BB - BlackBerry

[Uccmal]

Hi Investmentacct, I bought call options $60 on RIMM-Q, January 2013 expiry.  I use the options strictly as a leveraged proxy for the stock.  As far as I can tell RIMM options are efficiently priced relative to the stock price. 

 

I also bought a few hundred common shares after the FFH AGM, after hearing Prem's barebones thesis on RIM - 2.5 B cash, P/CF - 7-8; growing at a phenomenal rate etc - Somewhat of a copy cat move I guess - so sue me - I have owned RIM off and on many times since the patent troll dispute so it didn't take much convincing.  I am guessing that FFH holds up to 400 Million in shares between Nasdaq and TSX.  Note: Prem was asked about RIM at the pre AGM, AM of boardmembers.  Otherwise I only own about 2 other stocks that FFH holds.

 

Bronco/DCG, I am not really a tech head so I am not qualified to debate the relative merits of Operating systems etc.  I only know that on several occassions I have tried to download things in Safari and they wont load.  That makes it a pain in the ass for me.  I used to know tech really well but am fast becoming a luddite.

[Guest Bronco]

Don't include me with DCG as far as tech goes.  I'm not in his league, or any league for that matter.

 

I am an expert on sleep deprivation, and I doubt few can match me on that.

 

I should be more clear.  RIMM could turn out to be a decent investment.  I just like Apple better purely from a risk/reward standpoint.  And I poke fun, like I do with most things, at the Playbook b/c RIMM is not an innovator by anyone's imagination.  They are purely copycat now, as is every copy except Apple. 

 

I question whether RIMM will have growth going forward.  If they do, RIMM will turn out great.  My guess is they will grow until what I mentioned before - they lose the corporate market.

 

The world is being flooded with smart phones.  Who knows the winner 10 years out.  I guess it doesn't matter now and that is silly to project. 

 

I wish everyone here luck with their RIMM investments.  I will keep my eye on it, but am more interested in looking at some other niche players - CY, GLW...etc. 

 

I really have no more to add on this topic, so I'll wish everyone a good holiday weekend.

 

 

[Guest VAL9000]

I think it's possible as long as the current leadership team is intact, including Steve Jobs. Nothing last forever, but there are no signs of them losing their ability to innovate better and faster than every other company in the world right now. They have a tremendous talent pool, $ to put into R&D, exceptional leadership, a great supply chain, and a scale that allows them price products more competitively than their competitors.

 

I guess you could chalk this up to investment horizon.  The probability of someone beating Apple at the innovation game over a one year period is pretty low.  This probability of someone beating Apple at the innovation game over a 25 year period is approaching 100%.

 

My interests are for the long term.  My style is to make large bets on few companies and hold those bets while long term trends play out, so I'm naturally debating from that perspective.  One- to three- year opportunities are too difficult for me to guess.  To add to the anecdotal evidence, the varied spectrum of views here really show that this could go either way.  Everyone has valid points that lead to different conclusions.

 

As a value investor, what`s the advantage of getting involved in something that is so difficult to forecast?‎  Are the probability-weighted upsides on these bets really that much greater than those of less exciting, but more predictable plays?‎

[DCG]

Don't include me with DCG as far as tech goes.  I'm not in his league, or any league for that matter.

 

 

ha..not sure what league I'm in either. I've worked in the tech industry a bit, and I guess I'm a bit of a gadget/tech geek and read a lot of tech blogs and stuff. I feel like it's one of my main circles of competence though. That said, there are very few tech companies that I decide to buy shares in, and usually only stick to pretty large tech companies for investing. There are tons of tech companies out there that I have absolutely no idea what they do (ie..Level 3's business confuses the hell out of me), and many of them do the same thing as each other (how many more hosting companies do we really need?).

 

 

[Guest valueInv]

The advantage will last as long as Apple keeps moving. People assume that Apple is standing still while everyone else will catch up. That's not what recent history indicates. Apple is innovating faster than anyone else.

 

This is the main thing that makes Apple a darling.  They are leading the world in mobile and media innovation and I don't think anyone can dispute that.  Their recent history of hits has been world-beating.  They've also done a great job of leveraging one technology into the next: iPod -> iPhone -> iPad.  It's fascinating to watch.

 

It's also unsustainable.  The premise of the bet is that Apple can continue to out-innovate the rest of the world.  It's not possible.  There's mean-reversion to innovation and we've seen that everywhere in tech.  Eventually they`ll need to hang their hat on an advantage that`s more sustainable than innovation.  So having a sticky platform is critical for maintaining a long-term advantage (the platform is the moat), and nobody has figured out better than Apple how to do this (yet - my hopes are still on Android for reasons aforementioned).

 

RIM is subject to the exact same market forces.  In order to win long term, they need to have a compelling platform.  QNX (the OS) is a good move in that direction, but there are huge gaps that they will need to address.  I mentioned that I think this is a winner-take-all scenario (harking to Hyten`s comments on single-device dependence), and if that`s the case they can`t only focus on the corporate side of things.  RIM`s platform pitch of `most secure` is underwhelming.  Linux is more secure than Windows, but makes up less than 20% of the corporate server market.  RIM needs to hustle on media, app ecosystem and payment for a complete platform.  Apple needs to hustle on security because really those devices are a joke to break into (six seconds for an iPad).  Android has a lot of half baked bits and needs to work on everything.

 

And I`ll drop this line again because I like it so much: skate to where the puck is going to be.

 

Nothing in the world is forever. There will come a day when even Berkshire will decline but it is a long, long time away. The horizons in the tech world are shorter but there is also a (smaller) degree of predictability is you understand the rules of tech. Knowing that there is a significant probability that Apple may falter 10 years from now does not convince me to miss out the growth in between. You also need to look at the margin of safety. This is a company that almost recently doubled there earnings trading at 19x without factoring in $65B in cash.

 

Another thing, betting that Apple won't or can't do something is not a good idea:

 

http://technologizer.com/2011/04/17/saying-apple-will-never-do-something-always-dangerous/  :D

[Liberty]

I guess you could chalk this up to investment horizon.  The probability of someone beating Apple at the innovation game over a one year period is pretty low.  This probability of someone beating Apple at the innovation game over a 25 year period is approaching 100%.

 

My interests are for the long term.  My style is to make large bets on few companies and hold those bets while long term trends play out, so I'm naturally debating from that perspective. 

 

Thanks for your posts, VAL, they are always well-thought out and insightful. I try to have a style a bit similar to yours, and I was wondering if you had ever written about some of the businesses that are included in your portfolio? I'd be curious to see if we have any picks in common, or if some of yours might fit my criteria.

 

Cheers!

[Smazz]

Who here is old enough  (and you dont have to be that old) to remember when  you could substitute "Apple" for "Rim" in alot of these discussions going way back.

Before the IPOD Apple was dead $ for a long time.

 

I am not making a comment on the company current - I dont own iether, I did own BB but found i didnt want to be tethered to anything anymore - so I de thered and just own a std Cell now.

 

http://ant.sillydog.org/blog/2006/001543.php

 

 

Anyway - carry on ;D

 

 

[Uccmal]

So true Smazz, I remember Steve Jobs standing in front of a Tron with Bill Gates on it discussing the investment of MSFT in 20% of Apple to keep Apple afloat.  I guess that would make Gates the real genius behind Apple's resurrection.  Rim is in nowhere near the state Apple was in back then.

[Smazz]

Is it fair to say RIMM is still the king of corporate hand held communication?

 

Thats all theyve ever been, thats all theyve ever wanted to be. Today corporate and private usage seem to have grey borders now.

 

To me thats how i see it and im sure some can steer me straight - i wont be offended.

 

Bring it on.

[Guest VAL9000]

Thanks for your posts, VAL, they are always well-thought out and insightful. I try to have a style a bit similar to yours, and I was wondering if you had ever written about some of the businesses that are included in your portfolio? I'd be curious to see if we have any picks in common, or if some of yours might fit my criteria.

 

Hi Liberty, thanks for the props.  I try to only speak on topics that I know about, which isn`t a lot.  The only business that I have written about that is in my portfolio is SSW - Seaspan.  It makes up a majority of my holdings and I`d be happy to answer any questions you might have about it on that thread.  My schedule clears up in June, at which point I`ll be contributing more original content to the ideas category.  I`m really looking forward to those discussions and learning more from this board.

 

BTW, love Richard Feynman - good choice.

[Uccmal]

Hi Val9000,

 

As a value investor, what`s the advantage of getting involved in something that is so difficult to forecast?‎  Are the probability-weighted upsides on these bets really that much greater than those of less exciting, but more predictable plays?

 

Looking back, I would have assigned SSW a less likely chance of being a good investment then I would today.  I first bought it about the time they cut the dividend.  As their balance sheet has improved or certain events have occurred such as the recap, and not having to issue more shares to pay for the ships, I have added to my position.  Right now my position in RIM is roughly befitting of its risk level. 

 

There is a constant balance around the size of a position.  SSW is roughly 10% of my holdings.  RIM would be 5%.  FFH -20%, MFC - 15%.  I dont measure probabilities but I probably think in probabilities of total loss versus upside constantly.  Nothing drives me nuttier than zero probability of loss with zero upside as well, and an insufficient dividend such as BAM (brookfield).

[Guest VAL9000]

As a value investor, what`s the advantage of getting involved in something that is so difficult to forecast?‎  Are the probability-weighted upsides on these bets really that much greater than those of less exciting, but more predictable plays?

 

Looking back, I would have assigned SSW a less likely chance of being a good investment then I would today.  I first bought it about the time they cut the dividend.  As their balance sheet has improved or certain events have occurred such as the recap, and not having to issue more shares to pay for the ships, I have added to my position.  Right now my position in RIM is roughly befitting of its risk level. 

 

Uccmal,

 

Fair point.  Investors are rewarded (or punished) based on their assumption of risk.  Price reflects that risk and with RIM trading at 8.5 PE this is a pretty heavily discounted tech stock.  The appeal is there and so are the success scenarios.  In my mind it doesn`t play out in RIM`s favour, but really what do I know about the future?‎

 

I hope that I`m wrong about RIM - friends, family, and members of this board have a lot riding on them.  I`m sitting this one out for now and I think I`ve expressed why that is, but good luck to everyone who`s in!

[Liberty]

Hi Liberty, thanks for the props.  I try to only speak on topics that I know about, which isn`t a lot.  The only business that I have written about that is in my portfolio is SSW - Seaspan.  It makes up a majority of my holdings and I`d be happy to answer any questions you might have about it on that thread.  My schedule clears up in June, at which point I`ll be contributing more original content to the ideas category.  I`m really looking forward to those discussions and learning more from this board.

 

BTW, love Richard Feynman - good choice.

 

Great, I'm looking forward to your ideas.

 

Feynman was great. More investors should read his stuff; it's not directly about business, but it can help you learn how to think more rationally and ask better questions.

[Viking]

Here is a write up on Nokia Q1 results... not pretty, with Q2 guaranteed to be worse. Nokia is RIM's primary competitor in international markets. RIM is doing very well in international markets and it looks to me that RIM is getting a gift for at least the rest of this year.

 

Most importantly for RIM, I see 2011 as the year of transition. Once they make the transition to QNX phones (likely Q1 2012) I think they will be in solid shape for years to come (with an operating system at least as good as Apple). The benefits from recent bolt on aquisitions, like The Astonishing Tribe (great at user interface), will also kick in.

 

I am not expecting them to outsell APPLE; rather, to be a strong, profitable niche player. Time will tell!

 

http://communities-dominate.blogs.com/brands/2011/04/smartphones-bloodbath-year-2-q1-now-nokia-ouch-this-is-painful.html#comments

[Myth465]

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.

[Guest Bronco]

Viking - you're investment with RIMM is safe, at least if my company has any say.

 

I tried to get my email on my Iphone (thanks BTW liberty for the help) but they mentioned that this option is unavailable and they weren't willing to support multiple platforms.

 

I sorta think they are not telling the truth - but I am stuck using my BB for work email (unless I use OWA).

 

I am not sure how big RIMM's moat is going forward but the corporate market is what is keeping them around IMO.  We'll see.  Best of luck to you all...

[Viking]

Myth, pretty much all non-Canadian analysts hate the company; sentiment measured this way has to be near an all time low. Time will tell us if this is an inflection point.

 

Bronco, thanks for the info. Part of valuing RIM is understanding how sticky the corporate part of their business is. My understanding is Android is a security mess (minimal risk there) and that leaves Apple. Again, Nokia has a sizable international corporate business that RIM should be able to take share from over the coming year.

 

In the very short term, Blackberry world is in early May and we should get some nice announcements. We should start getting firm launch dates about the new 6.1 phones; I am hoping these phones are nice enough to bridge the company until the QNX phones come next year; especially in North America.

 

Also, in July RIM will once again be able to buy back stock (they completed the last buyback authorization last year when the stock fell below $50) and I expect them to be very aggressive. They have re-purchased 10% of their shares over the past two years (at very low prices).

 

The key near term risk is Q1 2012 fiscal sales (May is quarter end); they lowered expectations during the March conference call and a miss in the June release would likely lead to a fresh round of downgrades, negative press and a new low for the stock.

 

[FlyingArrow]

So I'm bored and thought I'd do an "Abramsky" light survey of retailers on the Playbook inventory status. Based on stock out levels it seems the 32gb and 64gb models are selling better than the 16 (though I have no idea if stores got equal amounts of each or mostly 16's).

 

In my completely unscientific survey via online sites and inventory checks it seems there are lots of stock outs on 32's and 16's in all Toronto stores. Fewer stock outs in the west and east of Canada.

 

I checked Best Buy US cities and a quick check of New York, LA, Atlanta, and yes even San Francisco showed stock outs of 32's and 64's just about everywhere. There seems to be inventory of 16's in most locations. EDIT: Office Depot shows similar results but they have stock outs of 16's as well.

 

I wonder what the initial channel fill was? 20,000 retail locations - maybe 50 each? 1M units?

 

I'm surprised at how many locations are out of stock already. So maybe there is more to this than I'm seeing right now. But it could be indicative of an upside surprise come the end of Q1.

 

Like Viking I see a lot of potential in RIM for all the reasons already mentioned. And the buyback is like a 10% dividend to me that is not being factored at all into the value. So any outperform on the playbook (from admittedly low expectations) is icing on the cake.

 

And yes, I bought some more leaps today....

 

Mark

[Guest Dazel]

 

Apple used to be the most hated stock on Wall Street and was called dead....it traded for less than cash and

I passed...$5 billion cash to be exact.

Do i think they could fall again yes...I have seen it before.

 

Rimm has the market that types with their thumbs...and email a lot...more to the point we would rather email you than talk to you. We are boring and we like easy. We will buy playbooks because they will sync with our phones. We have money and will pay for easy and no change. My blackberry sat in a box for 3 months the first time i bought. MY wife has an iphone and I cannot...email on it...impossible for me.

how big i s the business market...pro's will buy BB...iphone is for recreation...business people do not have time for it.

I will buy a playbook and check it out... and look at the stock...I WILL make money shorting apple...can you say deflationary?

 

Dazel.

[FlyingArrow]

 

Rimm has the market that types with their thumbs...and email a lot...more to the point we would rather email you than talk to you. We are boring and we like easy. We will buy playbooks because they will sync with our phones. We have money and will pay for easy and no change. My blackberry sat in a box for 3 months the first time i bought. MY wife has an iphone and I cannot...email on it...impossible for me.

how big i s the business market...pro's will buy BB...iphone is for recreation...business people do not have time for it.

Dazel.

 

Funny, but so true! Well put Dazel. A kindred spirit. Boring and easy.....

[S2S]

Except the Playbook does not feature a standalone email app. Yet.

 

What genius at RIM thought that restricting email to tethered situations is a good idea?  ???

[Liberty]

Except the Playbook does not feature a standalone email app. Yet.

 

What genius at RIM thought that restricting email to tethered situations is a good idea?  ???

 

They're certainly as well aware of this as anyone. My guess is they wanted to get the thing out as quickly as possible and figured they could fix it later with software updates.

 

I'm not saying that's how I would do it...

[FlyingArrow]

Except the Playbook does not feature a standalone email app. Yet.

 

What genius at RIM thought that restricting email to tethered situations is a good idea?  ???

 

The point was that there are a ton of us "thumbers" who have BB's and want simple (you might say we are simple and need simple...). We don't need a standalone app.

 

It has nothing to do with restricting email. If your biggest and easiest potential sell is to your current BB customers it would be a bad idea to wait for a standalone email app to be finished before releasing. That will come soon enough. I would guess that of the first 100k sold more than 75% were for to existing bb owners.

 

I think the genius is in ensuring that the standalone email app that does come out has the security and strength expected of a BB email solution. If "professional grade tablet" is the strategy for differentiation you don't want to water that down with a rushed "me too" standalone email app.

[DCG]

From my personal experience, as well as friends I've talked to, once you use the iPhone touch-screen keyboard for about 2 weeks you forget about how you used to like the BB physical keyboard. The iPhone keyboard is not at all perfect, but the iPhone OS destroys the BB OS to the point where you quickly put your old keyboard preferences behind. I know very few people (actually, I honestly am having a hard time thinking of 1 person I personaly know) who switched back to a Blackberry after using an iPhone or most Android phones for a couple weeks (other than because their IT departments don't feel like supporting a 2nd phone).

 

That said, I'm interested in checking out the new BB OS if they actually put it on their phones within this decade. RIM has been mind-boggling slow in rolling out upgrades and new devices, to the point where their management should be nothing short of embarrassed.

[Guest Bronco]

Anecdote #1 - me.  I first tried the Iphone keyboard and it sucked.  I couldn't type anything. 

 

To your point, 3 days later I was flying around on the keyboard. 

 

My wife can text, much to my dismay, about 70 words a minute on that thing.  It's out of control.  Sometimes I get 4 texts in 10 seconds, all telling me how much a POS I am, before I can respond to the first one!  That's not technology, that's just ridiculous.

 

Getting serious - The Iphone and Ipad are both very easy to use after a couple days.  Not saying Android, Playbill etc. aren't...just sharing my experience.