Shares of BlackBerry maker Research In Motion
The stock trades for a startlingly low 3.2 times trailing earnings and below book value. By comparison, Motorola Mobility
In short, Research In Motion is priced for absolute disaster. The only way these prices are fair is if you see the BlackBerry platform dying very soon. I don't think that's unfair.
Wall Street voices
Noted stockpicker Laszlo Birinyi doesn't think so. He told CNBC that RIM surely has a future. "It's been beaten down," he said. "It's a brand, it's got fans, and it's got its products." The stock jumped on these rare positive comments.
Bernstein has a less rosy view. The firm just upgraded RIM from sell to hold, noting that shareholder activism might lead to a wholesale management change or even a buyout. But if Bernstein's analysts truly believed in a takeover, you'd think they would have more than a simple hold rating on the stock. The odds for a positive outcome must look pretty slim even to these quasi-bulls.
What's wrong, dear?
So why am I not wearing my rose-tinted lenses and siding with Birinyi? Because this company has already missed the smartphone boat, and co-leaders Lazaridis and Balsillie are too proud to admit defeat. Deep and difficult changes are in order, but they simply won't happen.
The not-so-dynamic duo sits atop what was once a terrific business with a serious moat 10 years ago. Secure business-class communications in your pocket, at a time when the best Palm alternatives looked like Fisher-Price toys? No wonder they called it CrackBerry.
But that was then and this is now. Apple changed the mobile game with the first iPhone, then Google's Android solution piled on. Nowadays, even Microsoft
BlackBerrys don't really have special powers anymore, and RIM is finally admitting as much by presenting management services for iPhones and Androids at long last. The competition caught up, then left the old leaders far behind.
For years, management promised not to go all consumer-grade on its loyal business-class fans. Cameras and music players didn't belong in a serious tool, you know. That tune didn't change until it was far too late. A good hockey player skates to where the puck is. Wayne Gretzky plays where the puck is going to be. Surely huge hockey fan Jim Balsillie understands this important distinction, but he's managing RIM the other way around.
All things considered, I wouldn't pay scrap value for BlackBerry phones or for PlayBook tablets that only sell when discounted so far that all profit has evaporated.
As for a takeout play, I just don't see it happening. The buyer would get a decidedly unhip brand with increasingly unremarkable technology. The only thing of any value in this mess anymore is the network management aspect -- which accounts for less than 25% of RIM's business.
I'm afraid that RIM is much, much closer to being the second coming of Palm than the next Apple. Hewlett-Packard
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Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Microsoft. We have also recommended creating a bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.