RIM: How Long Can Investors Hold Their Breath Waiting for 10?

NEW YORK (TheStreet) -- Research In Motion (RIMM) investors received a somewhat unsurprising, albeit painful press release stating the warehouse is bulging at the seams and inventory writedowns are expected to wipe out this quarter's profit.

In August of last year, I questioned if RIM would survive another year. RIM was trading near $26 a share. Comments received included "ridiculous" to "This is one of the best articles that fairly and objectively describes RIM's position and market space." At the time, I remained bearish despite the "attractive" price-to-earnings ratio.

I believed that Google's (GOOG) execution into the mobile space demonstrated near perfection and the overnight market-share penetration would erode RIM's ability to compete. As it turns out, Google ran laps around RIM, but Apple's (AAPL) iPhone delivered what high-end consumers wanted also.

Since then, Apple overtook RIM for smartphone sales even in Canada, Google's Android remains at second place, and Nokia (NOK) supported by Microsoft (MSFT) and left for dead by almost everyone, is making a comeback (Read Rocco Pendola's insightful bullish article about Nokia and Microsoft).

RIM's stock price reflects the opinion of a company losing its way. However, does RIM also present an opportunity? By December of 2011, with shares trading for less than half at $12-13 a share, I believed all the negative developments and failings of RIM were fully priced in. BlackBerry may not be popular and sexy with North American investors, but around the world sales remained respectable. I will get back to global sales, but let's take a look under the hood for valuations based on hard assets.

When co-CEOs Jim Balsillie and Mike Lazaridis finally stepped down (pushed while kicking and screaming may be closer to reality), at least RIM could place Thorsten Heins at the helm. Selling RIM would not be the first large tech company he successfully liquidated.

I imagine Heins asked for and received wide latitude from the board of directors to right the ship. Heins has a lot of RIM assets to sell and the current stock price may not reflect the true value.

RIM has no long-term debt (thank goodness), and holds enough cash to either stop the bleeding or negotiate a favorable sale. Using the last annual balance sheet and adjusting based on my valuations:

Cash/short term	$2.2 billion
Net A.R.	$2 billion
Inventory	$300 million
Other	$300 million
Total Current Assets	$4.8 billion
Long term Investments	$325 million
Plant & Equipment	$2 billion
Goodwill	$20 million
Intangibles	$2 billion
Total Assets	$9 billion
Liabilities	$4 billion
Stockholder equity	$5.2 billion

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