Home Capital Markets Throwing in the towel on my RIM shares part 2

Throwing in the towel on my RIM shares part 2

The feedback on Monday’s Blackberry post (see prior post “Throwing in the towel on my RIM shares” June 24-13) has been visceral. It seems that I’ve unknowingly crossed many RIM shareholders by following the ways of Legendary Investor Peter Lynch, and the passion is something to behold. I can break news about Canada’s $180 billion investment vehicle, CPPIB, or Kevin O’Leary’s shrinking asset base, but nothing has ever generated quite the hullabaloo like selling RIM after years and years of my unrewarded patience.

To be clear, I’ve not ditched my Q10, nor am I short BBRY. The post was a lament, which should not be taken as a criticism of those RIM shareholders who have chosen to stick around for an eventual turnaround. It may yet happen. The post was, however, a recognition that I had allowed blind loyalty / misplaced confidence in RIM management to allow me to ride RIM down for the past few years. Despite all of the warning signs. Despite talking about those warning signs on BNN Business News Network over and over again since summer 2011.

The one thing that kept me in the stock was the promise of the Q10. I shared a bunch of examples of why the Q10 is not our Pollyanna; at least not yet. Why it is not an obvious Android killer; and why the people we’ve lost to the iPhone aren’t going to come running back in droves.

Many of my concerns about the device can and should be fixed. It is true that there is a stock app; I should have been more precise to say that the Bloomberg one that was so popular for the 9900 isn’t yet available; it combined commodities and currencies plus stocks. What I can currently download to track the RIM quote could have been built by 12 year old programmers on a Saturday morning. Has RIM management forgotten who pays the bills? White collar workers in finance, law, accounting and so forth; people who work in, or care about, the markets. As for the lack of a Starbucks app, it was merely a case in point.

That you can “sideload” apps from elsewhere pre-supposes that traditional white collar enterprise users know how to do this. Most don’t, and the Blackberry introductory videos fail to actually teach you how to, either. Remember the stats about how many clocks on North American VCRs would flash ’cause people didn’t know how to set them? We are still the same gene pool.

Ask a lawyer about the hassle of the cutting and pasting with the QNX software now that the trackpad is history; it almost brings tears to the eyes of Associates in the legal industry. May not matter to you, but every time the company’s QNX focus degrades the work performance of these devices, RIM loses another reason that has historically kept their existing users from changing teams. As one RIM staffer might say: the QNX people are now running the company and they don’t care about what “used to work”. That’s a problem, and every RIM staffer who has been in Waterloo more than three years knows what I’m talking about. I doubt Mike or Jim would disagree, either.

If RIM’s new team can turn the Q10 family into the device that kept 9700 / 9900 users happy (perhaps I should say “satisfied”) all those years, while adding some “modern day” smart phone table stakes, there may be hope for the stock beyond an eventual takeover premium.

After 5 years of fumbling, I just think that same investment dollar could be redeployed elsewhere. If they get the handset right at long last, and the guidance is fantastic for the next 3 quarters, I’d be only too happy to buy the stock back at higher prices.

But as any long term RIM shareholders will tell you, this week’s earnings don’t really matter. They’ll make us feel good but little more than that. It’s all about the guidance; and being able to believe the guidance and then see it play out over the next 6-12 months. And, just like the buzz around a movie, if the core 9900 users aren’t telling their friends to dump their iPhones and come back into the Blackberry pool, I am convinced that RIM shareholders are left to yearn for an eventual $20/share takeover, sadly, and that’s not a good enough reason to own BBRY right now relative to the other choices. Like Constellation Software (CSU:TSX), which is up 17% since the Decade of Daddy Fund “bought it” in January (see prior post “Decade of Daddy Mirror Fund Q4 report” Jan. 12-13) or Halogen Software (HGN:TSX), which has risen 26% since its recent IPO (see prior post “Halogen IPO filing gives Canadians their first chance to taste tech in far too long” Apr. 2-13).

Over on the Seeking Alpha site, the post had attracted 185 reader comments so far. Most of them were angry shareholders, and a few were very kind to try to point out some fixes to the challenges I’ve been facing with my Q10. And there have been emails, too. I appreciate the sincere feedback. Here’s a sample of the passion:

A sympathizer:

Some of the issues you identify I’ve not experienced, others are growing pains that need to be fixed (inability to cut and paste easily is a problem). Others are crazy (most obviously why they flattened the flexibility of the notification profiles, and limited apps for core market) which can be fixed but why…?

A soon-to-be former Q10er:

I hate mine with a passion after 3 weeks! What are you switching to? I’m trying to decide between the Samsung because the touch screen is big enough or iphone with the blue tooth keyboard attachment.

Sent from my BlackBerry 10 smartphone on the Bell network.

Someone who is embarrassed for me with my application of the Peter Lynch approach to investing:

Mark,

Saw the cast and do hope your investment advise is not based on such emotion rather than prudent diligence. As I read above, the issues that you brought up seems to have all been addressed. I may suggest that maybe spent a bit more time on querying minor nuances when getting any new device.

Again, saw no value in the cast and am surprised BNN actually aired it. Another colleague mentioned that they were embarrassed for you and your clients if they were watching.

Just thought I would share my thoughts.

Regards,

Trish

Babs61, A fellow sad shareholder on the Seeking Alpha site:

Thanks for the article…

I do agree with some of your points, and your sentiment.
The phones and “Link” need some serious work, disappointing.

The endless comments above sort of doesn’t surprise me, this is a BBRY long camp. Say something positive, doesn’t matter how backdated and you get an endless number of people agreeing with you.
BBRY will not survive if it doesn’t sort out all these issues..

BTW dont bother with Blackberry Link. Its a pile of c**p.
I solved the problem u mentioned by dragging and dropping stuff directly into my phone on my laptop..

I am still Long…

That was me, up until a week ago. And I don’t regret it one bit.

MRM
(disclosure: I own CSU and HGN; as always, this post reflects a personal Opinion and is not to be taken as investment advice or a recommendation to buy or sell securities as I’m not licenced to give such advice)

 
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6 Comments  comments 

6 Responses

  1. Jack Fitzgerald

    Mark I was going to email you as well

    It looked very suspicious on your part to say you stuck with it that long and then suddenly you bail days before the catalyst of positive earnings and a string of announcements and positive guidance from THOR (many would believe you got a check in the mail or really large suit case full of American money & you slam BB/BBRY on A blog WHY???????? call in the PR team)

    There is 182 million shares shorted & a 5 $ rise in the stock price, will cause the short position 1 billion dollars as a group & if they’re unable to unwind before 19 bucks(Jefferies Peter Misek’s target price) its btw 12 days to cover at present, at 24 (which is the next platform for the technical side) is 2 billion you see where i’m going

    So it looks awfully suspicious to those of us Value investors who truly see a future at Black Berry

    Here is my predictions:

    EPS 1.00 street is .05
    10M+ hand set sales street is 7+ 4m 10’s 3 m 7.0
    4 Billion in cash

    BBRY Estimates (in my utopia of course)

    Street consensus estimate is 5 cents (.05) 3-4 million bb10 sales with 7.0 down to 3m units for a total of 7million

    Q4 bbry beat the street by .50 cents .22 gain : street est.30 loss

    Q1 if that happens again ,50 cent beat were going to 26$

    If it goes over 1.00 with license deal with Sony and Lenovo ( lenovo having bought marketing & manufacturing rights to blackberry, 2Billion cash deal add that to the 4b were at 6b in cash)

    RIM becomes RIM again (notice they haven’t changed legal name only the ticker symbol) serving software and service and pow to the moon .. 60 bucks, maybe 100 dollar with short squeeze

    There are only 250m share available to cover 182m short I am contending the other 275m shares are with value investors who buy and hold ( ie: FFH, Mike L & yours truly)

    OMG is this going to be ugly for shorts

    if you own shares well breakup value of company is minimum 18$ Patents, cash, property and other saleable assets

    If you’re a long option investor well there is risk, but in my estimation holding a position in the shares is good business

    there o.oo down side according to my analysis of situation, but UP OMG ( that’s oh my goodness )

    risk reward is perfect here folks buy the shares and don’t let any noise try to convince you of selling its the demand for shares and there short supply that influence stock up, so yes real share holders can control the price not day traders and junkie gamblers who would rather see a company fail for their personal benefit

    So here I am retail investor who owned Apple in 1995 at 4 bucks and you are a in the investment business I presume with you being on BNN and all, what are you thinking ????????

    It appears you better enjoy the money, some think, you sold your professional reputation out for.

    If NO and you are genuine I will apologize in advance for the skeptical group

    SORRY!

  2. Thisblogsucks

    Troll and a shaved ape.

  3. Trish

    Peter Lynch approach?

    Think you may have taken liberties as to his concept vs an emotional rant that may have been better suited to you providers help desk.

    Do think your current customers should be looking at better alternatives. You of all individuals should know of the inherent upside of today’s price points regardless of the short term fluctuations. Not sure of your recent returns…. Hope they stand and return using the “McQueen’s frustration” approach.

    Think you have hit your tipping point…oleary your not.

  4. edeast

    Good Call;
    I gambled pretty heavy and lost.

  5. vijay

    I have been a loyal and admiring blackberry user thru many models, the last being the 9700. The phone started to give me some cryptic messages such as “28>=28″ and also stopped syncing to BDS. I thought what a perfect time to switch to Q10 with 4G. Love the hardware, love the speed for browsing. But am shocked at how cumbersome it is to do what I think are the most basic tasks. Try replying by text to a phonecall you cannot take since you are in a meeting. I could do that practically blindfolded earlier. Try copying a single phone number from a contact and texting it to someone else.
    Within a week, started getting messages to update OS but would not wirelessly update the OS. It would freeze at 99% download. Found out that someone had hijacked my “Blackberry ID” and assigned a security question that I had no idea what it was. Only real help on support line was to setup a new fake email address and use that as an ID.

    why is it impossible to customize the icons to have an icon for emails. Why can one not have contacts on the hub. Effectively now there are TWO home pages and it takes time to go from one to the other.

    I am getting to slowly learn how to use the phone, but what is probably THE most disappointing is the battery life. I am at one notch by end of day even without too much time on the phone even though I do extensive emails.

    Could Blackberry or RIM, not allow one to sacrifice some of the screen real estate and allow users to use the old features by placing the menu/phone/escape etc keys as “software” buttons, that one could use through the touchscreen.

    I am not giving up on Blackberry. Just that I almost want my 9700 back. The device never broke, the software on it did and I could not reinstall the OS.

  6. D Wheeler

    Yes, im a little disappointed with my bb10. Sometimes u have to keep averaging down. This approach doesn’t always work (think NT). But if you pick companies with sufficient cash, it works more often than not. So as a great Canadian (im referring to u) I’m a little disappointed to see u throwing in the towel. With a slow summer likely ahead, I’m still hoping to have the chance to buy more shares at cheaper levels.

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