Rim Semiconductor Company (fka RSMI)

[destiny12903]

With the introduction of the Reuters analyst, now things really get interesting! Reuters is the world’s premier independent news agency! It is respected the world over for its unbiased, timely, accurate reporting. It does however derive 90% of its revenues reporting on the financial markets. It is the financial professionals #1 source of news and information. http://about.reuters.com/home/

Our once little unknown stock, that some claimed had no real product, has now been legitimized to the world by its premier news agency. What was once a relatively unknown entity is now been placed into the big leagues with the likes of: Conexant, Alcatel, PMC-Sierra, Texas Instruments, Motorola, Metalink, and Broadcom. (See the Peer Comparison section of the Reuters analysis)

So lets have some fun… For the skeptics and those with self-serving agendas its true, Rim has yet to market its product, yadda yadda, yadda….. But just for sake of argument, lets assume that since the most respected news agency in the stock world is convinced of the legitimacy of the product, the product does exist and performs as advertised.

With that said, we should be in for quite a ride! Again, look at the Peer Comparison section of the Reuters analysis. There you will see how Rim compares with other companies in the Communications Equipment industry. Then go over to the, “P/E, Based on Current Year Estimates” portion of that analysis. Notice all of Rim’s competitors, and most are household names, are trading at P/E ratios between 16.6 (Motorola) and 33.0 (Broadcom).

So how does that fair for Rim? Lets forecast a little.
Suppose within the next six months Rim announces it projection for 1st year earnings. What will they be? 50 million, a 100 million? I don’t know. But based on reported “extraordinarily” high market interest. I don’t think a 1st year projection of $50-100 million is out of the question.

We’ll use the conservative P/E estimate of 16. Projected earnings of $100 million yield a market cap of 1.6 billion. This divided by roughly 250 million shares outstanding equals a share price of around $6.40.

The stock price would be half of that, $3.20 with projected 1st year earnings of $50 million.

Obviously, if Rim trades at higher multiples, like toward Broadcom levels, these estimates are very conservative. Also if projected earning are considerably higher or lower, again we could expect the stock price to act accordingly.

But regardless, even with the huge upswings we’ve seen in the last 3 days, Rim’s current stock price is considered bargain basement to the rest of the world.

So again to answer the question as to why the stock is suddenly hitting all-time highs in trading volume, it’s simply, Reuters has just given it its coming out party. Hello world, let me introduce you to Rim Semiconductor! They are the new kids on the block and they’ve got some baaaaad toys!