BB - BlackBerry

[Smazz]

They should become a licensee of windows phone and cut the R&D budget.

 

Clearly, you are a big fan of Mr. Softee! ;)

 

I agree, though, RIMM should license either Win Phone or Android.  Given that they are trying to port Android apps onto their OS, it seems more likely that they would go with Android.  

 

I have to retract my comment about RIMM being more likely to go with Android.  They have just partnered with MSFT to make Bing the default search engine on Blackberry devices.  

 

I wonder how much RIMM is getting for that?

 

Maybe not so much how much is RIMM getting for that but how much can they make through this? Im going to assume MSFT will be paying them per activity?

Does that seem like the way to go?  Anyone who wants to help me on this.

Yes, I know I shouldnt be going outside my circle of competence but this is a smaller position im my portfolio than I usually take.

[txlaw]

Apple is working to be a cloud platform provider, just like GOOG and MSFT.  The question is not if but when their platform is going to be released. 

 

It was already released, in the form of iTunes.  It just looks different than what GOOG and MSFT are offering because the part of the cloud they've built has a different focus.  Apple's cloud is a media cloud.  Today I can pull up a device and pay to access millions of songs, movies, tv shows, and apps.  It's delivered over the web and runs local to my device.  This is similar to Google Apps where the application is transmitted over the web and runs in my browser, or Office 365 where the app is installed on Windows and runs in conjunction with web services at Microsoft.  There are stark differences in these offerings, but if you squint your eyes they all look the same.

 

As far as new products go, I bet that Apple TV will become a real thing.

 

I am referring specifically to a possible Apple PaaS solution. 

 

See:

http://en.wikipedia.org/wiki/Platform_as_a_service

http://upon2020.com/2011/04/the-ever-growing-list-of-paas-companies-and-paas-projects/

 

In other words, I expect Apple to relase a cloud OS like Google App Engine or Windows Azure on top of which developers can develop their apps and services (including content delivery services). 

 

iTunes itself is not a PaaS solution.  In fact, the cloud version of iTunes will likely be built on top of this possible cloud OS.

 

You're right, however, that Apple is also probably using its data centers to store media content for cloud delivery.

[txlaw]

They should become a licensee of windows phone and cut the R&D budget.

 

Clearly, you are a big fan of Mr. Softee! ;)

 

I agree, though, RIMM should license either Win Phone or Android.  Given that they are trying to port Android apps onto their OS, it seems more likely that they would go with Android. 

 

I have to retract my comment about RIMM being more likely to go with Android.  They have just partnered with MSFT to make Bing the default search engine on Blackberry devices. 

 

I wonder how much RIMM is getting for that?

 

Maybe not so much how mush is RIMM getting for that but how much can they make through this? Im going to assume MSFT will be paying them per activity?

Does that seem like the way to go?  Anyone who wants to help me on this.

Yes, I know I shouldnt be going outside my circle of competence but this is a smaller position im my portfolio than I usually take  :-[

 

I'm assuming it's a rev share business model.  Google gives a rev share to manufacturers who set Google as the default search option and who use Android (which automatically has Google as the default) for the OS.

 

Makes me wonder whether the Win Phone biz model will eventually morph to be more like the Android model.

[txlaw]

You're right, however, that Apple is also probably using its data centers to store media content for cloud delivery.

 

See http://arstechnica.com/apple/news/2011/05/new-mobileme-replacement-codenamed-castle-can-find-your-mac.ars

[Guest Bronco]

Texas Lawyer,

 

Good response.  BTW - I have nothing against attorneys, I married NJ Lawyer.

 

Dell does intrigue me - I may focus my attention on that for now.  And maybe HPQ after.  RIMM is just leaving a knot in my stomache, and MSFT (I said this before) seems like a potential 5 up, 5 down stock.  Even though it is cheap and value and all that it seems like the market will never take this also-ran up.

 

I bought some Loews today.  But will work on Dell.

[goldfinger]

Dell does intrigue me - I may focus my attention on that for now.

 

Dell is finding new higher margin niches like (cloud or not) services to mid-sized businesses. It has and is cutting fat to the max and

it is cheap. Dell himself seems to consider his stock as not a value stock yet (by opposition to growth)...

 

And maybe HPQ after.

 

Smart man!

 

and MSFT (I said this before) seems like a potential 5 up, 5 down stock.  Even though it is cheap and value and all that it seems like the market will never take this also-ran up.

 

That doesn't make a lot of sense. Eventually numbers just do not make sense!

[ERICOPOLY]

Dell does intrigue me - I may focus my attention on that for now.

 

Dell is finding new higher margin niches like (cloud or not) services to mid-sized businesses. It has and is cutting fat to the max and

it is cheap. Dell himself seems to consider his stock as not a value stock yet (by opposition to growth)...

 

And maybe HPQ after.

 

Smart man!

 

 

HPQ also following the growth through services route.  For those of you who hold DELL and no HPQ, was it a conscious choice in lieu of HPQ or was it simply that DELL was cheap and you liked the price and the CEO, and that you didn't evaluate HPQ?

 

Competitors in several areas.

 

[Guest Bronco]

I'm not a technical analyst but that chart on RIMM doesn't look, well, strong.

 

 

[txlaw]

HPQ also following the growth through services route.  For those of you who hold DELL and no HPQ, was it a conscious choice in lieu of HPQ or was it simply that DELL was cheap and you liked the price and the CEO, and that you didn't evaluate HPQ?

 

I will say upfront that I've owned DELL off and on since the market bottomed out in the middle of the recession, and I know far more detail about DELL than HP.  However, below are a couple reasons why I like DELL over HP.

 

HP PC earnings are more tied to the consumer, while DELL is more about the biz.  In a declining biz with an increased focus on tablets, I like DELL's position better.  

 

I don't know what happens to HP printer/imaging division going forward, and that division generates 17% 28% of earnings.

 

I like DELL management/board members better.  More shareholder friendly.  Less crazy board shenanigans.  More willing to put their money where their mouths are.

 

I like Dell's increased focus on cloud hardware and services.  I don't get why HP is trying to compete with Google, MSFT, and AAPL on the OS front.  It might weaken HP's relationship with these guys, who are in a much stronger position to dominate.  And it could lead to a RIMM-like disaster for their PC/tablet biz.

 

I like what DELL is doing abroad.  On the consumer side, DELL is number one in market share in India and is number two in China.  Dell has the number one brand in Brazil.  They're partnering with CHL in China.  They're helping build out Tata's IaaS service in India and Singapore.  Michael Dell is on the governing board of the Indian School of Business in Hyderabad, India.  The former joint CEO of Wipro is now leading Dell Services in India.  It goes on and on.

 

Basically, I think the DELL transformation has been occurring and continues to occur and will be executed properly.  I'm not so sure what's going on at HP.

[stahleyp]

have any of you guys looked at the leaps for RIMM? I don't have a ton of experience in options, so if my math or logic is wrong, please let me know!

 

The way I see it, they are either going to turn it around, be bought out, or die out slowly.

 

Let's look at these and assume the following probabilities. Feel free to add what you feel would be an appropriate probably and/or value associated with them. I tried to be more on the pessimistic side of things.

 

30% turn around

20% purchased

50% die out

 

If they turn around the company, let's say things double. I don't think that is unrealistic, based on how cheap the company is at the current levels. The stock is then worth about $90.

 

Let's say there is a merger and the company pays a premium of 30%. I would say that's not unreasonable given the expertise, brand image, and customer loyalty...and the fact that merger candidates are getting close to top dollar these days, look at skype, ceph, etc.

That would value the shares around $58. That would give the company about the same market cap as NOK. Again, based on operating income, growth potential, I don't think this is too far a stretch.

 

worse case - company burns out and files bankruptcy over the next couple years. Options would be worth nothing. Shares would probably be worth next to nothing.

 

The at the money calls are trading around $9. So, to be in the money, we would need the stock to be worth $54 within the next 20 months or so.

 

company turns it around and doesn't die off, and the stock doubles to $90 -$54 = $36 profit. 4x on your money. 400% return * .3 = 120% return.

 

potential profit merger- $58-54 = $4 profit on $9 investment = 44% * .2 = estimated return about 9%.

 

bankruptcy = wipe out. 50% chance.

 

So, the expected payoff would be about 129%. Obviously, if the stock only gets to 70, like it did this year - without a full turnaround - the results aren't as great. According to a quick calculation, that still gives a result of about 60% return in less than 2 years.

 

As of last year, Fairfax was also accumulating RIMM, so that is a good sign.

[Myth465]

stahleyp, I dont look at things like that really. For me its more like, whats RIMM worth? Whats the chances it gets there in the next 2 years? If low do I want leverage, if yes go deep in the money and use options to limit my capital. If I dont have a catalyst options are a way for me to bet with a lower chip stack and achieve the same return.

[ERICOPOLY]

HPQ also following the growth through services route.  For those of you who hold DELL and no HPQ, was it a conscious choice in lieu of HPQ or was it simply that DELL was cheap and you liked the price and the CEO, and that you didn't evaluate HPQ?

 

I will say upfront that I've owned DELL off and on since the market bottomed out in the middle of the recession, and I know far more detail about DELL than HP.  However, below are a couple reasons why I like DELL over HP.

 

HP PC earnings are more tied to the consumer, while DELL is more about the biz.  In a declining biz with an increased focus on tablets, I like DELL's position better.  

 

I don't know what happens to HP printer/imaging division going forward, and that division generates 17% 28% of earnings.

 

I like DELL management/board members better.  More shareholder friendly.  Less crazy board shenanigans.  More willing to put their money where their mouths are.

 

I like Dell's increased focus on cloud hardware and services.  I don't get why HP is trying to compete with Google, MSFT, and AAPL on the OS front.  It might weaken HP's relationship with these guys, who are in a much stronger position to dominate.  And it could lead to a RIMM-like disaster for their PC/tablet biz.

 

I like what DELL is doing abroad.  On the consumer side, DELL is number one in market share in India and is number two in China.  Dell has the number one brand in Brazil.  They're partnering with CHL in China.  They're helping build out Tata's IaaS service in India and Singapore.  Michael Dell is on the governing board of the Indian School of Business in Hyderabad, India.  The former joint CEO of Wipro is now leading Dell Services in India.  It goes on and on.

 

Basically, I think the DELL transformation has been occurring and continues to occur and will be executed properly.  I'm not so sure what's going on at HP.

 

I became a DELL shareholder late last week.  They are both priced roughly the same on forward earnings after backing out net cash.  I think they will both double within 4 years (just doing the math on their earnings).  I own the same amount of both.

 

[stahleyp]

stahleyp, I dont look at things like that really. For me its more like, whats RIMM worth? Whats the chances it gets there in the next 2 years? If low do I want leverage, if yes go deep in the money and use options to limit my capital. If I dont have a catalyst options are a way for me to bet with a lower chip stack and achieve the same return.

 

thanks, myth. I appreciate the insight. I remember you told me that you are trying to mimic the Cornwall Capital guys. Do you know anything about them besides what's in the Big Short? I've tried to find somethings, but to no avail.

[Myth465]

Nope it seems like those guys like to fly under the radar. I would too given the choice / capital they have. I think one is involved in education. I think if you like RIMM I would do options, but mainly to limit my position size and I would go deep in the money because this is one of those value is its own catalyst kind of things.

[frog03]

I became a DELL shareholder late last week.  They are both priced roughly the same on forward earnings after backing out net cash.

 

***************

How much of the net cash are you backing out?  Keep in mind that most of the cash on the BS is driven by the business model of the firm and not cash that just could go to shareholders.

If you net out the whole cash, you end up with massive negative equity on the BS.  You probably want to figure excess cash and not just take net cash.

[Smazz]

I forgot to add this item a while back.  Since I have insomnia right about now I will do this.

 

From A non scientific casual poll on a non investment forum a while (weeks) back

 

sample size 42

Question: Company issued Smartphone - which choices are you given or do you get.

 

Android = 40%

BB        = 33%

Apple    = 19%

Other    = 7%

 

Comments:

 

We are stuck with Blackberries because of the paging software we use for field service techs

+++++++++++++

We have a mix. Sales people have iPhones cause sales people are full of shit and need a full of shit phone. My techs are all Android now. I even have 2 different carriers.

+++++++

BB and Android are the options here

++++++++++++

Blackberry, and iPad for field sales/marketing.

++++++++

my old job is moving away from blackberry, they have a handful of android based DROID2 and DROID-X, a couple Thunderbolts, and a couple iPhone 4's now

++++

Still using a BB Bold w/o texting. Hoping to get an Android phone soon.

++++++++++

have a curve; they block certain things and i cant download anything i have to pay for, but i have no cell phone bill and unlimited data. so, i'm cool with it.

+++++++++

Started with a windows mobile brick a couple years go, then got a iPhone 3GS, now on iPhone 4.

********

We were doing Blackberries until about 2 months ago when we switched over to Droid X's. Field guys still have Blackberry Curves.

+++++++++

We have a choice of BB, Palm, Android, or Windows Mobile. No iPhone option though.

+++++++++++++|||

Current policy is Blackberry (Torch), but I hear that they will be offering a choice of company-paid smartphones (Apple, Android, Blackberry) in the very near future.

+++++++++++

They already allow us to plug in to the corporate e-mail with any personal Apple or Android smartphone, but if using a Blackberry, they only allow company-purchased phones to connect.

++++++++++

 

 

[ERICOPOLY]

I became a DELL shareholder late last week.  They are both priced roughly the same on forward earnings after backing out net cash.

 

***************

How much of the net cash are you backing out?  Keep in mind that most of the cash on the BS is driven by the business model of the firm and not cash that just could go to shareholders.

If you net out the whole cash, you end up with massive negative equity on the BS.  You probably want to figure excess cash and not just take net cash.

 

Backing out all cash net of debt (so backing out roughly $8b out of their $14b total cash).  That leaves them with $6b of cash to play with.

 

HPQ gets by with $10b in cash on their balance sheet, yet they are three times the size of DELL and compete in the same markets.

 

So I think I leave DELL with plenty of cash with which to run their operations.

[beerbaron]

Anybody buying RIM at this price?

 

I'm keeping my finger close to the trigger...my price is 40$. I probably won't get it but I rarely overpay!

 

BeerBaron

[Smazz]

going back to anectodal RIM comments,

 

I was talking to my 16 yr old niece today - now, she's 16 but she is more mature than people 2x+ her age..INCLUDING ME! :o

 

She has already completed all her mandatory volunteer hours for Highschool and holds down a part time Job of approx 20-30hrs a week at a national brand Grocer.

 

I asked her if she is treating herself to something with all the hours she works and $ shes made because I know she is saving most for her University fund.

 

She said she would like to buy one of the newer BlackBerrys. I asked why the BB and not Apple. She said she likes the BBkeyboard, the lighter weight compared to Apple, the ability of BBM to name a few things.  She has owned both Apple and Rim products previously.

 

Another story,

I was texting my friend this afternoon. She called me right back -which was unusual because its common between us that you answer a text with a text and a phcall with a phcall. So, I asked whats up with that? and she said her Iphone been going screwey. She notices that when there is a large amt of heat the thing goes screwey.. she cant see the screen - only zigzags.

Ok, not sure how she called me if she couldnt see the screen but she said this happened to her in Mexico also. she said she notices this because as soon as the environment the Iphone is in gets cooler - it goes back to normal.

Not sure if these are isolated or not.

 

 

I had a few other points to make but i lost my train of thought! :-\

[turar]

Does anyone know if selling RIMM (listed in US) and buying RIM (listed in Canada) is considered a wash sale for tax purposes? Or is it considered two different securities?

[gfp]

Does anyone know if selling RIMM (listed in US) and buying RIM (listed in Canada) is considered a wash sale for tax purposes? Or is it considered two different securities?

 

For US filers, at least, it is a wash sale and you would have to wait 31 days if you want to claim the loss.  The securities are 'substantially identical', but you could argue that they are not to the IRS.  Good luck with that.

[Uccmal]

I had a few other points to make but i lost my train of thought!

 

Smazz, I am guessing you use your BB to remind you of everything....  :P

 

A couple of us have been researching this in more detail.  RIMs data compression gives it an advantage in every market except Canada and the US where data is cheap.  The difference between the data use by a BB with the compression service and an Apple is not insignificant - something on the order of 1/3.  Until broadband rates drop across the world which isn't happening in any hurry, RIM will have an entrenched advantage.  I would urge anyone looking at RIM to consider the international story, not just the US story.

[Smazz]

I had a few other points to make but i lost my train of thought!

 

Smazz, I am guessing you use your BB to remind you of everything....  :P

haha, I dont even own one!  :D

A couple of us have been researching this in more detail.  RIMs data compression gives it an advantage in every market except Canada and the US where data is cheap.  The difference between the data use by a BB with the compression service and an Apple is not insignificant - something on the order of 1/3.  Until broadband rates drop across the world which isn't happening in any hurry, RIM will have an entrenched advantage.  I would urge anyone looking at RIM to consider the international story, not just the US story.

 

 

Kindof off tangent abit but having witnessed Apples Tablet pilagiing of the "traditional" pc market from recent numbers that came out - wouldnt it make sence for RIMM to take some with their tablet when it comes out balls out? I mean wouldnt a company that uses BB just tend to go Playbook if they are going to deflect from the std desktop/laptop?

This is a thought that just came to me so you people smarter than me can straighten me out ;)

[Eric50]

Recent article on RIMM below. I think it's a value trap, it looks cheap but I don't see how they can reverse the competitive forces  at stake. It's a closed-system commodity hardware maker; historically these businesses end up in the trash can.

 

-----------------------------------------------------------------------------

Research In Motion: 4 Ways Things Could Still Get Worse

by Eric Savitz

 

If you think Research In Motion is poised for a turnaround – I’m not sure why you would think that, actually – you might want to reconsider.

 

Jefferies analyst Peter Misek asserts in a new research note that there are four significant potential negative events that could spell trouble for RIMM holders in the next 6-12 months. Note that Misek already is an affirmed bear on the stock, with an Underperform rating and $35 target price, around 20% below the current level.

 

Here’s his list of coming woes:

 

    Product delays: He thinks most BlackBerry OS7 devices have been delayed from August to October, “as integration, polishing, and carrier certification are taking longer than expected.” He says this is leading to delays for other products, including the 3G/4G PlayBook tablet as well as QNX-based handsets. He now expects QNX-based phones to be delayed until the second half of calendar 2012.

    Earnings reset: He thinks management will need to take either lower margins or lower unit sales “as carriers become worried about inventory levels for an aging portfolio of products.”

    Aging products: He notes that Marvell’s FY Q3 earnings miss yesterday was blamed in part on “continued software at one of our largest customers,” an obvious reference to RIMM. He says RIMM may be 80% of Marvell’s wireless revenues. Misek notes that Marvell’s comments were focused on the ramp of new products in the second half of 2011, and not on calendar Q2.

    Waning carrier support: Misek writes that his checks find the company “is being forced to increase handset bounties and co-marketing payments in order to retain carriers and slots.” He says carriers want to support three ecosystems – Apple, Android and one more to be determined. It could be BlackBerry…or it could be Windows.

 

RIMM today is up 20 cents, at $43.77.

[Viking]

While I do like where the company is headed (QNX) I am getting more concerned with management/delays etc. Yes the stock is cheap. For me there are better risk/reward opportunities out there (I am talking about a core position type of stock... not a specualtive flyer).

 

My learning with this stock over the past 4 months or so is to pay a little more attention to management.