BB - BlackBerry

[nkp007]

But we can pretend there is asset value in a tech company that lost it's mojo. companies are worth what they can "earn" for owners.

 

You don't make any sense. You sound like those guys who can't understand why SHLD could be a great deal at around $30 (when Lampert pumped $150M into it).

 

The tangible assets RIMM has on its B/S have a certain value no matter what (unless you think things like receivables, investments, PPE, are worth $0 - and if you do, you're at the wrong website). The more distressed the company is, the less the value you would assign. The fact that RIMM has lots of cash, positive earnings, and no debt, means the haircut on its tangible assets wouldn't be huge.

 

This is all ignoring the intangibles, of course, including their valuable patent portfolio.

 

As far as I know Einhorn, Cooperman, Yacktman, et al are still holding. The best price they could've gotten is not far below today's low. In fact, there's a good chance some or all of them have a cost at or above today's price. These guys are not short-term traders.

 

They could burn through these tangible assets in a heroic effort to turn this ship around.

[WarrenWatsa]

But we can pretend there is asset value in a tech company that lost it's mojo. companies are worth what they can "earn" for owners.

 

You don't make any sense. You sound like those guys who can't understand why SHLD could be a great deal at around $30 (when Lampert pumped $150M into it).

 

The tangible assets RIMM has on its B/S have a certain value no matter what (unless you think things like receivables, investments, PPE, are worth $0 - and if you do, you're at the wrong website). The more distressed the company is, the less the value you would assign. The fact that RIMM has lots of cash, positive earnings, and no debt, means the haircut on its tangible assets wouldn't be huge.

 

This is all ignoring the intangibles, of course, including their valuable patent portfolio.

 

As far as I know Einhorn, Cooperman, Yacktman, et al are still holding. The best price they could've gotten is not far below today's low. In fact, there's a good chance some or all of them have a cost at or above today's price. These guys are not short-term traders.

 

They could burn through these tangible assets in a heroic effort to turn this ship around.

 

Considering they're only spending about 20-30% of their annual EBITDA on R&D right now, unlikely.

[Myth465]

I cant wait to read the pending I Told You Sos. I vote that RIMM is toast competitively, but that doesnt preclude some idiot buying the carcass. HP still has cash lying around and they are seldom the smarting guys in the room.

[Guest valueInv]

But we can pretend there is asset value in a tech company that lost it's mojo. companies are worth what they can "earn" for owners.

 

You don't make any sense. You sound like those guys who can't understand why SHLD could be a great deal at around $30 (when Lampert pumped $150M into it).

 

The tangible assets RIMM has on its B/S have a certain value no matter what (unless you think things like receivables, investments, PPE, are worth $0 - and if you do, you're at the wrong website). The more distressed the company is, the less the value you would assign. The fact that RIMM has lots of cash, positive earnings, and no debt, means the haircut on its tangible assets wouldn't be huge.

 

This is all ignoring the intangibles, of course, including their valuable patent portfolio.

 

As far as I know Einhorn, Cooperman, Yacktman, et al are still holding. The best price they could've gotten is not far below today's low. In fact, there's a good chance some or all of them have a cost at or above today's price. These guys are not short-term traders.

 

They could burn through these tangible assets in a heroic effort to turn this ship around.

 

Considering they're only spending about 20-30% of their annual EBITDA on R&D right now, unlikely.

Tech companies burn through assets quickly by making desperate, dumb acquisitions.

[AZ_Value]

Now on a separate note (kind of), I have finally ditched my Blackberry, that thing crashed on me one time too many and I had to take actions  :)

And I have to say I feel good already.

 

Alright, that was all, you guys can go back to debating whether RIM can dream of ever getting my business back  :D

[Guest valueInv]

Yeah people seem very fired up about this stock, either they love it or hate it. 

 

I don't know the future of RIMM, but I think there is a good chance it could come back with BB10 and be a meaningfully player in this hugely profitable sector.  So many people have declared this company dead.  I've heard "everyone I know now has an iphone" a hundred times -- RIMM's international sales get no respect.  Lots of smart money in there.  I just figure its got massive potential upside and the price is giving me great odds. 

 

If we're playing dice and you're giving me 12-1 on rolling a six on one roll, I've got to take that bet all day.  That's how I see RIMM.  Can't bet the farm of course

Let's do an exercise:

 

BB10 is likely to be released around Q4. Let me know the list of the major features that it needs to have to be competitive with Android and IOS when it is released.

[merkhet]

Possibly applicable to the RIMM situation - Munger on turnarounds:

 

http://variantperceptions.wordpress.com/2012/03/07/munger-on-the-perfect-turnaround/

[Olmsted]

Possibly applicable to the RIMM situation - Munger on turnarounds:

 

http://variantperceptions.wordpress.com/2012/03/07/munger-on-the-perfect-turnaround/

 

So the Munger turnaround course of action, one which I've heard before, might be to spin out the data service business, allow them to seek new clients, then put the BB hardware business into runoff mode focusing on emerging markets and places without the networks to support iPhone/Android.  I think it would work, the question is: will management do it themselves?  I think no.  Will an activist come in and force their hand?  Maybe.

[merkhet]

I'd also love a patent spin-off after issuing a perpetual non-exclusive license to RIMM for future use.  I'm wondering if we might not already have an "activist" on the board in Prem.

[merkhet]

I'm going to take a stab at why Prem and others thought this was a good investment at the time they bought into the company -- and why I'm uncertain whether it's still a good investment.

 

I read through this thread, and I don't remember seeing anyone doing this analysis, but it was a long thread, and I could be wrong...  Here are the non-North America (US and Canada) and non-UK year-over-year revenue growth rates on a quarterly basis for the last 11 quarters...

 

2012-Q3  30.94%

2012-Q2  38.20%    --> Prem's fourth buy (8.5% more)

2012-Q1  87.86%    --> Prem's third buy (40% more)

2011-Q4  97.21%    --> Prem's second buy (300% more)

2011-Q3  127.02%

2011-Q2  128.46% 

2011-Q1  89.22%    --> Prem's first buy

2010-Q4  78.03%

2010-Q3  56.76%

2010-Q2  59.97%

2010-Q1  44.40%

 

Now, Prem actually bought in the fiscal quarter above each of the lines I'd indicated, but he would only have known the numbers starting at and below the lines I've indicated... (It's slightly confusing since RIM has an off-fiscal year...) 

 

(Dataroma link -- http://www.dataroma.com/m/hist/hist.php?f=FFH&s=RIMM)

 

So, my guess is that Prem saw a GoodCo/BadCo dynamic at work between Research in Motion's overseas (not including U.K.) sales and Research in Motion's North American and U.K. sales.  When he first bought into the company in FY2011-Q2, he saw incredible growth rates overseas.  When he triple downed in FY2012-Q1, he was still seeing tremendous growth in overseas revenue.  (100%+ growth rates are hard to come by, after all...)

 

Unfortunately, it looks like those growth rates have pancaked as of FY2012-Q2 and FY2012-Q3.  Maybe that's because of handset and/or OS delays -- not terribly sure, since I just started following this company.  (I remember there were delays on new phones, but I'm not sure if that has played out or not -- anyone care to enlighten me on that issue?)

 

I think the most important things to know about this company are the following:

 

(1) Are international growth rates stalling?

(2) Why has international growth been such a hit?  Has Apple been slow to penetrate internationally or is there another dynamic at work here?

(3) What are their margins like internationally?  (I don't believe they break down GM and net earnings on a segmented basis, but I could be wrong...)

 

In my mind, if I were running the company, I'd do the following:

 

(1) Create three companies -- (A) RIMM IP HoldCo, (B) International RIMM and © Domestic RIMM (North American and maybe UK)

(2) Have RIMM IP HoldCo grant a non-exclusive perpetual license to International RIMM and Domestic RIMM while seeking monetization of IP rights through everything but an outright sale.

(3) Have the majority of the research and development costs in Domestic RIMM because while they're all likely melting ice cubes (contingent on figuring out my questions above this list) Domestic RIMM is certainly the faster melting ice cube.

(4) International RIMM is then essentially a sales machine.

(5) RIMM IP HoldCO is your patent holding company similar to IDCC or TSRA.

 

In my estimation, you'd get about $3 billion of value in RIMM IP HoldCo, and some indeterminate amount out of the other two OpCos.  (Hard to figure out how much they're worth unless you can get the information needed for International and back out the Domestic.)

[PlanMaestro]

So, my guess is that Prem saw a GoodCo/BadCo dynamic at work between Research in Motion's overseas (not including U.K.) sales and Research in Motion's North American and U.K. sales.  When he first bought into the company in FY2011-Q2, he saw incredible growth rates overseas.  When he triple downed in FY2012-Q1, he was still seeing tremendous growth in overseas revenue.  (100%+ growth rates are hard to come by, after all...)

 

Unfortunately, it looks like those growth rates have pancaked as of FY2012-Q2 and FY2012-Q3.  Maybe that's because of handset and/or OS delays -- not terribly sure, since I just started following this company.  (I remember there were delays on new phones, but I'm not sure if that has played out or not -- anyone care to enlighten me on that issue?)

 

Not sure what Fairfax is looking at but that is precisely what I was looking at. In Mexico RIM still not showing signs of slowing down and India seems to be abdicated by Apple. My understanding is that Europe is stalling so critical revenue is classified under ROW and continues to grow and taking a large share of RIM's revenues. That plus SERVICES seems to provide a margin of safety.

 

Still watching though, double checking that there are no signs of disruption int the ROW and SERVICES categories.

[prevalou]

The question is: are revenue in growth zones like India and Mexico enough to make the whole business still grow ?

[PlanMaestro]

The question is: are revenue in growth zones like India and Mexico enough to make the whole business still grow ?

 

Not sure but there is a chance. RIM is a global company. Close to 60% of its revenues are outside USA, Canada and UK and growing fast. And close to $4 billion comes from services that are also growing double digit.

 

millions  9m 2011  9m2010

ROW      8,240        5,565

%Total    57.8%      38.8%

[alertmeipp]

IPAD 3 is out. Any reason to bet that BB will be able to compete oversea when their products are inferior.

[Liberty]

IPAD 3 is out. Any reason to bet that BB will be able to compete oversea when their products are inferior.

 

Maybe in the future. But right now, I don't think the Playbook's market performance even counts as "competing" with Apple.

 

I'm ordering an iPad 3 soon, anyway  ;)

[merkhet]

 

this is more a function of their sales in NA being absolutely abysmal.

 

 

Well, the 60% of consolidated revenue part might be because of their NA sales being abysmal, but I'm still curious as to what's driving the growth in international markets...

[mpauls]

Anyone know offhand what percent of RIMM's business is Government; Domestic and abroad?

[Smazz]

IPAD 3 is out. Any reason to bet that BB will be able to compete oversea when their products are inferior.

IPad3 has really very little improvement over IPad2 and its heavier and thicker.

 

I cant believe the people that will pay the $ for that when they still have an IPAD2 and that competitors make something just as good for 100's less.  But I guess some people will have to have the latest thing - even if their is relatively little progress between units besides costs.

 

Madness.

[racemize]

IPAD 3 is out. Any reason to bet that BB will be able to compete oversea when their products are inferior.

IPad3 has really very little improvement over IPad2 and its heavier and thicker.

 

I cant believe the people that will pay the $ for that when they still have an IPAD2 and that competitors make something just as good for 100's less.  But I guess some people will have to have the latest thing - even if their is relatively little progress between units besides costs.

 

Madness.

 

as someone who just upgraded from 2->3, I can tell you the main reason is the upgraded resolution.  Retina resolution is much, much better on the eyes over long periods of time.

[Guest valueInv]

IPAD 3 is out. Any reason to bet that BB will be able to compete oversea when their products are inferior.

IPad3 has really very little improvement over IPad2 and its heavier and thicker.

 

I cant believe the people that will pay the $ for that when they still have an IPAD2 and that competitors make something just as good for 100's less.  But I guess some people will have to have the latest thing - even if their is relatively little progress between units besides costs.

 

Madness.

 

Many of the upgraders will be from iPad1 and no, noone makes anything close to it. Try finding an app like Garageband for an Android tablet.

[Smazz]

lots of people bought the rimm tablet for $400-$500 and didn't get 1/10th the value IPAD buyers get. that's a Crime.

ONE TENTH?? Lol yea.. maybe 1/10th of the Apps ok

 

Checking out the recent comparisons listed on CB between

 

New iPad vs. ASUS Transformer Infinity (Android) vs. BlackBerry PlayBook 2.0

 

To be honest, looks like the ASUS is on top yet it hasnt come out yet so really not fair to put that one in there.

 

as someone who just upgraded from 2->3, I can tell you the main reason is the upgraded resolution.  Retina resolution is much, much better on the eyes over long periods of time.

 

Yes Racemize I have heard that over and over again as being a great upgrade. Looking forward to seeing it in person.

[AZ_Value]

lots of people bought the rimm tablet for $400-$500 and didn't get 1/10th the value IPAD buyers get. that's a Crime.

ONE TENTH?? Lol yea.. maybe 1/10th of the Apps ok

 

Checking out the recent comparisons listed on CB between

 

New iPad vs. ASUS Transformer Infinity (Android) vs. BlackBerry PlayBook 2.0

 

To be honest, looks like the ASUS is on top yet it hasnt come out yet so really not fair to put that one in there.

 

The Asus Transformer Prime is already out and I have to say it's pretty impressive, especially when running on Android ICS (Ice Cream Sandwich) and it uses the very (VERY) powerful NVIDIA’s Tegra 3 quad-core chip.

I'll admit that when it comes to apps, Apple is ahead of everybody, but I haven't needed something desperately and couldn't find an Android app for it, and most importantly  if you're someone like me who doesn't like all the limitations Apple puts on their operating system then Google and Android are your friend. Plus other misc things like having an SD card slot to increase available storage and stuff like that the Ipad doesn't offer.

 

I'm really curious to see what Windows 8 tablets will be able to accomplish.

 

[racemize]

lots of people bought the rimm tablet for $400-$500 and didn't get 1/10th the value IPAD buyers get. that's a Crime.

ONE TENTH?? Lol yea.. maybe 1/10th of the Apps ok

 

Checking out the recent comparisons listed on CB between

 

New iPad vs. ASUS Transformer Infinity (Android) vs. BlackBerry PlayBook 2.0

 

To be honest, looks like the ASUS is on top yet it hasnt come out yet so really not fair to put that one in there.

 

The Asus Transformer Prime is already out and I have to say it's pretty impressive, especially when running on Android ICS (Ice Cream Sandwich) and it uses the very (VERY) powerful NVIDIA’s Tegra 3 quad-core chip.

I'll admit that when it comes to apps, Apple is ahead of everybody, but I haven't needed something desperately and couldn't find an Android app for it, and most importantly  if you're someone like me who doesn't like all the limitations Apple puts on their operating system then Google and Android are your friend. Plus other misc things like having an SD card slot to increase available storage and stuff like that the Ipad doesn't offer.

 

I'm really curious to see what Windows 8 tablets will be able to accomplish.

 

Here's a comparison that I just found

 

http://www.ibtimes.co.uk/articles/311104/20120308/new-ipad-3-versus-transformer-prime.htm

 

Looks like the infinity will be pretty good (similar price though)

[Guest valueInv]

lots of people bought the rimm tablet for $400-$500 and didn't get 1/10th the value IPAD buyers get. that's a Crime.

ONE TENTH?? Lol yea.. maybe 1/10th of the Apps ok

 

Checking out the recent comparisons listed on CB between

 

New iPad vs. ASUS Transformer Infinity (Android) vs. BlackBerry PlayBook 2.0

 

To be honest, looks like the ASUS is on top yet it hasnt come out yet so really not fair to put that one in there.

 

The Asus Transformer Prime is already out and I have to say it's pretty impressive, especially when running on Android ICS (Ice Cream Sandwich) and it uses the very (VERY) powerful NVIDIA’s Tegra 3 quad-core chip.

I'll admit that when it comes to apps, Apple is ahead of everybody, but I haven't needed something desperately and couldn't find an Android app for it, and most importantly  if you're someone like me who doesn't like all the limitations Apple puts on their operating system then Google and Android are your friend. Plus other misc things like having an SD card slot to increase available storage and stuff like that the Ipad doesn't offer.

 

I'm really curious to see what Windows 8 tablets will be able to accomplish.

 

Here's a comparison that I just found

 

http://www.ibtimes.co.uk/articles/311104/20120308/new-ipad-3-versus-transformer-prime.htm

 

Looks like the infinity will be pretty good (similar price though)

 

I think this says it all:

 

"The issue comes down to one thing. Do you want the freedom which Android offers (bugs and all) or do you want the closed but easy-to-use world of iOS. It's your choice."

 

[alertmeipp]

 

"The issue comes down to one thing. Do you want the freedom which Android offers (bugs and all) or do you want the closed but easy-to-use world of iOS. It's your choice."

 

hmm... how does RIMM fits in?