Cardboard Posted January 3, 2012 Share Posted January 3, 2012 Looking at free cash flows over the last 7 years or so is one reason that kept me away from RIMM (thank goodness! I made enough mistakes already in 2011). On the positive side, I was surprised to see accounting remaining very consistent over that time frame. Often, when you look at one annual report to the next, you see changes in net earnings due to "new" accounting rules. I saw none of that. What drove me to do this little study is the fact that Apple has a mountain of cash on its balance sheet while RIMM has very little. Is it a result of bad investments, low profitability, size? It seems to be a combination of all of these reasons and also it seems to me that RIMM was actually too early to the smartphone business to really harvest the rewards that are now present to an Apple. Of course, Apple had the Mac business, the IPod and ITunes which were very profitable, but I was still surprised as to how little cash RIMM had been able to accummulate over time despite its early dominance. It makes quite a difference on the defensiveness between the two stocks. So since fiscal 2005 (included) and to the end of the last quarter, RIMM has made a total of $4.25 billion in free cash flow (cash flow minus capex and acquisitions) vs $11.56 billion in net earnings. While the growth rate has been stellar, it came to a halt this fiscal year which now begs the question about all these past investments and that are continuing. If they stop investing, are earnings going to come crashing down? If these are more "maintenance" capex, then looking at earnings is a joke. Now, I noticed that people have mostly stopped looking at earnings and are now talking about patents, remaining cash on the balance sheet and the possibility of being acquired. That is quite a change in thesis over just a few months. While this liquidation value may be real if they don't end up losing money in the not too distant future, I question the reward. Are we talking about a double from here or not? If not, why even bother with RIMM? Cardboard Link to comment Share on other sites More sharing options...
Liberty Posted January 3, 2012 Share Posted January 3, 2012 http://www.theglobeandmail.com/news/technology/tech-news/rim-chops-all-playbook-prices-to-299/article2289840/ Link to comment Share on other sites More sharing options...
Cardboard Posted January 3, 2012 Share Posted January 3, 2012 "I would include "investment in intangible assets" in your FCF calculation. those expenditures are required by rimm just to stay competitive in the rapidly evolving mobile device industry." They were part of my numbers. Cardboard Link to comment Share on other sites More sharing options...
Smazz Posted January 3, 2012 Share Posted January 3, 2012 Rimm spent a hell of alot on aquisitions - as well as buybacks. Obviously the buy backs have proved bad timing but aquisitions such as QNX its hard to know. Haven't seen those revenue/earnings numbers extrapolated from the whole as they arent minority interest. Link to comment Share on other sites More sharing options...
Eric50 Posted January 4, 2012 Share Posted January 4, 2012 Great post on Web OS with an interesting ending on RIM: "Two companies are working on new mobile platforms scheduled to ship in 2012: Nokia's next-generation Windows phones, and RIM's BlackBerry 10. In both cases, the press has been focusing on their development schedules. The schedules are very important, of course. But the real questions to ask are: 1. Do they have the financial backing to complete versions 2 and 3, which will be needed to fix the inevitable flaws in version 1? and 2. Will the products do anything unique and compelling that will cause at least some customers to prefer them even if they have other drawbacks? I think Nokia can probably say yes to question 1; RIM is in doubt. And as far as I can tell, neither vendor has even started to address question 2. If they don't, in a year or two we'll probably be doing more post-mortems." http://mobileopportunity.blogspot.com/2012/01/why-web-os-really-failed-and-what-it.html Link to comment Share on other sites More sharing options...
Guest Hester Posted January 7, 2012 Share Posted January 7, 2012 I personally would not pay $5 for the stock. tech stocks that lose their mojo tend to occupy the real estate below $5 a share. "it's a cigar butt. i guess we stopped investing in cigar butts around here and have resorted to buying vrsk at 22 times last year's earnings. you can do very well as an investor buying into run of the mill or even bad businesses. it all depends on price. I don't get all these debates about sears kmart and best buy being bad stores. Everybody knows that. That's not even debatable yet every thread about the companies devolves into that discussion. They are cigar butts. If they were great businesses you'd be paying high multiples for them. There is a place for that. There is also Still a place for dumpster diving for cigar butts." Link to comment Share on other sites More sharing options...
sdev Posted January 12, 2012 Share Posted January 12, 2012 I really like the new Playbook 2.0. I don't care about the stock but the new features and integration with the phone are pretty cool! Link to comment Share on other sites More sharing options...
eclecticvalue Posted January 17, 2012 Share Posted January 17, 2012 It seems there is a potential acquirer http://www.bgr.com/2012/01/17/research-in-motion-pushing-for-sale-to-samsung/ I always thought if you buy into this company. The thesis would be that RIM will be acquired. There is a nice spread if you decide to initiate a position. Link to comment Share on other sites More sharing options...
nwoodman Posted January 23, 2012 Share Posted January 23, 2012 From the WSJ WATERLOO, Ontario—After 20 years together at the helm of Research In Motion Ltd., Jim Balsillie and Mike Lazaridis, the company's co-chief executives, said they planned to turn over the top job early Monday to a little-known company insider as part of a board and management shuffle. http://online.wsj.com/article/SB10001424052970204624204577177184275959856.html "RIM also appointed a new board member, Prem Watsa, chief executive of Fairfax Financial Holdings Ltd., a Canadian investment firm and big RIM shareholder. In a separate interview, Mr. Watsa said there was no outside pressure from him for the two to go. Fairfax built up a significant stake in RIM recently because the firm believes in the long-term value of the company, he said." Link to comment Share on other sites More sharing options...
NormR Posted January 23, 2012 Share Posted January 23, 2012 We might get to see the RIM guy at the FFH dinner this year. ;D Link to comment Share on other sites More sharing options...
Liberty Posted January 23, 2012 Share Posted January 23, 2012 Interesting. Will be curious to see how the new guy does. This quote from the G&M isn't very reassuring: "Research In Motion Ltd.’s new chief executive officer says the company is doing everything right and does not need a change in strategy, and must instead focus on harnessing its talent to improve the BlackBerry and revive sales." http://www.theglobeandmail.com/report-on-business/at-research-in-motion-a-new-ceo-vows-to-silence-the-doomsayers/article2310968/ Link to comment Share on other sites More sharing options...
CONeal Posted January 23, 2012 Share Posted January 23, 2012 Mike L is going to be buying $50 million worth of shares on the open market. He must have some faith in the new guy and Blackberry's future. I like the guy already. In the longer term, Heins, previously one of RIM's chief operating officers, said he would push for more rigorous product development and place greater emphasis on executing on the company's marketing and development plans. "We need to get a bit more disciplined in our own processes," he said in a YouTube video posted by RIM. "We are a great, innovative but sometimes we innovate too much while we are building a product." (https://www.youtube.com/watch?v=QUFwhpcrCTw) Heins said RIM, which suffered a damaging outage of much of its network last year, has embarked on a global search for a chief marketing officer to improve advertising and other communication with consumers. Consumers now account for the majority of RIM's sales even though the BlackBerry built its reputation as a business tool. “It’s a fantastic growth story and it’s not coming to an end,” Mr. Heins said. “What you will see with me is rigour and flawless execution.” Also Mr. Wasta has a board seat now. Link to comment Share on other sites More sharing options...
Guest Hester Posted January 23, 2012 Share Posted January 23, 2012 In the longer term, Heins, previously one of RIM's chief operating officers, said he would push for more rigorous product development and place greater emphasis on executing on the company's marketing and development plans. "We need to get a bit more disciplined in our own processes," he said in a YouTube video posted by RIM. "We are a great, innovative but sometimes we innovate too much while we are building a product." (https://www.youtube.com/watch?v=QUFwhpcrCTw) Heins said RIM, which suffered a damaging outage of much of its network last year, has embarked on a global search for a chief marketing officer to improve advertising and other communication with consumers. Consumers now account for the majority of RIM's sales even though the BlackBerry built its reputation as a business tool. “It’s a fantastic growth story and it’s not coming to an end,” Mr. Heins said. “What you will see with me is rigour and flawless execution.” Also Mr. Wasta has a board seat now. I think the new CEO has even more arrogance and delusion than their past two CEO's. "Sometimes we innovate too much." Seriously? I can just see consumers saying, "Gee I was going to buy the Playbook but it's just way too innovative." Steve Jobs is rolling over in his grave, from laughter. I'm not surprised the stock is down. The market realizes they need a Steve Jobs, or some innovation and better new products, not a better marketing strategy. Link to comment Share on other sites More sharing options...
CONeal Posted January 23, 2012 Share Posted January 23, 2012 You can innovate to much my constantly changing and tweaking a product at the last minute, thus causing delays. This is what I think he ment by the statement. If the CEO executes like he says he will, it will be a large step forward for the company. Marketing is a big issue when you don't do any to begin with. If you don't communicate with customers, how will customers have demand for your product? Are you really going to let a billion dollar business rest in the hands of a bunch of kids at Best Buy or a cell carrier? I think its a great hire. Would rather have someone that has something to prove, then some hotshot know-it-all come in and make things even worse. Link to comment Share on other sites More sharing options...
Liberty Posted January 23, 2012 Share Posted January 23, 2012 I think its a great hire. Would rather have someone that has something to prove, then some hotshot know-it-all come in and make things even worse. Wasn't he the COO of RIM, though (unless I'm misremembering)? Seems like he was already in a position to do most of what he's now saying he's going to do. Link to comment Share on other sites More sharing options...
Guest Hester Posted January 23, 2012 Share Posted January 23, 2012 You can innovate to much my constantly changing and tweaking a product at the last minute, thus causing delays. This is what I think he ment by the statement. If the CEO executes like he says he will, it will be a large step forward for the company. Marketing is a big issue when you don't do any to begin with. If you don't communicate with customers, how will customers have demand for your product? Are you really going to let a billion dollar business rest in the hands of a bunch of kids at Best Buy or a cell carrier? I think its a great hire. Would rather have someone that has something to prove, then some hotshot know-it-all come in and make things even worse. Is it easier to market a hot pile of dog feces or a bar of gold? That is what it comes down to. Better products are easier to market. Loads of terrible products are hard to market. How many smartphones does RIMM have? Too many. Apple has one and it blows all RIMM's phones out of the water. Good innovation comes first with mobile tech products. The rest falls into place. RIMM's strategy is to keep polishing the turds, instead of trying to strike gold. And another thing about Hein's backround pre-RIMM that I haven't seen mentioned: His experience is working at Siemens-Mobile. They were a perpetually money losing subsidiary that was eventually sold to a Tiawanese company called BenQ. About a year after the acquisition BenQ filed for bankruptcy. Link to comment Share on other sites More sharing options...
Smazz Posted January 23, 2012 Share Posted January 23, 2012 Prem Watsa: Meet the man behind the RIM shakeup Link to comment Share on other sites More sharing options...
SharperDingaan Posted January 23, 2012 Share Posted January 23, 2012 Keep in mind that these kinds of time commitments tend to grow with time. Prem & his team may have the bandwidth today - but at some point he will have to choose between commitments. As JB did something similar, & essentially took his eye off the ball to the detriment of all ... the concern is understandable. That said we wish him the best of luck, & the strength to make the right decisions at the right time. SD Link to comment Share on other sites More sharing options...
Liberty Posted January 29, 2012 Share Posted January 29, 2012 http://www.theglobeandmail.com/globe-investor/tech-talent-turns-away-from-rim/article2318192/ This is one of the dangers for RIM now. Success for a high-tech company depends a lot on recruiting and keeping the best engineers/designers/programmers.. Link to comment Share on other sites More sharing options...
Liberty Posted February 7, 2012 Share Posted February 7, 2012 http://www.theglobeandmail.com/news/technology/mobile-technology/rims-enterprise-problem-halliburton-latest-to-switch-to-iphone/article2329313/ http://www.newyorker.com/talk/financial/2012/02/13/120213ta_talk_surowiecki Link to comment Share on other sites More sharing options...
racemize Posted February 12, 2012 Share Posted February 12, 2012 board member (Roger Martin) commenting on RIM: http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/the-lunch/roger-martin-defying-rims-critics/article2334739/page1/ Link to comment Share on other sites More sharing options...
Guest valueInv Posted February 12, 2012 Share Posted February 12, 2012 board member (Roger Martin) commenting on RIM: http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/the-lunch/roger-martin-defying-rims-critics/article2334739/page1/ This article represents everything that is wrong with RIM. Link to comment Share on other sites More sharing options...
PlanMaestro Posted February 12, 2012 Share Posted February 12, 2012 board member (Roger Martin) commenting on RIM: http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/the-lunch/roger-martin-defying-rims-critics/article2334739/page1/ They ask ‘Why can’t you be more like Apple?’ So we should go bankrupt and fire our founders and bring in a moron? - Roger Martin Link to comment Share on other sites More sharing options...
Ben Graham Posted February 21, 2012 Share Posted February 21, 2012 RIMM Investors, Prem Watsa is thinking ahead - he cracked the black berry code. Steve Jobs said he cracked the code while he was on a crackberry device like this one: This App reads bar codes & brings them to life! ;D edit: Truly putting Research in MOTION!!! Link to comment Share on other sites More sharing options...
Liberty Posted February 24, 2012 Share Posted February 24, 2012 http://www.theglobeandmail.com/news/technology/mobile-technology/sorry-blackberry-netflix-has-no-plans-to-support-playbook/article2348827/ Online and mail-order video company Netflix has no plans to bring its streaming service to Research In Motion’s PlayBook tablet. “We don’t have any current plans to support BlackBerry devices, including PlayBook,” the company said on Twitter late on Thursday in response to a query. Link to comment Share on other sites More sharing options...
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