BlackBerry Maker RIM Rises About 7% in Trading as Bears Starting to Run for Cover.

News of the departure of CEO founder Mr. Jim Balsillie, and news that Research in Motion is seeking strategic alternatives sent shares in the BlackBerry maker sharply higher during Friday's trading session. Still over 70% down from its year ago price, the Canadian technology titan is giving shareholders a brief sigh of relief.

500,000 PlayBook tablets were shipped last quarter, well above the 150,000 shipped during the previous quarter. With the release of the 2.0 software upgrade, along with price reductions, demand is starting to pick-up.

Research in Motion ended the quarter with 77 million subscribers, which is an increase from the 75 million it had at the end of last quarter.

RIM's revenue for the quarter was $4.2 billion, which is at the higher end of analyst expectations.

BlackBerry 10 is still on track for release later this year, which will give a much needed boost to its revenues and subscriber base.

Lower-end BlackBerry 7 models are being developed for the many foreign markets to help stem erosion from new competition, such as many low-end Android models.

Desperately, however, the company still needs a more targeted and forceful marketing initiative. So many consumers are swayed by games and gimmicks on their devices, which has not been BlackBerry's hallmark. Going forward, the company needs to find a way to attract a more fickle audience... less concerned with quality and more concerned with fashion and fun.

Happy Investing and Happy Friday : )

Median Weekly Earnings of Graduates Versus Non-Graduates and their Associated Unemployment Rates.

The above illustration from the Bureau of Labor Statistics in the United States highlights the advantage that graduates of various levels experience in terms of both pay rates, and employment prospects. Taken from 2009, one would only assume the discrepency is even worse during today's poor economic climate. Without a post-secondary education, many individuals are now finding themselves underemployed and underpaid relative to many of their contemporaries.

The Millennial Generation of Lost Car Buyers. Those in their 20s are Bewildering Car Makers as they Show Little Desire to Own a Car.

The Millennial generation, those born in the 1980s and 1990s, are bewildering car manufacturers as, in contrast to previous generations, they do not seem nearly as interested in buying or owning a car.

At a conference last year, Toyota USA President Jim Lentz said the following:

"We have to face the growing reality that today young people don't seem to be as interested in cars as previous generations. Many young people care more about buying the latest smart phone or gaming console than getting their driver's license."

Indeed, less than half of potential American drivers under the age of 19 had a license in 2008. This is down from a rate of 66% only a decade before. But the important questions for auto-makers is whether they are buying less cars and not obtaining their licenses because of money and the economy, or because of a genuine shift in their tastes, preferences, and priorities.

In particular, the Millennial generation is known for delaying adulthood and its hallmarks. They are delaying marriage, delaying moving out, delaying getting full-time jobs, and now delaying purchasing auto-mobiles and houses.

Interestingly, in The Atlantic, it is noted that the Millennial generation has a rising preference for urban living, in contrast to their parents' desire to live in sprawling suburbs. If this is true, there will be a large dent in auto-mobile sales as this generation and their children grow older. Expanding suburbia after the end of World War II was a key contributor to the growth of auto-mobile culture in North America, and if the suburb begins to wane, so too will car sales.

So how to increase car sales? The Millennial generation often loves fun toys that look cool, more than they appreciate a product's practicality. Engineer cars that make them feel like they are somehow rejecting the idea that they have to be responsible or grow older. Make a fun car with lots of gadgets, and one that helps them to identify more with a culture that rejects the conformity of previous generations for a new... while, conformity. But one that this time is so self-concious and worried about conforming that it desperately tries to be different and unorthodox for the sake of it.

Will this work? Perhaps not, but watch closely and you will see Ford, GM, Toyota, Chrysler, Honda, BMW, Volkswagen, Mercedes, and others beginning to fall all over themselves trying to preach unconformity and difference to the lost generation of car buyers.

Ally Financial Still Owes A Huge Sum to the Government. The Financial Crisis is not Over, and Canadian Banks Might Still be Left Holding the Bag.

Ally Financial, the Detroit based former finance unit of General Motors, is still owned 74 percent by the United States Treasury. This stake was received in return for over $17 billion in government investment during the height of the U.S. financial crisis. Though it intends on fully paying back the taxpayer's investment, recent news from Bloomberg indicates that the the company will be unable to fetch a large enough sum if it engaged in an initial public offering, or IPO.

It is now being suggested that Ally Financial split into an automotive finance unit, and a retail bank. The retail banking unit, which is what most of us are familiar with from their advertisements, already has $28 billion in deposits. The albatross around the company's neck is Ally's residential mortgage unit, which issued a flurry of bad loans prior to the housing and associated mortgage meltdown in the United States.

Thus far, Ally has paid back $5.4 billion to the United States Treasury. It also almost reached a deal to sell itself to TD Bank and General Motors last year, but those talks fizzled. Buying the beleaguered lender, however, might leave a Canadian bank with significantly more exposure to bad debts than it can handle, which might reverberate back to the Canadian marketplace and its shareholders. TD Bank already paid $6.3 billion for Chrysler Financial, which is not exactly always a prime lender.

Ally's current situation is an indication that though the financial crisis might be in our rear view mirror, it might still be closer to us than it seems. Shareholders of Canadian banks have to be careful that they know what they really own and watch out for their own bankers left holding a big bag of defaulting U.S. debt. The American government would be more than happy to let us share some of the risk.

China Experiences Worst Trade Deficit in a Decade. Demand for Resources Reaches Record Levels. Will the Chinese Consumer Force the Government to Spend its Currency Reserves?

Primary resource industries are poised to continue reaping record profits as China's demand surges and the country experiences its largest trade deficit in over a decade!

Chinese imports in February rose almost 40%, leaving the country with a trade deficit of $31.5 Billion. Exports rose at a slower pace of 18.4%. The primary contributor to the deficit was imports of fossil fuels, which Chinese consumers are demanding in ever increasing numbers as their preferences for American and European styled vehicles reaches record levels.

Inflation in China is heating up, but the administration is still apt to try and keep domestic demand growing in fear of growth collapsing amidst a European recession. Inflation, however, is trying to be reigned in at 4% per annum, a difficult prospect with oil reaching $125 per barrel recently on the international markets. Chinese demand for copper, iron, and oil all rose during February.

It was only a matter of time, but the Chinese consumer is now forcing the state to funnel some of its cash reserves back to the world market, and thankfully for Canada, we are selling the goods that they are buying.

Steam and Netflix Show Old Media How to Profit and Generate Revenue in the New Era. With $350,000 per Employee, Steam Leads by Example.

For anyone familiar with Steam, they are aware of the success it has experienced in the video game industry by shirking the traditional brick and mortar distribution model, and deciding on an exclusive on-line presence. Paul Tassi in a recent issue of Forbes notes that Steam has a model for success that other media distribution company's need to follow and emulate. He is absolutely right, and the sooner the better for many of the media dinosaurs.

Amazingly, he notes that at Steam, developers get 70 percent of revenues... traditionally they get 30 percent. Utilizing Steam to sell your software, therefore, is a huge win for developers, and Steam is smart in developing a loyal base among those who develop and create the content that consumers want to buy.

A second statistic is that Steam rakes in $350,000 per employee. This is more than even Apple or Google, and unparalleled in the technology industry.

Essentially, Steam's "ease of use" and fair prices are making piracy a manageable problem for the video game industry according to Paul Tassi.

Instead of trying to use legislation to fight against the headwinds of new technology, developers, content providers, and distributors need to emulate company's like Netlflix and Steam. Revenue and profits are there to be made in the new era of media, company's simply have to innovate and modernize their operations. The examples are already there to follow.

Education Reaps Huge Financial Rewards. $570,000 in Gains! The Best Investment for the Future.

"Where is the best place to invest $102,000?" asks a recent study by the Brookings Institute. Their finds are clear and strikingly decisive. It is not stocks, bonds, real estate, et cetera, but education. The average undergraduate degree in the United States will cost approximately $102,000 to earn, but will net about $570,000 more in lifelong earnings than somebody with a high school diploma. Someone with a two year college diploma or associate degree will net $170,000 more during their life.

As a return on investment, this amounts to a 15.2 percent return per year for a 4 Year Degree, and an astounding 20 percent return on a college diploma. Why the higher return on a college diploma? A college graduate will make less money, on average, per year than someone from university, but the opportunity cost was lower. The college graduate started earning money two years earlier, and they paid significantly less money for their education.

A Chance to Own Facebook. IPO Values Company at $80 to $100 Billion. Zuckerberg Maintains Control.

Facebook plans to raise between $5 and $10 Billion in its upcoming Initial Public Offering, but CEO Mark Zuckerberg should contain complete control. With 854 million active users, the company is expected to be valued at approximately $80 to $100 billion. Zuckerberg's current stake would be worth over $28 billion at estimated levels.

According to Thomson Reuters:

"Its IPO prospectus shows that Facebook generated $3.71 billion in revenue and made $1 billion in net profit last year, up 65 percent from the $606 million it made in 2010."

This would make Facebook one of the most expensive stocks on the market, with a price to earnings multiple of almost 100 times. For investors to generate any kind of long-term profits, this company is going to need to continue growing at a rapid pace for years. Given that it is failing to generate any meaningful income from mobile media devices, this is going to be very difficult.

There will, however, be a tight supply of shares when they issue. With $10 billion being floated, that leaves about 90 percent of the shares locked-up. Of course, insiders could begin liquidating after the IPO, but buying interest should give a floor to share prices. Nonetheless, Intelligent Investors beware of a hot IPO or a technology darling coming to market. Multiples are very, very, high. 

Oil Sands Realizes Massive Profits for Imperial Oil Shareholders. IMO Dividend Increase and Kearl Oil Sands Expansion on the Horizon.

Imperial Oil raises dividend after profits rise 26%. For 2011, the Canadian oil giant is finishing the year with its second highest profit ever, which should make Intelligent Investors very happy. Earnings for the quarter rose from $799 million to $1 billion, and total revenue rose to $8.12 billion.

Annual revenues for 2011 were an astounding $30.71 billion, but the dark spot for quarter was total production levels, which declined to 291,000 barrels per day. The Cold Lake oil sands project, however, was very strong, with daily production increasing to a whopping 160,000 barrels per day.

The end of this year should bring Imperial shareholders another profit jump as the Kearl oil sands mine comes on line with 110,000 barrels of production per day. By 2015, the Kearl mine should be producing 270,000 barrels per day, almost as much as the entire Imperial operations did this quarter

Imperial, which also runs the Esso brand stations across Canada is a good long-term hold for Intelligent Investors, and one of the few companies that already has production increases scheduled into its pipe.

Full Disclosure: Matthew Clarke owns or indirectly controls shares in Imperial Oil Corporation. (TSE: IMO).   

Warren Buffett of the North Buys Huge Stake in RIM. Research in Motion Appoints Prem Watsa to Board of Directors. More Shareholder Friendly Company.

The CEO of Fairfax Financial, Prem Watsa, has increased his stake in Research in Motion (TSE: RIM) to 5.12%. Often referred to as the Warren Buffett of Canada, he succeeded in making a fortune while others failed during the great financial crisis of 2008-2009. Mr. Watsa has now been named to the board of directors for the BlackBerry maker. 


According to Canada's Globe and Mail:
"Mr. Watsa, Fairfax, and other companies related to them bought 6,499,500 shares of RIM on Wednesday and an additional 7,550,700 on Thursday, according to filings with U.S. securities regulators."


Fairfax Financial spokesperson Paul Rivett is quoted as saying that the company is very excited to be buying RIM below book value. Furthermore, the company is interested in buying more shares as Research in Motion continues a restructuring program. With a new CEO and an increased presence for investors on the board, shareholders should be pleased with recent changes.