(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
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Tonight, RIMM disappointed traders and investors once again with its latest earnings report. This time, it was not an outright miss on overall earnings or revenue guidance. {snip}
Alas, RIMM built up enough expectations that they would deliver some outstanding news ahead of the Christmas selling season to make up for all the awful news earlier this year. The near 50% rally from the recent lows demonstrated some of the growing anticipation. The bottom line is that the massive number of shorts crowded into RIMM won the day once again.
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Conspicuously missing from the highlights, at least for me, is news of the company’s stock repurchase activity. {snip}…RIMM reports zilch on the line of the balance sheet for “Common shares repurchased.” {snip}
Putting it all together, I can understand why investors might get nervous seeing such massive expenditure for very uncertain returns. {snip} The upside (yes, there I go again looking for a silver lining!) in this news comes from the prospect of future repurchase activity. With the stock selling off sharply in the after hours by 19% and trading just above multi-year lows, RIMM might just feel the need to start drawing down on its repurchase authorization…unless, of course, management foresees even worse news coming and even cheaper opportunities ahead for buying back stock.
(RIMM trades reported on my twitter feed using the #120trade hashtag. Archive of RIMM posts available by clicking here).
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: long RIMM shares, calls, and puts