BB - BlackBerry

[Smazz]

Shoot, if these guys are going to come out with more

"anonymous employee" letters at least give them juicy names like Deepthroat or Spyrodroid or something.....

 

They obviously havent read the handbook on "how to get alot of publicity by dropping anonymous employee letters".

If they are execs they should most likely working in Waterloo.. what? no Globe and Mail? Not even that Fox knock off the SUN? :P

[Uccmal]

peterburke,

 

Anyone who knows the history of that Patent case that Rimm settled knows that it started as a tiny patent troll case of a few million, and grew as RIM grew, much like the Winklevoss case.  RIM settled it for one reason and one reason only, to get it behind them, the same reason Facebook settled the weak case against them.  I chalk it up to the inexperience of the RIM CEOs at the time. 

 

None of us on this board knows whats in the Nortel patent set and whether they will save each of the companies money in the medium/long run.  Keep in mind that everyone wanted that patent set.  The winners were MSFT, Sony, RIM etc.

 

Funny thing right now is that AAPL is taking a hit and alot of criticism too.  Unfortunately for AAPL investors the company is priced to perfection, unlike RIM which is priced as if its going out of business.

[DCG]

Unfortunately for AAPL investors the company is priced to perfection

 

WHAT??? Are you being sarcastic?

 

Apple is incredibly cheap right now. Apple has a growth rate averaging around 70% and is trading for around 11x future earnings estimates (which they always beat). Strip out the boatload of cash, and it's much cheaper than that. Apple is priced cheaply due to things like concerns over Jobs' health. How In any way is Apple priced to perfection? Aside from them having a large market cap, I can't think of one single valuation metric that would indicate AAPL is in any way priced to perfection. Go look at CRM if you want a company priced to perfection.

[CONeal]

Unfortunately for AAPL investors the company is priced to perfection

 

WHAT??? Are you being sarcastic?

 

Apple is incredibly cheap right now. Apple has a growth rate averaging around 70% and is trading for around 11x future earnings estimates (which they always beat). Strip out the boatload of cash, and it's much cheaper than that. Apple is priced cheaply due to things like concerns over Jobs' health. How In any way is Apple priced to perfection? Aside from them having a large market cap, I can't think of one single valuation metric that would indicate AAPL is in any way priced to perfection. Go look at CRM if you want a company priced to perfection.

 

If the growth rate is averaging 70%, how much longer can this really be maintained?  Who doesn't own an apple these days.

[DCG]

If the growth rate is averaging 70%, how much longer can this really be maintained?  

 

People have been saying that for the last 5 or so years. The market is pricing Apple like it's has no growth.

[CONeal]

An interesting perspective on the Nortel patent auction earlier this week.

 

http://www.cringely.com/2011/07/the-enemy-of-my-enemy/comment-page-1/#comment-102829

 

 

[Uccmal]

DCG, et al, AAPL is the second largest publicly traded company in the world right now by market cap.  It is priced as if the growth rate is never going to slow down.  It is priced for perfection! 

 

I dont know where you folks were when MSFT had a market cap of 500 B.  That in my opinion is almost certainly Apple's future.  One or two missteps and the stock will be cut in half.  And then shareholders will be pressuring AAPL to give them something back for such bad performance, and there goes the cash.

 

AAPL does not have the monopoly that MSFT had in any of their areas of production and they never will.  It is only a matter of time before reality hits, and margins get crushed across the board.

 

Save this thread and throw it in my face when AAPL trades at double its present market cap for a few years.  Cisco, MSFT, GE, etc. - what makes AAPL so different?

[DCG]

DCG, et al, AAPL is the second largest publicly traded company in the world right now by market cap.  It is priced as if the growth rate is never going to slow down.  It is priced for perfection!  

 

I dont know where you folks were when MSFT had a market cap of 500 B.  That in my opinion is almost certainly Apple's future.  One or two missteps and the stock will be cut in half.  And then shareholders will be pressuring AAPL to give them something back for such bad performance, and there goes the cash.

 

AAPL does not have the monopoly that MSFT had in any of their areas of production and they never will.  It is only a matter of time before reality hits, and margins get crushed across the board.

 

Save this thread and throw it in my face when AAPL trades at double its present market cap for a few years.  Cisco, MSFT, GE, etc. - what makes AAPL so different?

 

Is XOM also priced to perfection?

 

I'm not saying their growth will never slow down or that it will be increasingy challenging to grow at this rate when they are this large, but market cap seems to be the only metric you're basing your statement on. Its only a matter of time until we see companies with trillion dollar valuations. Not soon, but it will happen.

[JAllen]

DCG, et al, AAPL is the second largest publicly traded company in the world right now by market cap.  It is priced as if the growth rate is never going to slow down.  It is priced for perfection! 

 

I dont know where you folks were when MSFT had a market cap of 500 B.  That in my opinion is almost certainly Apple's future.  One or two missteps and the stock will be cut in half.  And then shareholders will be pressuring AAPL to give them something back for such bad performance, and there goes the cash.

 

AAPL does not have the monopoly that MSFT had in any of their areas of production and they never will.  It is only a matter of time before reality hits, and margins get crushed across the board.

 

Save this thread and throw it in my face when AAPL trades at double its present market cap for a few years.  Cisco, MSFT, GE, etc. - what makes AAPL so different?

 

How is AAPL priced as if they're never going to stop growing?  Isn't a company with no growth and a 10% discount rate worth 10X earnings?  AAPL has about $19.5B in TTM earnings with a net cash market cap of $250B = 12.5X.  AAPL is priced for 3 years of 13.5% growth with a 2% terminal growth rate. 

 

Does this really seem right?  It doesn't to me but want to know what others have to say.

 

I used: http://www.creativeacademics.com/finance/dcf.html for the DCF analysis

[Uccmal]

Respectfully, all of your arguments are entirely rationale.  But, the assumption is that AAPL maintains its present cash flow and profits, never mind growth.  What if cash flow, and profit gets cut in half? 

 

There is alot of competition across all of their businesses spaces, and not alot of protection.  As we have seen with RIM, any of these businesses can be hammered pretty quickly.  I personally dont like the Apple computer I bought and unlike MSFT office, or windows, it is not a standard, that is used in business.  So. it would be pretty easy for me to switch to something else.  I admire AAPLs genius at product selling, and producing products with appeal, but I dont think it is a sustainable business model.  it requires constant innovation without mistakes.

 

I also dont think the first trillion dollar company will be a consumer tech company.  More likely an energy company or a conglomerate such as BRK or GE.

[DCG]

Respectfully, all of your arguments are entirely rationale.  But, the assumption is that AAPL maintains its present cash flow and profits, never mind growth.  What if cash flow, and profit gets cut in half? 

 

well, what if any company's cash flow and profit got cut in half? That would most likely hurt the stock price of almost any company. AAPL is hardly priced to perfection though.

[roundball100]

Respectfully, all of your arguments are entirely rationale.  But, the assumption is that AAPL maintains its present cash flow and profits, never mind growth.  What if cash flow, and profit gets cut in half? 

 

well, what if any company's cash flow and profit got cut in half? That would most likely hurt the stock price of almost any company. AAPL is hardly priced to perfection though.

 

I think the point is that this is more likely for high-tech companies than others, and experience is that the largest of the large in the high-tech space have not fared well historically.  Perhaps this time it is different?

[Uccmal]

 

 

I think the point is that this is more likely for high-tech companies than others, and experience is that the largest of the large in the high-tech space have not fared well historically.  Perhaps this time it is different?

 

That is the point!  RIMM is trading at 30% of its highs and it was not overvalued at the time by any normal metric.

 

Perhaps AAPL is different...

[DCG]

RIMM is trading at 30% of its highs and it was not overvalued at the time by any normal metric.

 

 

You realize that RIM was selling for around $150 a share a few years ago, trading at over 60X earnings, right? That was priced for perfection. AAPL trading for 11X estimated earnings (and with levels of cash on its balance sheet that RIM could only dream about) is not priced for perfection. And as I said, yeah, if there earnings get cut in half (which I don't see happening in the next couple years), their stock price will most likely go down. Yeah, tech can be volatile and hard to predict, but so are industries like Energy, Insurance and many others.

 

And AAPL has a much more diverse revenue stream than RIM, which was, and really still is, a one-trick-pony. And I don't think their Playbook is going to have much of an impact on their earnings in the near future. fwiw, on a flight I was on 2 days ago, I saw about 35 people with iPads (including myself). I did not see a single person with a Playbook (yes, I pay attention to that type of thing). I played around with a Playbook for a bit recently, and while I thought the operating system was pretty good (although not as intuitive and as easy to learn how to use as iOS, IMO) the thing is tiny! It's really half the size of the iPad, and seemed more like a large phone than a tablet to me. I know some people like the smaller size, but for things like reading and watching movies, the larger screen is much better. And the lack of available apps for the playbook (and other BB devices) is a deal breaker.

[Uccmal]

Gents, I maintain AAPL is priced to perfection.  Leaving aside RIM.  40% of AAPLs earnings come from the phones at the moment.  Competition is coming from every side.  AAPL is trading at 15 x trailing earnings.  If they have one bad quarter the stock will get destroyed - 50% downside.  There is no MOS here.

 

Shalab, I bought RIMM at a higher price.  I thought it was good value then.  Perhaps I was wrong.  I sold some, and may buy some call options sometime later in August well after my 30 day wash period.  Well see.  It is a very good value if they execute, but that is the big unknown.  They have cash, and ability, but may lack the marketing savvy to salvage this.  I think it is a deep value play as oppose to AAPL, or GOOG which may be more Garp type stocks.

[Smazz]

I think what Al was alluding to is yes, though APPL is trading at 11x earnings, the earnings part of the formula is a HUGE number - fair to say no one saw these numbers coming X yrs ago?

 

I cant see them blowing doors off all competition with IPAD (just my guess) so, the phone, can it generate the huge numbers going forward - or will there be a next big thing? What is their CocaCola? Is it just the IPhone? There are alot of revenue $ out there to be had. RIMM does have a niche market if you want to call security BBM niche  and obviously they are a smaller company so speaking generally they have more room to go up.

 

I dont know that Al was talking about his point from a multiple standpoint as much as a sheer HUGE revenue number required going forward.

 

We shall see because we always do live in interesting times.

[Uccmal]

Smazz, That encompasses it.  The hurdles for the AAPL earnings are getting too high to reach.  Unlike certain oil companies that operate in what is essentially an oligopoly, AAPL is very much in a competitive business. 

 

To increase earnings by 10% they need to make 2B more in profits.  That's maybe 13 Million more AAPL handsets at the present price than what they sold last year, or say 7 million more plus 1 B more profits from other sources. 

 

The following year they need to make 4 B more profits than last year etc, etc, etc.  At a certain point it cannot be done. 

 

The key word in all of this is more.  At the same time Samsung, HTC, RIMM, Nokia, Ericsonn etc, are all doing the same thing.

[CONeal]

For those of you that doubted a smear campaign was going on with Blackberry.

 

http://crackberry.com/haters-wanna-hate-seriously-paid-smear-campaigns-are-not-cool#comment-1066716

 

[Guest HarryLong]

Viking you may be on to something. Harry is right about one thing, the best ideas typically elicit a visceral hatred and RIM has that market covered.

 

Without commenting on RIMM, you are right "the best ideas typically elicit a visceral hatred". Essentially we're taking advantage of divergent problems. You really get a tailwind not only when you're right, but when everyone disagrees, which ensures the most inefficient pricing. I always value variant perception. The public does not.  ;D

[Smazz]

Believe it or not, I have re-read this entire 24 page thread because i was not able to read it in its entirety as it was being posted... i was just picking up on posts here and there.

 

Of all the comments, speculation, data etc that was written here, it strikes me that the one item which has differentiated RIM from its competitors has rarely been mentioned.

 

A RECURRING revenue stream which RIM decided to discontinue publicizing in extrapolated fashion. Why? Probably because their growth figures here could not continue to go to the moon the way they had - AND none of their immediate competitors have this revenue stream.

 

The Subscriber Base

I did some sleep deprived number crunching and using a very conservative growth rate was astonished by what this revenue stream would mean in gross revenue by the year 2016. It is obvious they are looking at increasing share here and with a recurring revenue stream like that without worrying as much as flavour of the year phone type..hmmmm

Nay sayers will say "if they arent selling phones".... Well they dont have to outsell Apple to make alot of hay here.

 

I will sleep on it before i publish as i have made typos before when typing at this time of the night :-[

 

[CONeal]

Smazz feel free to take your time before posting your numbers... Like 6 months  ;D

 

Apple has/had something similar in place with vendors but it was part of the plan so it would be hard to pull out.

 

Virgin said they were doing away with it but you can tell based on the new structure it's just be combined into the lower plan.  Not real sure how it would be affected in the higher plans since the rates did not go up. 

[woodstove]

Smazz, your thoughts on subscriber base and other matters will be much appreciated.

 

I wish RIM would back off on the announcement of projections, future products etc.  I know some of it is necessary to get new business, but to the extent it was being done to prop the stock price, it has stopped working, and I think this is an opportunity to settle back into a long-run service and profit-making style of company interaction with brokerage firms, ie no public forecasts of earnings, subscribers etc.

[Smazz]

Thanks Woodstove,

after some much needed (but not nearly enough) sleep and considering that RIM does no longer report their subscriber base Ive decided to leave out my projections in dollar figures however its just simple math really. In addition because it is mostly forecast forward looking someone (we know who) could say "you are crazy" and they may in fact be correct (Ive never disputed that).

 

If we take what is generally accepted subscriber base of 70M, we incorporate a multiple per subscriber revenue which really shouldnt be difficult to forecast - I just did some conservative incrimental growth (Im talking high single low double digit). It is really astounding what this recurring number can grow to and will continue to be going forward.

The negative media out there coming from down south doesnt like almost predictable earnings i guess.

 

So, I will leave it to whomever is in the playing moods to punch into their formula. I dont have a hard avg per subscriber number but i think i may not be too far off.  From my projections their revenue from subscriber should easily outperfrom their yearly revenue from handsets/Playbook around the year 2015.

 

I also remember reading in this (I believe it was here) thread how security is not so important anymore. REALLY? :o

 

Tell that to the prez and every other company that spends $$$$ on it. If anything this area is becoming more important not less.

[Uccmal]

Smazz, I have to agree with you.  RIMM made 700M in the last Q.  Google just made 2.5 B.  Simple math tells me that RIMM should be worth at least 1/4 Google.  40 B or $60/share.  Good on Balsillie and Lazaridis to tell the corporate govenance twats to screw off.  Shows their commitment.  Doesn't hurt that RIMM sits next to the pre-eminent computer engineering University in Canada, and one of the most important in the world. 

 

Rimm is using its new operating systems to branch into whole new lines of business such as Automotive.  And I am sure that they have enough groupies around the world to help them generate new ideas.

 

I personally think this may be the biggest hit since FFH pre 2006.  A simple reversion to the mean puts the stock at $70.  In LEAPland that can be a multibagger.

 

Then i am probably crazy as well.

[Guest VAL9000]

Smazz et al.,

 

Open question.  What is the _value_ behind the 70mm in subscriber numbers?  I know it's expensive, but if there's no additional value being delivered, then we can't reasonably expect these subscription dollars to keep flowing in.  Maybe I just don't understand the enterprise mobile space that well, but from what I can tell iPhone etc. and BB have (from a corporate point of view) the same capabilities and functionality.  But the iPhone doesn't require a subscription fee.  What am I missing that enterprises are willing to pay for?