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General Chat Thread, Trouble at RM? in General; Originally Posted by MK-2 No no, just someone who despises this particular company and the way they operate I'll second ...
  1. #16
    EdWhittaker's Avatar
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    Quote Originally Posted by MK-2 View Post
    No no, just someone who despises this particular company and the way they operate
    I'll second that, too!

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    X-13's Avatar
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    Quote Originally Posted by EdWhittaker View Post
    I don't think it rumour. Anyway, have a look at RM's own website RM plc Share Price
    The share price drops because people are selling shares. They're selling shares because of the rumours they're in trouble.

    RM now look like they're actually in trouble, so people sell shares.

    It's a vicious circle. And one type of hostile takeover.


    Quote Originally Posted by Sir Wiki of Pedia.
    A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private) - at a dramatically lower price - the takeover artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent tens of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the fire sale that can sometimes be in the hundreds of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives). This is just one example of some of the principal-agent / perverse incentive issues involved with takeovers.

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    it could be worse, they might get bought by capita!

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    EdWhittaker's Avatar
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    RM is not selling off its non-core assets because the share price is low, it's selling them them off because because they have lost a lot of income and future business when the plug was pulled on BSF (and don't get me started on THAT gravy train!). The article I linked to above is reporting the fact (not rumour) that RM was selling off non-core assets.

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    X-13's Avatar
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    Quote Originally Posted by EdWhittaker View Post
    RM is not selling off its non-core assets because the share price is low, it's selling them them off because because they have lost a lot of income and future business when the plug was pulled on BSF (and don't get me started on THAT gravy train!). The article I linked to above is reporting the fact (not rumour) that RM was selling off non-core assets.
    Exactly.

    They're selling off the bits they don't want/need. It doesn't mean they're in trouble.

    But people claim that's what it means, which worries some shareholders enought for them to sell shares, which drops the price, which gets RM into trouble.

  6. #21

    MK-2's Avatar
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    Quote Originally Posted by X-13 View Post
    Exactly.

    They're selling off the bits they don't want/need. It doesn't mean they're in trouble.

    But people claim that's what it means, which worries some shareholders enought for them to sell shares, which drops the price, which gets RM into trouble.
    Exactly......


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    EdWhittaker's Avatar
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    Quote Originally Posted by X-13 View Post
    Exactly.

    They're selling off the bits they don't want/need. It doesn't mean they're in trouble.

    But people claim that's what it means, which worries some shareholders enought for them to sell shares, which drops the price, which gets RM into trouble.
    RM is a large, multinational company. Over 60% of its shares are held by institutional shareholders like Aviva, Standard Life, Legal and General, Schroder Investment Management etc. The idea that these hard-headed fund managers can have their investment decisions based on anything other than hard facts is fanciful. RM themselves have issued a profits warning - fact. RM have disposed of assets - fact. RM have had a board reshuffle and taken on Andrew Adonis as non-exec - fact. Companies absolutely do not issue profit warning lightly. The share price has fallen because of these facts, not because of rumour. I rest my case, m'lud.

  8. #23

    localzuk's Avatar
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    Like many companies in the last 10 years, RM 'diversified' too much. They sort of lost sight of what they do best and tried to be everything to everyone. They need to trim the fat, and get back to their core business.

    Much like Motorola.

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    Quote Originally Posted by localzuk View Post
    Like many companies in the last 10 years, RM 'diversified' too much. They sort of lost sight of what they do best and tried to be everything to everyone. They need to trim the fat, and get back to their core business.

    Much like Motorola.
    I disagree to a point look at AOL! RM had its time, its holding onto legacy schools I d guess it hasnt took on many new schools for a while plus with the BSF starting a year before elections they took a massive gamble

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    localzuk's Avatar
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    Quote Originally Posted by irsprint84 View Post
    I disagree to a point look at AOL! RM had its time, its holding onto legacy schools I d guess it hasnt took on many new schools for a while plus with the BSF starting a year before elections they took a massive gamble
    RM are an IT solutions provider. They took on cashless caterers, software makers, low end device/software sellers (TTS) etc... All of these are not core to their business.

    RM are not just a 'CC3/CC4' provider, and never were really.

    So, their business should be back to getting schools to do their IT as a whole - ie. cabling, AV, machines, servers, licensing. Extra bits like those peripheral companies are overdiversified. That service is what many schools, especially primaries, want.

    AOL didn't modernise at all, they stuck to exactly what they'd always done, but they are a very different company in a very different market.

    I don't say diversifying in itself is bad, but doing too much of it can water down the company's direction and reduce overall performance from the different areas of the business. It really depends on what the core business is and what realistic growth you can expect.

    Look at BT, they got rid of BT Cellnet/O2 just as the phone market got competitive. So, they did the opposite to what they should have IMO, especially in light of the fact that the landline market was heading towards liberalisation at the time and therefore potential growth and profits in that area were forecast to stagnate somewhat.

  11. #26

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    Many large companies invested heavily (e.g. bought up the smaller agile companies to get control of the right people/products) for BSF.

    With the sudden termination of the project these assets become under utilised and continue to incur costs to the organisation. If the company cannot find a new revenue stream or market in which to better utilise these assets then they become unwelcome liabilities. Liabilities that negatively impact the bottom line and shareholder value.

    Divesting themselves of the assets and concentrating on areas of core expertise is one very common approach to this sort of shift in the business operating environment. In this case everybody is in trouble: BSF was huge. RM could be sunk if they didn't respond quickly and decisively to the new education landscape. So they have. The share price reflects the fact that at present the education IT market is no longer an investment priority for government. Several other BSF providers are wholey owned subsiduaries of multinationals and thus not traded and so the impact of BSFs termination on their share value is obscured.

    That said Gove et al has been making some positive noises of late, and I wouldn't be at all suprised if all Edu IT share prices respond to his opening speach at BETT.

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    Quote Originally Posted by EdWhittaker View Post
    RM is a large, multinational company. Over 60% of its shares are held by institutional shareholders like Aviva, Standard Life, Legal and General, Schroder Investment Management etc. The idea that these hard-headed fund managers can have their investment decisions based on anything other than hard facts is fanciful. RM themselves have issued a profits warning - fact. RM have disposed of assets - fact. RM have had a board reshuffle and taken on Andrew Adonis as non-exec - fact. Companies absolutely do not issue profit warning lightly. The share price has fallen because of these facts, not because of rumour. I rest my case, m'lud.
    I have to disagree with you that institutional shareholders base anything on hard facts. Their traders are moved by sentiment as much as anyone's.

    That said, RM's share price is tanking because its primary source of revenue is being squeezed. Like crapita, they've got very wealthy leaching off the taxpayer, and I can't say that I'm sorry that they're suffering. I do hope they go under. They're a huge parasite.

  13. #28

    localzuk's Avatar
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    Quote Originally Posted by Flatpackhamster View Post
    I have to disagree with you that institutional shareholders base anything on hard facts. Their traders are moved by sentiment as much as anyone's.

    That said, RM's share price is tanking because its primary source of revenue is being squeezed. Like crapita, they've got very wealthy leaching off the taxpayer, and I can't say that I'm sorry that they're suffering. I do hope they go under. They're a huge parasite.
    I hope they don't. They employ 2700 people.

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    Quote Originally Posted by localzuk View Post
    I hope they don't. They employ 2700 people.
    How many other companies are being squeezed out of the marketplace by their monopolistic behaviour, and how many people would those companies employ?

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    localzuk's Avatar
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    Quote Originally Posted by Flatpackhamster View Post
    How many other companies are being squeezed out of the marketplace by their monopolistic behaviour, and how many people would those companies employ?
    Monopolistic? How so? Might need some evidence to back up such a harsh claim.

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