This morning's pump job on RIMM comes courtesy of Jefferies, which upped the company to "Buy" from "Hold".
The truly disgusting part of this from a technical perspective is that if the -23.6% level breaks at $16.25 there is a technical target of $19.36 up above.
That would be a hell of a move.
But let us not forget that Jefferies was one of the (many) who thought this company was flatly going broke until they reversed course in November.
I don't quite know how you expect a company with no debt, positive cash flow and a product in the pipe you haven't seen to go under, but that's the record on The Street with the various "analysts." And this is not a criticism leveled only at Jefferies; they're all guilty.
I've been following technology in general since, well, pretty much forever (my entire professional life.) And as you know if you've read my work you're aware that in general I've been exhorting RIMM to "break the glass" -- because that's what underdogs do that turn the corner.
Sprint did it, and went from a probable zero to a nicely-performing company, and now they're on deck to be merged with.
But Thorston seems to think he doesn't have to do that. And he may be right.
I have long maintained that QNX is RIMM's "ace in the hole", in that it has the ability not only to provide a better user experience from a technical perspective (e.g. smoothness of operation, etc) but also superior power budget management.
When it comes to portable devices, especially those that are supposed to fit in a pocket, power budget is everything.
The bane of all of the current crop of smartphones is found there. None of them will survive a day on one charge if you actually use them during that day. Oh sure, they'll sit in your pocket with nothing going on; idle power consumption is easy to get on the down low, but it's far more difficult otherwise.
The secret is found in the speed with which you can transition from "processing lots of stuff and therefore chewing up amp-hours" to "in low-power sleep state, chewing up almost nothing" and how many cycles you must spend in the "burn up the power" state to do what you want to accomplish.
I've dug through power management within Android devices, since the source is available. To say it's clunky would be a compliment. This isn't really Android's fault -- Linux, the kernel, is a general-purpose kernel adapted to the mobile space. While the driver infrastructure is adapted to shutting down unnecessary things and thus being conservative with the power budget it's nowhere near what you get with a kernel designed for low-power, embedded systems real-time operation from the ground up. Then you have the Javaesque interpreted nature of not only Android applications but huge parts of the Android OS itself, which is allegedly easy to code for (I'd argue otherwise) but is cycle-intensive compared to native machine code and thus puts a further burden on the power budget.
But when it comes to QNX it's not similarly handicapped at the operating system level. It's what QNX has always been; it is a real-time operating environment at its core and thus is much more "in touch" with the hardware and efficient.
The "common street talk" was that BB10 would never make it to the light of day; RIMM would run out of money first. In a word, no. Not when you have positive cash flow and no debt. But that's what drove the stock to $6 -- the idiots on Wall Street telling everyone that the company was a zero and thus could be shorted with impunity.
So how's that worked out for you folks?
The amusing part of this is that as the stock rose through the end of the year short interest actually increased. About a quarter of the float is out short -- an insane amount -- and that has contributed massively to the short squeezes in the last couple of months.
Now we're in a place where anyone who shorted the stock in the last year is about to go underwater on their position.
Do I think "RIMM is back"? Not necessarily. I want to see the BB10 devices in the wild and also see whether I can realistically replace my GS-II Android device with it for my workload. That means the things I use have to be available, whether native, ported or run under emulation, on the BB10 platform. RIMM can still easily blow this; they have an embedded customer base that will largely convert, but in order to take share they have to be able to attract either IOS or Android users. That is now the test.
BB10 has one place that I expect it to excel, which is the same place the Playbook does -- in the browser. There is no other browser in a tablet or phone form-factor that I've ever been even somewhat happy with. They all suck in one form or another -- except for the Playbook's. Android in particular has always bit the big one when it comes to forms, particularly text box input -- it has never, ever scrolled and operated correctly on any Android device I've ever tested.
This is early 1990s web stuff folks, and Android still gets it wrong in 2013! I still cannot enter text in a plain textbox on Android that goes beyond the screen width and have it properly handled if I need to scroll over and edit because I fat-fingered the "soft keyboard." Hell, Android doesn't even scroll over to display the text correctly as I type!
The thing is that this test of "replacement" for Android and/or IOS devices and apoplications can fail and the company still succeed; the roughly 80 million users they have today will make for a very nice operating company with a very nice level of income and profit.
Add to this that Thorston Heins is compiling a record of sandbagging; he was very coy about release dates through the summer and into the fall months, leading virtually everyone on the street to believe that the company would miss the January 31st target. Then it leaked that the devices were in testing with carriers, on schedule, and that prompted the reversal in the stock from September.
Now here we are in January, just a couple of weeks from the announcement's expected date, and I'm seeing advertisements for BB10 on CNBC.
One thing you learn from watching the market over many years is that so-called "analysts" really don't analyze. They're always behind -- they'll tell you to sell a stock that's already lost half its value and they'll tell you buy one that has more than doubled already. None of them get in front of the curve with their calls, which is why by and large they're all worthless.
As for me? I like the price action, I like what it's doing in my account, but I'm a trader -- not an investor -- when it comes to essentially everything right now. All the manipulative games of our governments and central banks force you into this role whether you like being there or not -- unless you would like to put half your portfolio at risk of sudden loss.
Disclosure: The author has frequently played in this name in the past and is today; as of the penning of this article he is long but this can change at any time.
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