RIM and Nortel: No comparison

Article Excerpt

RESEARCH IN MOTION INC. $27 (Toronto symbol RIM; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 524.1 million; Market cap: $14.2 billion; Price-to-sales ratio: 0.7; No dividends paid; TSINetwork Rating: Above Average; www.rim.com) has dropped by 50% since March 2011, and now trades at a low 5 times earnings. That’s mainly because the company has run into delays in launching new smartphones. As a result, RIM is losing market share, particularly in the consumer market, to the Apple iPhone and smartphones powered by Google’s Android operating system. RIM’s recent problems have drawn comparisons with one-time tech giant Nortel Networks, which went bankrupt in 2009. However, Nortel bought a number of telecom companies during the Internet boom of the early 2000s, when telecom was headed for a deep decline. In contrast, the smartphone industry continues to grow rapidly, particularly overseas. RIM now has 68 million users worldwide, up 24% from 55 million users in November 2010. That’s particularly good news…