- Analysts suggest RIM has $13 a share breakup value
- Shares lose 10 per cent after company warns of operational loss
Research In Motion shares are enduring another rough day on the stock market after the Canadian company announced it expects significant layoffs and an operating loss due to weak BlackBerry sales.
The shares were down about 10 per cent in pre-open trading about an hour before North American markets opened. When trading opened on the TSX, the shares lost almost $1 or seven per cent to change hands at $10.68.
RIM's shares ended official trading Tuesday at $11.48 in Toronto and $11.23 US on the Nasdaq.
Wedbush Securities analyst Scott Sutherland says his firm lowered its price target for RIM shares by $2 to $11.50 US because it appears there is minimal demand for RIM products ahead of the new BlackBerry 10 devices.
"While we believe the currently strategy could cause RIM to go the way of Palm, we see value in the parts and thus see risks to being overly negative at current levels," Sutherland says in a research note released Wednesday.
The research team at Macquarie Capital issued a report Wednesday suggesting the company could be worth $13 a share broken up. That includes up to $3 billion that could be raised from selling the company's portfolio of patents, and the $2.3 billion in cash that RIM has on-hand.
"To own RIM now, we think one has to believe in the asset value in a breakup or [merger and acquisition] scenario," Macquarie said. "We believe the chances of a reversal of fortune with BB10 are dwindling."
The Waterloo, Ont.-based smartphone maker also hired JP Morgan and RBC Securities to advise it of strategic options up to an including a full or partial sale of the company.
"The stock sell-off signals investors have given up hope and are running for the exits," technology analysts Carmi Levy said. "The fact that it's not a penny stock means there are still lot of people out there who are holding on hoping this restructuring will allow them to find some sort of value."
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There have been suggestions, including from some of RIM's shareholders, that RIM could separate operations that make the BlackBerry handhelds and PlayBook tablets from the operations responsible for networks and intellectual property.
"The potential for a sale here has never been greater," Levy says. "It's every clear that all options are on the table. This is as serious as it gets."
Another possibility would be a more focused approach on fewer product lines, with greater emphasis on the business and government sectors and less on consumer-oriented devices that compete with Apple, Samsung and others.
RIM chief executive Thorsten Heins said Tuesday that there will be an unspecified number of jobs cut as the company aims to cut $1 billion in costs.
Reports have suggested RIM will bring it's workforce down to as low as 11,000 employees worldwide by next year, down from more than 17,000 currently.