Google Boosts Android Wireless Business and Buys Motorola in Largest Acquisition. Microsoft, Apple, Research in Motion, Nokia on High-Alert.

In an effort to boost its Android operating system, and increase market share in the highly competitive mobile phone industry, Google is buying Motorola for $12.5 billion in cash. This is Google's largest acquisition ever, and a clear indication to its competitors in the mobile space that the company is willing to utilize the significant cash at its disposal to dominate the lucrative and growing smartphone market. Apple, Research and Motion, Nokia, and Microsoft will all be on high-alert after this deal.

The deal values Motorola at $40 per share, or a whopping 63 percent premium to its closing price on Friday. Google paying such a huge take-over premium for a company may be a clear indication that current prices for other mobile manufacturers like Nokia and Research in Motion are depressed and poised to rise over the next twelve months, especially if Microsoft decides to fight fire with fire in the mobile handset wars and buy Nokia or RIM.

Google has been gaining significant market-share recently with its Android platform, but a lack of intellectual property in the wireless area was hampering its growth. Instead of innovating on its own, and devoting significant time and resources towards research and development, Google just bought a company with existing patents and previous research completed.

Earlier this month Google's competitors, including Apple, Microsoft, and Research in Motion, bought a significant patent portfolio from Nortel, effectively blocking Google from the process.

Google states that it will run Motorola as a separate business and close the deal by the end of this year, or the beginning of 2012.

More at the Vancouver Sun.

Happy Investing : )

Research in Motion Releases new BlackBerry Line-Up to Compete with Rivals: Bold 9900, Torch 9810, Torch 9850 on BlackBerry 7 OS.

In a much better attempt to compete with its rivals, Research in Motion (TSE: RIM) is releasing three new touch screen enabled phones. The biggest development is their decision to release a phone with no QWERTY keyboard at all, which looks more like many Android models. All of the new phones will run on RIM's new BlackBerry 7 operating system, and have faster processors than their predecessors.

The BlackBerry 7 OS will offer better web browsing and approximately 40 percent better performance than BlackBerry 6. The new system will surely be powerful, but investors are still waiting on the release of the QNX operating system, which should be on RIM's next models to mesh better with the user experience of the PlayBook.
The specifications for the new models are detailed below. The new Torch 9850 will be the new game changer for RIM, and should receive some initial success, and give the company and its investors some time before the release of their QNX phones.

Bold 9900

• 2.8-inch 640×480 (VGA) screen
• full QWERTY keyboard. 
• 1.2GHz processor 
• 8GB of on-board storage 
• MicroSD card slot
• 5MP camera that can record 720p video. 
• NFC chip (could be used as a wireless credit card)

Torch 9810

• 3.2-inch “high resolution” touch-screen
• 5MP camera with autofocus and “HD” video recording
• slide-out QWERTY keyboard. 
• 1.2GHz processor

Torch 9850

• 3.7-inch screen, the largest of any BlackBerry smartphone, 
• Liquid Graphics technology
• 1.2GHz processor
• 4GB of internal storage
• MicroSD
• 5MP camera with autofocus

Importantly, the company is releasing their phones simultaneously throughout their developing markets and North America, which should lend them a sales increase and an influx of cash for new research and development. Overall, the release looks promising and investors should now wait a couple of quarters to see how earnings, and free cash flow, come in the door.

Happy Investing : )

Research in Motion Layoffs. RIM Laying-Off 2000 Employees to Save Costs. Number in Canada not Announced.

Canada's Research in Motion (TSE: RIM) will be laying off 2000 employees in order to save costs. This represents more than 10 percent of the company's workforce, and is more lay-offs than many analysts had previously expected. Some think that this might mean that the situation at the company is worse than expected, but others maintain that it is just an important part of their restructuring efforts to increase corporate profits.

According to RIM, the reduction is: "a prudent and necessary step for the long term success of the company and it follows an extended period of rapid growth within the company whereby the work force had nearly quadrupled in the last five years alone.”

RIM has not announced where the lay-offs will take place, but if the company hopes to save any substantial amounts of money, they will probably be from North America. More information on the cuts will be announced on September 15th, and chief financial officer Brian Bidulka will oversee the cost-cutting program.

The major worry with the investment community is that these lay-offs may not be focusing much on the future, but on quickly shaving costs for short-term gains in profits. However, it is important that the company is moving quickly and indicating to the public markets that it is actively looking after shareholder resources. A major danger, however, is that human capital is crucial in the technology industry, and having your employees move elsewhere means that they can take their valuable ideas and intellectual capital with them.

Happy Investing : )

Why Microsoft Should Buy Canada's Research in Motion. It is a Better Target than Nokia or Yahoo.

In a recent article for the Rhodes Capital Blog, Sean Farhy outlines an excellent argument in favour of Microsoft's acquisition of Canada's Research in Motion. The price he mentions that would be appropriate is $49 per share, well above today's current price of around $27 and a healthy premium for investors should a deal like this ever materialize. To be sure, if the situation at RIM gets much worse, the management will shop around for a suitor and happily take a fat golden handshake... leaving their shareholders with a wad of cash on hand, or ownership in a stronger combined entity. 


"Microsoft (MSFT), like City Hall, is the established bureaucracy and its stakeholders often feel like powerless constituents. Unfortunately for the small investor, the lack of a democracy in a stock proxy only empowers Steve Ballmer and his administration. Mr. Ballmer will play the role of our Mayor, a career politician who has done absolutely nothing for the stock price since he has come into office." 


Microsoft sits on almost $50 billion in cash, or $5.78 a share and also pays a dividend of 2.7%. Earnings are expected to be over $20 billion going forward- Mr. Ballmer, surely you can do better than maintaining your failed policy of executing the status quo? The first trial into the smartphone market failed within weeks and the likelihood of creating another profitable organic hardware system like the X-Box is virtually nil. What needs to be done is something extremely logical and affordable. Rumors were that Microsoft was going to partner with Nokia (NOK) and there was even more speculation that Microsoft was then going to buy some or all of that company. Forget about buying Nokia (which you’ve done, correctly I might add). If Microsoft is on the acquisition path, Research in Motion (RIMM) is more compelling purchase.


"Research in Motion’s market cap is now under $20 billion, with no debt, plenty of cash flow, and a solid footprint in the smartphone market. Nokia on the other hand is larger, leveraged with high-yielding debt, and offers product lines not applicable to Microsoft’s core business. Blackberry currently supports Windows and MS Office so further integration would appear to be easy to accomplish. So if the rumors are right, and Microsoft is going to make an acquisition- Research in Motion would appear to make the most sense."


Abstracts are from the Rhodes Capital Blog


Happy Investing : )

Can RIM Recover? New Article from Maclean's on Research in Motion.

A recent article in Maclean's highlights more of the issues and uncertainties at Canada's technological giant Research in Motion (TSE: RIM).

"RIM’s hopes are pinned on an operating system made by QNX Software Systems, an Ottawa-based company RIM scooped up last year. The software is already running the PlayBook and will eventually power every BlackBerry in RIM’s lineup. But the PlayBook’s troubled launch—reviewers have seized on a lack of key applications, like native email—has raised nagging questions about RIM’s ability to execute its plan. Nor does it help that the updated BlackBerries that were supposed to whet consumer’s appetites in the meantime using the new BlackBerry 7 operating system have been delayed—reportedly because RIM realized midway through their development that the phones would be outdated before they hit store shelves."

Abstract is from: Maclean's.ca

Can RIM recover? With investors and customers losing faith, its fate may rest in a promised ‘super-phone.’

Getting Back to Business for Research in Motion (RIM).

Saturday's Globe and Mail contained an excellent article about some of the problems at Research and Motion (TSE: RIM) and how they might get back on track in terms of advertising, development, and, most importantly, share price. 


"It has been a miserable year for Canada’s most important tech company. Almost everything that could have gone wrong has: A series of sub-par quarterly earnings and profit warnings, coupled with delays in new product launches, have hammered RIM’s share price, which started the year at about $60 and now trades at less than $30. The company’s two bosses have faced pressure from some investors and analysts to shake up RIM’s management structure, and perhaps even hand control to someone else."


Read the rest of the article below:
http://www.theglobeandmail.com/globe-investor/putting-rim-back-on-the-winning-track/article2074548/


Happy Investing.

Research in Motion (TSE: RIM) Decline Way Overblown. Should You Buy RIM Before it is Taken-Over?

I must admit, as a recent owner of Research in Motion, I am a little biased in saying that the recent sell-off in the stock is overblown. Down from over $60 per share in March of 2011, to the high $20's, on the announcement of slower growth and late product development is more than a bit much. Of course, there are many bears in the proverbial Wall Street woods that claim Research in Motion is about to go the way of Palm and other early device makers, but this is not just another dog stock with terrible fleas.

The usual story for defunct technology companies is that they begin to burn cash quicker than they can make it. To be sure, many even have to borrow hordes of cash from investors and banks just to stay current with new developments and recent trends. RIM does not fit this bill. It has over $2 billion of cash in the bank, and it earned almost $700 million in the last quarter alone! To be sure, growth is slowing... but that does not mean everyone should just abandon ship and find the nearest lifeboat. They are at the end of a product cycle and it will take some time for them to release and market their new QNX operating system products, like those similar to the Playbook.

The other reason, which is clearly starting to gain traction, is that investors are starting to really smell a takeover target. When this happens, a floor starts to be created in the price of a stock. According to the CBC, potential "suitors mentioned in the past have included the likes of Microsoft, Oracle, Cisco, IBM and Hewlett-Packard." Each of these companies has deep pockets that could gobble up and enjoy RIM for breakfast. In addition, there are many great technology companies that would love to seize all of RIM's technology in one fell swoop. Why spend billions inventing your own systems when RIM's could be had for much less... plus you get the cash in their bank account remember. Most estimate the cost of buying all of RIM at around $20 billion. This is a large number, but not that large for the technology giants of the world's stock markets.

Happy Investing and be sure to give RIM a look in the near future.

Here is some additional information on this story:

http://www.cbc.ca/news/business/story/2011/06/17/f-rim-shares-buy.html

BlackBerry to use Bing as Microsoft Contends with Google's Android now Leading the Smartphone Market.

Research in Motion (NASDAQ: RIMM, TSE: RIM) has announced that Microsoft's Bing search engine, the perennial loser in the struggle for search engine market share, will be the default engine on it's BlackBerry devices. This announcement was made by Microsoft (NASDAQ:MSFT) CEO Steve Ballmer at BlackBerry World, the industry conference hosted by RIM in Orlando, Florida.


Rival Google (NASDAQ: GOOG) dominates the search market and this move by Microsoft is hoping to take away some of Google's dominant market share. Google's Android phones, however, are beginning to take hold of the smartphone market as well, which has been bad for RIM and many other handset makers. Many industry watchers say that the Android phones are more user-friendly and open to third-party apps than are the phones of their rivals.


According to recent Nielson surveys, Android now has a 29% market share of smartphones in the US. Blackberry is now at 27%, while Apple's sits at 27% as well. Of course, it is important to note that Apple and Blackberry are also handset makers, while Google is not, they simply generate the operating system or OS.