BB - BlackBerry

[Parsad]

There's also that "little fact" that to this day 90% of computers in the world still have Windows as their OS.

I really don't see the analogy between RIMM and MSFT

 

I didn't say they were comparable.  What I was saying was that they have to continue to innovate to be competitive.  Microsoft had 90% of the computers running their operating system, so it will take years and years to kill that moat.  In the meantime, MSFT does everything they can to maintain that moat...Windows 8 on different platforms is an example...it will maintain the moat a while longer.  Whereas RIMM had nowhere near that type of market share, and their moat deteriorated very quickly.  Even if they continue to innovate, it will now be difficult to stop the tide, as so many users are switching at a faster and faster pace.

 

By the way, I'd say you are wrong about that number on Microsoft's operating system.  It is considerably less than 90% now.  Probably closer to 70%.  And it will take another decade to get that well below 40%.  Cheers!

[Guest valueInv]

There's also that "little fact" that to this day 90% of computers in the world still have Windows as their OS.

I really don't see the analogy between RIMM and MSFT

What I was saying was that they have to continue to innovate to be competitive. 

What company doesn't?

[Parsad]

There's also that "little fact" that to this day 90% of computers in the world still have Windows as their OS.

I really don't see the analogy between RIMM and MSFT

What I was saying was that they have to continue to innovate to be competitive. 

What company doesn't?

 

Is this a rhetorical question, or are you trying to goad me into something? 

 

Did Kodak do a good job of innovating?  What about Sears?  Or how about Yahoo?  Just because we breathe and walk on two legs, doesn't make us Michael Jordan! 

[Guest valueInv]

There's also that "little fact" that to this day 90% of computers in the world still have Windows as their OS.

I really don't see the analogy between RIMM and MSFT

What I was saying was that they have to continue to innovate to be competitive. 

What company doesn't?

 

Is this a rhetorical question, or are you trying to goad me into something? 

 

Did Kodak do a good job of innovating?  What about Sears?  Or how about Yahoo?  Just because we breathe and walk on two legs, doesn't make us Michael Jordan!

 

I'm trying to make a point. Today, every company has to be innovative to compete.  The technology industry is trying to subsume every other industry there is - advertising, payments, pawn shops, education, entertainment, investing, etc. Even if competition within the industry does not make innovation

a necessity, the tech industry sooner or later will. To me, saying innovation is necessary to compete is like saying managing cash flow cycles is necessary to survive. I'll address the companies you mentioned:

 

Kodak : Was very innovative. But their R&D efforts along the lines of film and chemicals. Their labs could not compete with a completely different  disruptive innovation i.e. digital cameras. In fact, they actually created the first digital camera:

http://www.msnbc.msn.com/id/9261340/ns/technology_and_science-tech_and_gadgets/t/digital-camera-turns-sort/#.T25nL-zC5e4

 

They just didn't commercialize it or believe in it. Innovation was not their problem.

 

Sears: Can't comment on this one. I don't know enough about it.

 

Yahoo: Again wasn't an innovation problem. They just didn't believe in search:

http://www.paulgraham.com/yahoo.html

 

Its the same with RIM. Being the incumbent smartphone leader, they would've realized the value of the iPhone when they saw it. They could've started development early on and would've at least had a fighting chance. Instead they dismissed it, saying it consumed too much power, wasn't secure enough, etc and didn't bother developing an alternative until it was too late. Even when they did eventually develop one, they did a half-assed job. Now, they're giving it another shot.

 

Saying that the tech industry is a race where the most innovative company wins is a gross oversimplification. In fact, the opposite is true for most of the time. Historically, it is the fast follower that has reaped the benefits. Microsoft, Google(non-search), Intel, etc weren't the most innovative companies in every product line. They won marketshare because of their business practices, not their innovation. 

 

[Parsad]

Its the same with RIM. Being the incumbent smartphone leader, they would've realized the value of the iPhone when they saw it. They could've started development early on and would've at least had a fighting chance. Instead they dismissed it, saying it consumed too much power, wasn't secure enough, etc and didn't bother developing an alternative until it was too late. Even when they did eventually develop one, they did a half-assed job. Now, they're giving it another shot.

 

I agree with you.

 

Saying that the tech industry is a race where the most innovative company wins is a gross oversimplification. In fact, the opposite is true for most of the time. Historically, it is the fast follower that has reaped the benefits. Microsoft, Google(non-search), Intel, etc weren't the most innovative companies in every product line. They won marketshare because of their business practices, not their innovation.

 

Agree and disagree with you here.  Google didn't develop search, but they made it superior.  Even their non-search products are game changers...software in the cloud, rather than installed on the computer...gmail, word, picassa, etc...and by far the biggest is GoogleAds. Microsoft and Intel both had huge market share and it is simply very difficult to dislodge them...whether they innovate, follow or stand still.  Even in that respect, Google search and GoogleAds has the same sort of moat. 

 

When I was discussing RIMM and using the word innovate, it was in terms of companies that don't have huge, near monopolistic moats.  Kodak had a moat, but in film...not digital media.  Sears had a moat in brick and mortar retail...but not online retail.  Game changing, disruptive innovation killed them.  That's why I was saying that RIMM needed a game changer.  Their moat is disintegrating quickly and just shoring it up won't do.  They need something completely different to survive.  Cheers!

[prevalou]

I think Apple need something completly different to survive too ( like they made the iPod , the iPhone and the IPad)

[BargainValueHunter]

Anyone care to take a guess at RIMM's numbers being released today?

 

http://www.globalnews.ca/analysts+keeping+expectations+low+for+rims+q4+results/6442610332/story.html

 

RIM releases its fourth-quarter earnings after markets close at 4 p.m. ET with new CEO Thorsten Heins delivering the financial report, his first as the chief executive of the company based in Waterloo, Ont.

 

Heins took over from co-CEOs Jim Balsillie and Mike Lazaridis in late January amid shareholder unrest over the company's weak stock price and strategic direction.

[tombgrt]

Tilson thinks it's a short, NOK as well. Not that I listen to the guy after the Netflix fiasco, he can rationalize it all he wants. Funny he thinks it is a short after it dropped so much. Not sure why he would take such a difficult short position with more obvious plays out there. He should probably focus less on technology sector, too much of a gamble to short aggressive.

 

Nokia (NOK), Barnes & Noble (BKS): terminal value zero, thinking of adding Research in Motion (RIMM) to the list, waiting for a bounce. Tricky with a lot of cash, doesn’t expect NOK and RIMM to survive in Android business. Bigger, better player can go under- Borders Books failed, BKS will be next. Any time you’ve seen a stock that has moved a lot, and you say, “I missed it.” Instead, stop and do your work, pretend like it never was at a price before. Only thing that matters is where the stock is today and where it’s likely to be in the future.

 

Read more: http://www.marketfolly.com/2012/03/longshort-equity-investing-panel.html#ixzz1qWFstPPq

 

http://www.marketfolly.com/2012/03/longshort-equity-investing-panel.html

[Liberty]

http://business.financialpost.com/2012/03/28/rim-slashes-blackberry-prices-in-india/

[DCG]

RIM Misses earnings estimates and Several More Executives Resign:

http://www.cnbc.com/id/46884165

http://blogs.barrons.com/techtraderdaily/2012/03/29/rimm-halted-ahead-of-fyq4/?mod=BOLBlog

 

Net income down over 50% from a year ago. Revenue down by 24%.

 

Jim Balsillie, former Co-CEO of RIM, has resigned as a director.

 

Along with Balsillie, RIM announced CTO David Yach is stepping down after 13 years at the company, as is 4-year veteran Jim Rowan, COO. RIM is currently seeking candidates for COO, it said.

 

[Parsad]

A couple of things look like Prem's influence...no more guidance, single COO, house-cleaning...I'm sure everyone will be asking questions at the dinner and AGM.  Cheers!

[Parsad]

Actually some of the comments they are making are better than what they were doing as well:

 

http://finance.yahoo.com/news/blackberry-maker-cede-most-consumer-212323407.html

 

"We plan to refocus on the enterprise business and capitalize on our leading position in this segment," Heins said. "We believe that BlackBerry cannot succeed if we tried to be everybody's darling and all things to all people. Therefore, we plan to build on our strength."

 

I think this is a hell of a lot smarter than what they were doing.  Still no guarantees that they can turn it around at this point, but it's a start.  Cheers!

[PlanMaestro]

A couple of things look like Prem's influence...no more guidance, single COO, house-cleaning...I'm sure everyone will be asking questions at the dinner and AGM.  Cheers!

 

Please share Parsad! RIM has its strengths, it just requires some pragmatism and diminished expectations

[tombgrt]

Following up on Tilson's view, here is Einhorn's (+1 for the latter):

 

14. Research in Motion (RIMM): has problems, but could be an interesting long (Einhorn established a new long position in RIMM in Q4 2011). Critical mass for app developers, and they may have missed it. Has a good B/S, trades at a low multiple, and has some IP that a lot of tech companies would want. Trades on a run-off basis, it’s a reasonable speculation that it won’t melt. Not a fantastic investment, but the price has come down so far, that it makes no sense to short it.

 

Read more: http://www.marketfolly.com/2012/03/david-einhorns-extensive-q-session-from.html#ixzz1qYIDi86i

 

 

[DCG]

house-cleaning

 

I could be wrong, but my initial view of all these top execs leaving is that they're bailing from a sinking ship.

[Guest Hester]

A couple of things look like Prem's influence...no more guidance, single COO, house-cleaning...I'm sure everyone will be asking questions at the dinner and AGM.  Cheers!

 

The problem is none of those things really matter in any signifant way in RIMM's case. The one thing they need, new products/innovation, is the one thing Prem cannot help them with.

[Liberty]

Lots of articles about RIM dying are popping up on tech sites:

 

http://www.techi.com/2012/03/rim-isnt-restructuring-its-dying/

 

http://www.bgr.com/2012/03/30/research-in-motion-is-dead/

 

Not saying they know something we don't, just putting them here in case some here haven't seen them.. I guess it could be a contrary indicator, but I certainly wouldn't put even a penny on that.

[txlaw]

I just listened to the call.  I have to say, I like what I am hearing.

 

I am even more confident now that capital will be managed so that it does not go down the drain.  Heins has finally acknowledged the deep problems that RIM has, and I like that he will consider all options to preserve and maximize value for shareholders, including focusing on software/services, licensing of IPR, and possibly even selling the company.

 

Still trades below runoff/break-up value IMO, and I hope that IV will grow from here.  It will be interesting to see what partnerships RIM is currently working on.  I'd love to see Amazon and RIM team up in a stronger way.  I'd also love to see them spin the hardware ops to a strategic partner. 

[jjsto]

I'll throw in another article (chart):

 

http://www.macrumors.com/2012/03/29/android-and-iphone-own-nearly-the-entire-u-s-smartphone-market/

 

I dont have a stake in this.  I do know that where I live, in Argentina, Blackberry seems like the most popular smart-phone.  They just banned iPhone imports, and there is a huge tax on imported phones.  I heard Blackberry is about to open a factory down there, and if they do, my feeling is it will be quite successful.  That being said, it is only a market of 40 million people.

[DCG]

So, wasn't Prem's main thesis on this company that management that was able to take the company from a $0 company to a $10 Billion company could figure out how to fix the company's problems? Now most of that management team is gone. What's his thesis now?

[racemize]

So, wasn't Prem's main thesis on this company that management that was able to take the company from a $0 company to a $10 Billion company could figure out how to fix the company's problems? Now most of that management team is gone. What's his thesis now?

 

I believe so, but at this point, he knows there is trouble, so the thesis has got to evolve.  Even if he doesn't get to break even on his average price, he can still do some good wrt keeping the company going.

[DCG]

I believe so, but at this point, he knows there is trouble, so the thesis has got to evolve.  Even if he doesn't get to break even on his average price, he can still do some good wrt keeping the company going.

 

I think he's trying to take steps to try to recover some losses from a very poor investment decision, but at what point do you just cut your losses though? I guess my concern is whether he will end up having to put too much time into trying to save RIMM where it will detract from his focus on Fairfax.

[jjsto]

Actually found a "not negative" article on Blackberry:

 

http://www.bloomberg.com/news/2012-04-02/blackberry-fans-cite-reliability-for-thumbs-down-to-competition.html

[txlaw]

Very interesting.

 

http://www.reuters.com/article/2012/04/02/us-rim-idUSBRE82S1DD20120402

 

The board, and in particular its newest member, value investor Prem Watsa, preferred to give Heins some time to turn things around, according to the source, who spoke on condition of anonymity because the discussion were private. "Prem Watsa is really very influential there now," the source said. "They want to give (Heins) the opportunity to keep his head down and focus on the business."

 

Watsa, known for big bets on what he considers downtrodden stocks, joined RIM's board in January after building a stake he has since doubled, making his Fairfax Financial Holdings the second-largest RIM investor behind Primecap Management Co.

[DCG]

I still don't really like Prem being on their board. It seems like he got involved in a business he doesn't really understand and is trying to invoke change to recover his losses. Does he really have time to be dealing with trying to reshape RIM?