Evening Islander:
Not that this gives one a good argument regarding P/E ratios, it does address another handheld company whose devices may also be obsolete in two years... that is if neither company never produces newer models and I think that is very unlikely.
RIMM Shares Outstanding 71.530 M
HAND Shares Outstanding 126.937 M
(only 10.00M are in the market today. Includes 115,253,728 shares to be released from lock-up on Dec-17-00)
RIMM REV on 12ttm US$119.1M
HAND REV on 12ttm US$155.2M
RIMM Net Income US$4.9M
HAND Net Income negative (US$62.7M)
RIMM Gross Margin 40.7%
HAND Gross Margin 31.2%
RIMM EPS on 12ttm positive US$0.08
HAND EPS on 12ttm negative (US$0.46)
RIMM P/E 1,201.56 Based on Nov-01-00 closing of US$96.125
HAND P/E Negative EPS=Negative P/E Based on Nov-01-00 closing of US$71.8125
RIMM Market Value US$6.876 Million
HAND Market Value US$9.116 Billion
Now let's look at a company who's value was also questioned in it's early stages(for comparison purposes, I've used FYE share prices):
AOL began trading on the NASDAQ in 1992:
AOL FY1993
30-Jun-93
High $37.13 Low $35.50 Close $37.00 (Adj. Close Post Splits 0.2890625)
Total Revenues for FY1993(ending June 30): $51.98M
Weighted Average Shares Outstanding: 58.57M
Net Income: $1.38M
Net Income per common share diluted: $0.02
P/E Ratio: 1,850
corp.aol.com
RIMM began trading on the NASDAQ Feb 1999:
RIMM FY2000
29-Feb-00
High $160.75 Low $135 Close $135.25
Total Revenues for FY2000(ending Feb 29): $85.0M
Weighted Average Shares Outstanding: 70.0M
Net income: $10.50M
Net Income per common share diluted: $0.15
P/E Ratio: 901.67
rim.net
AOL in '97 had believers:
messages.yahoo.com
....and those who questioned AOL's value as well:
messages.yahoo.com
and AOL's worth (note: that $90 is now only $5.625 after splits):
messages.yahoo.com
...As of FYE, June 30, 2000, AOL had 6.9 billion in total revenues with a Net Income of 1.23 billion and 2.3 billion shares.
That's not to say they didn't have problems or professional opinions:
Eternity in A-O-Hell
zdnet.com
Today AOL has a P/E ratio of 108.33 (using FY2000 EPS $0.48 diluted) and yes RIMM, with it's recent quarter ending allowing a 12ttm of $0.08, now has a P/E ratio of 1,201. AOL has a 5 year growth rate of 50 and RIM's is around 100+ (last 5 yr actual growth rate was 135.4 and I expect to see the forcast for future growth rate upped at a later date). Growth rates are based on present day information without taking into consideration forward surprises. Both will continue to grow, at different paces.
If one had invested $10,000 (270.27shares) in AOL at the close of June 30, 1993 they would now have 34,594.56 shares (7 X 2:1 splits), worth $1,798,917.12 (based on AOL closing price today of $52.00). That is 17,889.92% in profit. I figure my original core shares, priced around C$6.00(US$3.92) will do just fine over the next few years... I watch for any change in RIM's fundamentals and will sell the core if they ever show signs that they've lost their advancements in the wireless data market (not just based on one quarter either), but until then they'll be held. As for other shares that I may or may not have, those are traded around the markets sentiment in order to take advantage of
the gains they allow me.
It is up to every individual to do the necessary research before they decide to invest in any company, as only they know their style of investing and their comfort level of risk/reward. It is also necessary for them to realize that they are responsible for those choices made.
Best of Investing
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