Following my previous article comparing recent financial results between Nokia and HTC
it would be useful to take a look at those of Research In Motion (RIM), the maker of the Blackberry, and whose share price has fallen 50% since their annual results were announced in February. In fact RIM’s share price is at a 4 year low point with press scepticism regarding their product roadmap and delays in introducing new products.
RIM’s 2011 annual report shows the following key data
Net Sales $19,907m
Gross Margin $8,825m
Operating Profit $4,636m
And here are some ratios with the numbers for Nokia and HTC shown for comparison.
Operating Profit Margin
(Nokia 11.3% HTC 15.5%)
Gross Profit Margin
(Nokia 30% HTC 30%)
Return on capital employed
(Nokia 10.5% HTC 59%)
Return on Shareholders fund
(Nokia 8.6% HTC 56%)
Sales Revenue to capital employed
(Nokia 2.15 HTC 3.73)
Sales Revenue per Employee
(Nokia $429k HTC $1.33m)
Price per earnings (17th June)
RIM’s ratios are significantly healthier than Nokia’s, and better in some cases than HTC. Yet they have the lowest price per earnings. I think this is a good example of how the stock market looks considerably forward in their valuation mentality. RIM is making good margins and return on investment, yet their share price is heavily discounted. The markets clearly don’t see a positive future based on RIM’s product line and the mobile phone competitive landscape RIM finds itself in. Even more bleaker than Nokia it seems.
I think there is also a strong North American bias here. RIM’s international sales doubled in 2010 whereas in North America their platform is viewed by some as having peaked and being under threat from Apple and Android devices.
RIM hasn’t paid a dividend in 3 years. So with earnings per share of over $6 and a share price of $26 at time of writing maybe it is time to change this policy and boost the share price this way.