Author Topic: BBRY - Blackberry (Formerly RIM)  (Read 678339 times)

Viking

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Re: RIM - Research in Motion
« Reply #20 on: March 24, 2011, 03:58:38 PM »
RIM today reported fiscal Q4 2011 earnings (Feb 26 year end).
- Q4 earnings of $1.78/chare were roughly in line with guideance provided by the company and what was expected by analysts.
- Q1 2012 guidance provided by the company of $1.47 to $1.55/share was $0.10 to $0.15/share below what was expected by analysts; rev and GM also came in lighter than expectations.
- fiscal 2012 (full year) guidance provided by the company = $7.50/share was higher than what was expected by analysts.
After hours: shares are trading down 10%.

Reasons provided for lower Q1 guidance:
1.) mix shift in handset towards lower ASP products
2.) increase spending on playbook launch
3.) increased spending on QNX operating system
Regarding the handset mix shift, RIM will be launching new Blackberry products at the end of Q2 and more in the 2nd half of fiscal 2012, and as a result Q1 Blackberry sales will slow somewhat (mostly products at the end of their life cycle).

RIM believes they are in the process of laying the groundwork that will set the company up for the next stage of growth for the next few years:
1.) playbook
2.) 6.1 smartphones coming in 2H
3.) QNX smartphones coming by March 2012
It is clear they are also targeting Nokia as providing lower price range smartphones for international markets were also discussed on the conference call.

I expect the anti-RIM crowd (pretty much everyone) to hammer away pretty hard in the coming weeks so the share price should go lower (to back to under $50???). My read is paying $58.00 (after hours level today) for a company that should earn $7.50 in fiscal 2012 is reasonable given the solid products the company has in its pipeline. The fact that everyone hates the company actually makes me feel better.

PS: company also has $2.7 billion in cash and investments = $5.16/share and no debt. They will be able to resume their share buyback in July; last year they exhaused their allowable annual buyback when the shares traded below $50 (they spent $2 billion in fiscal 2011 on share repurchases); my guess is they will do another large share repurchase come July should the shares continue to trade at current levels.

Note: RIM is simply terrible at answering questions and communicating their prospects on quarterly conference calls. This does not help in the short term; fortunately, if they deliver the goods the share price will respond.

Here is a good summary from the Globe & Mail: www.theglobeandmail.com/globe-investor/rim-outlook-signals-time-of-transition/article1955529/
« Last Edit: March 24, 2011, 05:54:17 PM by Viking »


Bronco

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Re: RIM - Research in Motion
« Reply #21 on: March 24, 2011, 08:28:38 PM »
Biggest challenges facing Rimm.... Their products f'ing suck.

This is may be a cigar butt... A few puffs left before it is obsolete.  But I think a better comparison is taking a bite out of a dog turd.

WTF own this over Apple?  Why buy a crap business?

I am not anti-Canadian by the way.  Looking at making a move on tap if it treads to 40.  Also, you gents blessed us with prongs, Richards and carter...2011 S.C. Champs!

DCG

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Re: RIM - Research in Motion
« Reply #22 on: March 25, 2011, 06:56:56 AM »
Biggest challenges facing Rimm.... Their products f'ing suck.

This is may be a cigar butt... A few puffs left before it is obsolete.  But I think a better comparison is taking a bite out of a dog turd.

WTF own this over Apple?  Why buy a crap business?

I am not anti-Canadian by the way.  Looking at making a move on tap if it treads to 40.  Also, you gents blessed us with prongs, Richards and carter...2011 S.C. Champs!

Yep. RIM was making start of the art products 10 years ago. They are still selling pretty much those same products.

Viking

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Re: RIM - Research in Motion
« Reply #23 on: March 25, 2011, 09:47:00 AM »
Bronco, the challenge I am having with RIM is understanding the polarized opinions.

If their products truly suck so badly how do they sell 14.9 million units and earn $1 billion in the latest quarter?

More importantly, their future looks solid:
1.) operating system upgrade: QNX looks to be a solid improvement going forward from their current smartphone operating system. They are starting with the PlayBook and will transition into phones by March 2012. RIM is calling the QNX smartphone a 'superphone'; it will be high margin and they feel it will get them growing again in North America.
2.) new smartphone product lineup looks good (6.1) to great (QNX): RIM is saying interest in 6.1 phones is very high; they will be coming out beginning in May and later in the year. RIM will be featuring these phones at a RIM conference in early May so we will find out then if the company is blowing smoke or if the new models are competitive. A question was asked if sales of the new 6.1 smartphones will not suffer because carriers will want to wait for the QNX versions in early 2012; the answer was carrier interest in 6.1 is very high and this is not expected to be an issue.
3.) tablet offering looks good: RIM is targeting business customers and based on feedback it has received is forecasting very strong sales. We will know shortly if the company is blowing smoke. The PlayBook is quite different from other tablets (screen size, security, etc) and this market is very large.
4.) competitor Nokia, who owns the lower end of the market, is in massive transition: hard to see how this does not benefit RIM, especially in international markets where both companies are strong.

RIM just finished an absolutely terrific year; MUCH BETTER than everyone was predicting 6 months ago (when the stock was $45). If the company was going to 'disappear' this was when it most likely was going to happen.

Smartphone and tablet sales growth will be very strong in 2011. RIM looks to be poised to have a good to great year as it launches its new operating platform, PlayBook and much better smartphones and takes share away from Nokia (in the lower end international smartphone market). Note, I am not saying that RIM will eat APPLE's or Androids lunch; I think all three will do well; RIM is just trading at such a low multiple I like the value. The fact that FFH purchased RIM when it dropped below $50 last year also gives me some comfort.   

Bronco

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Re: RIM - Research in Motion
« Reply #24 on: March 25, 2011, 10:10:29 AM »
In school you can't do this, but I will.

Answer a question with a question.

McDonalds hamburgers - 1 billion, 1 trillion sold, whatever.


Now ask your question - if McDonalds sucks so bad, how did they sell 1 gazillion burgers?


I have a blackberry, but it is b/c my employer issues me one.  I also have an Iphone and Ipad for personal use.

I am not blind or stupid.  I can see what sucks. 

Viking

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Re: RIM - Research in Motion
« Reply #25 on: March 25, 2011, 10:37:18 AM »
Bronco, thank you for answering my question. We do not expect food-away-from-home to be supplied by one massive Apple like restaurant chain. Of course to suggest such a thing would be idiotic. That is because the needs of businesses/consumers (young/old) domestic/foreign are very different. McDonalds is successful because it services the needs (and very well I might add) of a segment of the food-away-from-home-market.

Obviously, RIM does not satisfy your needs; having sold 14.9 million units in the last quarter it is clear RIM is strong in a few segments. I am not looking for love... just some investing opportunities that may put some $ in my jeans.      
« Last Edit: March 25, 2011, 10:41:30 AM by Viking »

turar

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Re: RIM - Research in Motion
« Reply #26 on: March 25, 2011, 10:42:04 AM »
McDonalds is/was a pretty good investment to make.

Viking, are you buying more today?

Bronco

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Re: RIM - Research in Motion
« Reply #27 on: March 25, 2011, 10:52:59 AM »
Viking - I get what you are saying.  And of course stuff like this is preference.

No one really knows where Apple and RIMM are headed LT.  I just don't see RIMM as the best of breed, meaning they could go bye-bye quicker than someone else.  So that is a major risk. 

The only risk right now for Apple is Steve Jobs health.  They are going to sell a ton of products, until the next wave of innovation happens. 

The thing that scares me about Apple is that if it is $500B market cap, a 10x FCF multiple would indicate $50B in free cash flow.  How the hell is that possible?

I think you ride Apple until there is a real chink in the armor.  No where close to that now.

Viking

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Re: RIM - Research in Motion
« Reply #28 on: March 25, 2011, 11:00:30 AM »
turar, I established a decent position in RIM just under $60 at the beginning of the year. Since then, my read is 'the story' has gotten better. However, I will be reading their detailed quarterly results and anything else I can find to see if I am missing anything. I am not buying today as the stock is only trading a little below my purchase price (and I expect volatility with this holding) and I have learned over time to not be too aggressive in accumulating stocks on dips (becasue the dips can be larger and last longer then one would expect). Patience is the key. Should the stock drop in the coming weeks to the low $50 range then I likely would purchase more.  

Viking

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Re: RIM - Research in Motion
« Reply #29 on: March 28, 2011, 12:02:00 PM »
Here is an article on RIM summarizing many of the risks: www.mondaynote.com/2011/03/27/rim-the-inmates-have-taken-over-the-asylum/