BB - BlackBerry

[WarrenWatsa]

RIMM at $7.52 in AH trading

Down 18%

[premfan]

dead money still needs more pain. Prem is too deep in wont let company die. Still watching on the sidelines.

[lessthaniv]

http://www.marketwatch.com/story/rim-swings-to-loss-delays-blackberry-10-launch-2012-06-28?siteid=yhoof2

 

 

[Uccmal]

Whoa, that is ugly.  What is ugliest is the apparent lack of a game plan.

[hyten1]

the only positive cash and equivalent increase $100mil

[CONeal]

With new management running the show still the same results.  Can't execute worth a damn!!! Even when the new guy stated upon his hire that is was one of his main focuses.

 

Looks like it will go back on the watch list.

 

 

[kevin4u2]

Question.

 

Isn't the RIM selling getting a little overblown? 

 

Some facts to consider.  Market Cap is now $4.1 billion after the latest stumble.  Net of Cash the company is selling for $1.9 billion.  They have no debt.  Two thirds of the loss in the quarter was a non cash goodwill impairment, net the loss was $0.37.  So they are basically treading water until the new phones come out, no cash burn. 

 

They just purchased Nortel patents for $770 million.  What is the total value of their patents? 

 

It seems to me this one is getting very temping.  When I look at the balance sheet you have to be able to realize at least $4.1 billion in value.  Thoughts?

[cwericb]

"What about the new Google Nexus 7 tablet that's going for the same $199 price?"

.

Perhaps not a fair comparison in that it has 8 GB vs 16 GB.  And to quote PC magazine... "Google has this habit of releasing a device, and once it sells out, never selling another one, this one looks a bit like a one-off for them."

 

As an eReader I use the Playbook daily with Kobo and it gets top marks from me in that category. I have had it for 3 weeks and like it better every day - it is very well made and for a couple of hundred bucks it is an amazingly capable devise. As far as this quest for apps is concerned, it does just about everything I want it to - and for $199.  So if it does what you want...

 

When the home PC first came out, I know people who were constantly buying more and more software - just because it was available. They never learned how to use most of it, and when they did they would only use it once, they just liked to brag that they had software that could do this and do that. If - and remember for $199 not $600 - if it will do what you want, what’s the problem?

 

 

 

[given2invest]

How come nobody has said the obvious yet?

 

That RIMM isn't making money at $200 for the Playbook. 

[PlanMaestro]

Exclusive: Microsoft tie-up, network sale among RIM options: sources

http://www.chicagotribune.com/business/sns-rt-us-rim-optionsbre85s04j-20120628,0,2951432.story

 

One of these options is for RIM to abandon its own operating system and adopt Microsoft's upcoming Windows 8. Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft's latest Windows operating system on its smartphones.

 

In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

 

The RIM board prefers to see through the efforts to develop the new BlackBerry 10 operating system, according to the sources.

 

Microsoft could also be interested in RIM's wireless patents, the sources said.

 

RIM and Microsoft declined to comment.

 

Another option for RIM would be to sell its proprietary network to a private equity firm or a technology company. The buyer could then open up RIM's network operating centers to other smartphone providers, allowing them to also provide highly secured emails and other services to companies and government agencies, the sources said.

 

In that scenario, however, RIM's device business is seen to have no future, they said, adding that private equity firms have been considering how to separate the hardware business from the network business.

 

RIM has in the past considered opening up its network to rivals, under a plan led by former co-CEO Jim Balsillie. That could offer RIM a way forward as demand for its BlackBerry phones faces fierce competition from Apple Inc's iPhone and Google Inc's Android phones.

 

 

[kevin4u2]

Exclusive: Microsoft tie-up, network sale among RIM options: sources

http://www.chicagotribune.com/business/sns-rt-us-rim-optionsbre85s04j-20120628,0,2951432.story

 

One of these options is for RIM to abandon its own operating system and adopt Microsoft's upcoming Windows 8. Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to strike a partnership similar to the one the software giant has with Nokia Oyj, the sources said. Under that partnership, Nokia will use Microsoft's latest Windows operating system on its smartphones.

 

In such a scenario, RIM could also look for Microsoft to buy a stake in the company and fund marketing and other expenses, the sources said. However, this option is not attractive to RIM because it would mean the end of the Waterloo, Ontario-based company's technology independence, they said.

 

The RIM board prefers to see through the efforts to develop the new BlackBerry 10 operating system, according to the sources.

 

Microsoft could also be interested in RIM's wireless patents, the sources said.

 

RIM and Microsoft declined to comment.

 

Another option for RIM would be to sell its proprietary network to a private equity firm or a technology company. The buyer could then open up RIM's network operating centers to other smartphone providers, allowing them to also provide highly secured emails and other services to companies and government agencies, the sources said.

 

In that scenario, however, RIM's device business is seen to have no future, they said, adding that private equity firms have been considering how to separate the hardware business from the network business.

 

RIM has in the past considered opening up its network to rivals, under a plan led by former co-CEO Jim Balsillie. That could offer RIM a way forward as demand for its BlackBerry phones faces fierce competition from Apple Inc's iPhone and Google Inc's Android phones.

 

Haven't they already opened up their network to other smartphones?  It's called Blackberry Mobile Fusion. 

[cwericb]

"How come nobody has said the obvious yet?

That RIMM isn't making money at $200 for the Playbook."

 

That's RIM's problem (unfortunately) and probably what makes the Playbook such a great buy. But so many people are married to the idea of criticizing RIM that they don't realize what a great buy this is for someone with $200 to spend on a tablet.  Also there is a lot of mis-information being circulated about the Playbook by people who don't realize that RIM substantially upgraded the operating system a few months ago.

 

[DCG]

"How come nobody has said the obvious yet?

That RIMM isn't making money at $200 for the Playbook."

 

That's RIM's problem (unfortunately) and probably what makes the Playbook such a great buy. But so many people are married to the idea of criticizing RIM that they don't realize what a great buy this is for someone with $200 to spend on a tablet.  Also there is a lot of mis-information being circulated about the Playbook by people who don't realize that RIM substantially upgraded the operating system a few months ago.

 

But is it better than android tablets at the same price?

[cwericb]

It is, as far as the ones that I have looked at. And remember this is the Playbook 2.  http://ca.blackberry.com/playbook-tablet/overview.html

[Liberty]

RIM has now lost 95% of its market value from its peak. I wouldn't want to be the guy who bought at the top and held all the way down thinking "it'll rebound any day now".

[A_Hamilton]

RIM has now lost 95% of its market value from its peak. I wouldn't want to be the guy who bought at the top and held all the way down thinking "it'll rebound any day now".

Fairfax caught ~80% of that. Any day now...

[Stone19]

I'm having Nortel flashbacks

[Grenville]

I'm a little surprised and a bit worried by Karsan's latest blog post on RIM's recent conference call. I have not listened to the call.

 

I own shares indirectly through my stake in FFH.

 

http://www.barelkarsan.com/2012/06/rim-just-not-forthcoming-enough.html

 

For example, one analyst asked for margin info on the company's services business so that it could be valued separately. That question was completely ignored...no acknowledgement, not even a "We don't disclose that for competitive reasons."

 

Other times, management would answer a different question than what it was asked. For example, when asked about operating cash flow for the current quarter, management's bewildering answer seemed to focus on the company's line of credit and its impending extension.

 

Once, Heins even refused to answer a question that is already public: What are the factors upon which you are compensated? Heins stated that this is between him the board, but as a public company, this is public information! In addition to a base salary, Heins is entitled to a bonus that is based on targets the firm has set for revenue, diluted EPS, and net subscriber additions, according to the company's information circular. So management would like to make private that which is already public?

 

The stock price trajectory is a very scary thing for a company that is trying to release a new OS and phones. As it continues to fall, engineers important to the release are probably leaving and others are I'm sure are getting discouraged.  Employees won't see the value in a company the way value investors do, they look to the stock price as an indicator of value...feeding a negative feedback cycle.

[premfan]

This situation reminds me of sears. I made a mistake in my thesis by buying sears in 2010 thinking ( hoping) it will turnaround with no tangible reason why. My thesis was there assets are worth more than the market cap. The situation turned out okay cause it turned into a trading stock for me. But my intention before buying was it being a long term investment.  I still have a core position in sears and now i can mentally label it a long term investment cause the steps have been made to make it a long term investment. The turnaround is finally in process and it should show in this years numbers ( positive roe and net income). 

 

Rim's current value should be accessed only in the value of its patents. Its going to take years for the business to turnaround. If it cant the company will be sold. Buying rim now is similar to buying sears in 2010. Rim is only a trading stock until signs show the business will turn. I prefer to buy into businesses where the turn has started to take place. This is what i have learned from my sears experience.

[Liberty]

I'm a little surprised and a bit worried by Karsan's latest blog post on RIM's recent conference call. I have not listened to the call.

 

 

For example, one analyst asked for margin info on the company's services business so that it could be valued separately. That question was completely ignored...no acknowledgement, not even a "We don't disclose that for competitive reasons."

 

Other times, management would answer a different question than what it was asked. For example, when asked about operating cash flow for the current quarter, management's bewildering answer seemed to focus on the company's line of credit and its impending extension.

 

Once, Heins even refused to answer a question that is already public: What are the factors upon which you are compensated? Heins stated that this is between him the board, but as a public company, this is public information! In addition to a base salary, Heins is entitled to a bonus that is based on targets the firm has set for revenue, diluted EPS, and net subscriber additions, according to the company's information circular. So management would like to make private that which is already public?

 

Wow, that truly makes them sound like a sinking ship. Reminds me of some of the MBIA conference calls that are mentioned in Confidence Game, the book about Bill Ackman's fight against that company.

[Guest valueInv]

RIM has now lost 95% of its market value from its peak. I wouldn't want to be the guy who bought at the top and held all the way down thinking "it'll rebound any day now".

Fairfax caught ~80% of that. Any day now...

Maybe they'll double their stake again ;)

[Liberty]

http://www.forbes.com/sites/ericsavitz/2012/06/29/rim-apparently-not-interested-in-switching-to-windows-phone/

[tooskinneejs]

Interesting mis-quote from the Forbes article:

 

"If you compare us with others, did we take the hard rod? Absolutely. Absolutely."

 

Yeah, that about sums up the current situation.

[txlaw]

Some thoughts.

 

The dumping of the stock is due to the delay in BB10.  Essentially, by pushing the roll-out to Q1 of next year, there is an even higher probability that the OS is DOA.  Not good since RIM appears to be betting the company on BB10.  Indeed, not only have they rejected overtures from AMZN and MSFT (including a recent proposal, apparently, by Steve Ballmer), but they continue to use cash flow to purchase intangible assets, presumably for BB10 development.

 

So it appears that they are absolutely determined to push out BB10.  It also appears that they will keep the hardware ops and remain vertically integrated for the mobile phone space.  However, they also seem to be trying to line up carriers and device manufacturers to license BB10 for low end phone devices (most likely, for use in emerging markets) and for non-phone devices.  The carrier relationships seem to be vital to their plans going forward, as evidenced by their hiring of the Verizon GC.

 

Here is a key question that one of the analysts asked on the CC:

It sounds that it will have to be BlackBerry 10, whatever it takes. So the question is: How do you bridge the gap between now and then? What can you do to protect your installed base outside of major price cuts so that you'll have a base to upgrade later?

 

Or the way I would put it: how will RIM keep the software and services revenue linked to the BB ecosystem from evaporating between now and when BB10 rolls out, especially in light of competition by MSFT, AAPL, and GOOG?  The response by Heins was that RIM will aggressively roll-out BB7 devices to bridge the gap.  And regarding enterprise, "we are still upgrading our enterprise customers towards BlackBerry 7, making good progress with this. I expect us to be successful in bridging this gap and in protecting our installed base for those measures."

 

Is this a realistic response?  I don't know.  If I'm an enterprise customer and I am switching to BYOD, or if I want to upgrade my users because they need the latest equipment, I'm not necessarily going to wait for RIM to get BB10 pushed out while these other OS providers are ready to go and already on multiple non-phone devices, even if that means dumping RIM's network services and software.  And if the BB7 roll-out is not able to keep RIM from burning cash, that could materially affect BB10 development because all sorts of partners (including carriers, content and service partners, and third party developers) could presume RIM dead and, therefore, BB10 DOA.

 

Therefore, these strategic advisors RIM has hired had better apprise RIM of the dire situation they are in and give them some good advice. 

 

For one thing, they could monetize their device management software business by selling to the likes of a DELL, HPQ, or IBM.  Another thing they might consider is selling a minority stake in their network to someone else and giving themselves the option to put the network to the minority holder if BB10 uptake does not seem to be spurred by having the proprietary network.  One thing to note is that I'm not sure that their network is going to be a competitive advantage over the long run because if it stays exclusive to BB users, alternatives spurred by the cash rich OS providers will surely pop up. 

 

Finally, RIM should reconsider its refusal to partner with some of the bigger fish for the BB10 platform.  Perhaps they should reconsider on AMZN.  Or maybe they could even be open to a carrier investment, since it looks like they are going to be a very carrier-friendly OS.  MSFT seems like a no go at this time if RIM is really intent on rolling out BB10, but apparently Ballmer is still interested. 

 

[prevalou]

http://finance.yahoo.com/news/apple-wins-2nd-us-sales-064340475.html

 

The value of patents will rise