsets with the iPhone 5: "These Apple devices will replace the NTSB's existing BlackBerry devices, which have been failing both at inopportune times and at an unacceptable rate ... The NTSB requires effective, reliable and stable communication capabilities to carry-out its primary investigative mission and to ensure employee safety in remote locations."

How is RIM rallying with news like this? Do investors somehow see this as a value play?

By the numbers, it could be. RIM's 0.37 price-to-sales ratio reflects the awful truth that investors don't think a dollar of RIM sales is worth a dollar in market value. The stock also trades for less than the tangible assets identified on its books. A discount to liquidation value, in other words, which could explain the size and scope of the rally.

You might even say it's not all that different than the recent pop in Apple's shares after weeks of irrational selling.

But if that's your claim, realize that you're betting RIM can sell assets for what the company deems they're worth. Investors may take a very different view of what equals fair value, especially when we don't yet know if the BlackBerry 10 has the chops to live up to the hype coming from headquarters.

Do you believe the rally in Research In Motion's shares is justified? Why or why not? Please weigh in using the comments box below.

What the BlackBerry was, the iPhone is becoming -- and longtime Apple shareholders have been handsomely rewarded with over 1,000% gains as a result. But is Apple still a buy today? The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 28, 2012, at 10:19 PM, digitally404 wrote:

    NTSB has 400 employees. Not significant.

  • Report this Comment On November 29, 2012, at 1:26 AM, kramsigenak wrote:

    It's enterprise, and it's the NTSB. I think both rimm and Apple would argue that that has significance.

  • Report this Comment On November 29, 2012, at 8:05 AM, indybluff wrote:

    MM is trying to P&P. Big waterfall is waiting ahead very soon.

  • Report this Comment On November 29, 2012, at 8:42 AM, cbglobal wrote:

    You don't get it. NTSB people want a taxpayer paid iPhone for personal reasons. They need to make the switch before BB10 comes out, or they lose the excuse being used to switch and will have to get a BB10. Just more goodies if you work for Uncle Sam.

  • Report this Comment On November 29, 2012, at 8:52 AM, jelp2 wrote:

    The only ones that should ever go by the numbers are mathematicians and scientists. Analysts can review past numbers and make forward assumptions, mostly based on opinion. There are too many human factors involved to make a concise forward projection. Anyone that really follows RIM ( or any other company for that matter) as a consumers and not strictly by numbers can see the positive future outlook. Obviously if they didn't have the money to market it , that's definitely a downside and a negative forward projection is expected. For these other little things you mention in this article, its ridiculous. And as far as Apple becoming what RIM "was" , I agree to the respect that Apple has become as complacent as RIM did 4-5 years ago.

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