RM now look like they're actually in trouble, so people sell shares.
It's a vicious circle. And one type of hostile takeover.
Originally Posted by Sir Wiki of Pedia.
it could be worse, they might get bought by capita!
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.
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.
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.
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.
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.