How about a bowl of blackberries for breakfast? Anyhow, terrible pun, but Research in Motion, the company behind the popular Blackberry communication device, is having a nice day. I do not own any shares of this stock. Currently Research in Motion (RIMM) is trading at $38.24 up $2.52 on the day or 7.05%. The stock is actually drifting lower this morning as the market drifts in the red.
According to money.cnn.com, RIMM "...is a designer, manufacturer and marketer of wireless solutions for the mobile communication market."
RIMM reported yesterday their second quarter results: Revenue for the quarter ending August 30, 2003, was $125.7 million up 20% from $104.5 million the PRIOR quarter (SEQUENTIALLY) and up 70% (!) from $73.4 million in the same quarter last year.
Net income for the quarter was $2.1 million or $.03 per share compared to a net loss of ($8.2) million or ($.11)/share the prior quarter. Unfortunately, the news report did not include the prior year's result.
Morningstar.com shows a beautiful growth in revenue from $20.9 million in 1998, $47.3 million in 1999, $85.0 million in 2000, $221.3 million in 2001, $294.1 million in 2002, and extrapolating the current quarter would get us to about $500 million (!) in 2003.
Unfortunately, the latest *'s on free cash flow are NOT as pretty: ($37) million in 2000, ($75) million in 2001, ($56) million in 2002, and no numbers in 2003. I expect that with this profitable quarter, the free cash flow has also improved but this is not a strength for this firm.
This company is FLUSH with cash with $644.6 million of cash and $92.8 million of other current assets compared to a mere $59.5 million of current liabilities, and $11.9 million of long-term liabilities. Certainly, we can wait awhile for the cash flow to improve, but would rather see this neutral or improving than continuing the present 'burn'.
This company has a market cap of $2.95 Billion, with a forward (!) p/e of 61.59, a PEG ratio of 4.38 and a price/sales of 7.05...this is NO BARGAIN. There are 77.37 million shares outstanding and 57.30 million of them that float. I am not alone in my skepticism of the price here as there are 7.82 million shares out short representing 13.66% of the float or 3.047 days of trading (as of 8/8/03).
This is a fabulous company. However, you will pay top dollar to purchase these shares. That doesn't mean the stock cannot go higher...and I am not going to start being a value investor just yet....but all things being considered try to buy the best growth at the most reasonable price....(GARP). I would like to see the cash flow turn profitable...and the earnings pick up to get us a bit better price.