$80 bil to $5bil... Painful (ouch!)

Source: Yahoo Finance

They pioneered the smartphone market. They made it ubiquitous. They nearly ruled it for a decade. They made people addicted to the phones. They sustained the barriers to entry for competitors for years... And as per ECON 101, barriers were supposed to be broken. Players were supposed to enter... They felt possible long-term threat. But they didn't innovate. They saw their market share shrinking slowly. But they didn't innovate. They saw continuous decline in market share and customer base. They thought about innovation. They considered their R&D lightly. They suffered. They launched something exceptional. And they realized it was too late. They, the pioneer of the booming smartphone market, started considering strategic alternatives yesterday. Who are they? They are Research in Motion, Waterloo, ON, Canada based company, who pioneered BlackBerry, aka Crackberry (This name has nothing to do with their demise, but it was given when BlackBerry was the only smartphone option).

When I was young, I always wanted to own BlackBerry. And that's why I had BlackBerry as my first smartphone in mid 2009. Since then, I have had BlackBerry only. Currently, I am using BlackBerry Z10, runs on BB's new OS, BB10. I neither own any BBRY stock nor sit on their Board. I just want to writ what I feel. These should be enough disclosures for any conflict of interests!

BB 10, is by far the best RIMM has developed. I will not use word "innovate", because it may attract some critics. Apple's iPhones and Google's Android devices have become so "generic" these days, which is the prime factor for BBRY's dwindling customer base. The way BB 10 works, consider fast & smooth, if it was launched 2 years ago, the results could have been different. Only, the only, problem it has, is lack of apps. They have lost developers' interests as well along with customers. Recently, they announced to offer BBM, their premier messaging service, to other platforms. I am not really sure how useful it can be. But one thing I am absolutely sure about is BB 10 is all they can offer. There is nothing beyond that.

I have no vision for their future. They may be out of the business in 2015 when I will be hunting for a new phone. There is a huge possibility that I will not be able to get BBRY phone in the market in 2015. But I strongly believe that I will have good solid time with current Z 10 I have until 2015.

From one corner of my heart, I thank Apple and Google for bringing smartphone market to this level in such a short span. And that is the premier reason why BlackBerry developed their best product. And I could get a chance to use that!

Cash is "The King"

What is the difference between the great recession started in 2007-2008 and the global crisis we are currently facing? It is a 4 letter simple word. CASH- no matter what currency it is.

If I focus on the US, the biggest economy in the world, all big banks and corporations are sitting on the huge piles of cash. This was not the case 4 years ago. Most of them were cash stricken. After Apple Inc, the most valued company on this planet, released its 2011 Q2 results, it showed over $70 billions of cash & cash equivalents which is more than the GDP of many countries. Lessons learned perfectly- that's what we can say! Now the question is if these mammoth companies have enormous amount of cash, then why are we on the verge of another worldwide crisis? It is because everyone is too skeptical about economy, political unrest and discomfort in European economies. No one wants to spend their cash based on weak outlooks. If there is no cash circulating in the markets, then how can one make money and drive economy along?

In the course of company's life cycle, if management thinks there is no more growth ahead, then they distribute  excess cash as dividends to reward investors or buy back their own shares. Recently, share buy back has been a spree which is a good sign since companies buy back their "cheap" shares in anticipation of increase in share value. But many companies are issuing cheaper bonds to raise cash and use that cash to buy back their shares. Isn't it unusual? Why would they not use abundant cash they have and end up paying interest payments to bond holders? We have connected the dots here. No one wants to use "cash" they have. Everyone has figured out that cash is the only way to get their company out of the potential financial mess. And once again, it has been proved that cash is the only king you want to save till the end.

Chipotle: Expectations vs Fundamentals...

I never thought that "burritos" would bring me out from hibernation (it has been nearly more than 3 weeks since I wrote the last blog). I love their food. Many of us do. It is Chipotle Mexican Grill, Inc (ticker: CMG). Short, simple and affordable- 3 words help it rule its peers. An inspirational success and growth story. Following chart  says it all:

Phenomenal growth. Handsome return to investors. Stock was worth $38 on November 20, 2008. Stock is worth $330 today. Do I need to show return figures? Company's business model is fundamentally strong. They target fast food consumers who want to spend $5-$10 on their meals. It has nicely managed the global food inflation. Its store operate in all metropolitan area of the US and try to provide affordable options in such areas. Conclusion: Sweet & Sound!

Yesterday, they announced their second quarter earnings. Earnings were pretty good despite of rough outlook of the global economy. All numbers were decent and higher than last quarter. But I heard the voice.... "Clear Disappointment". I am still trying to figure out why I was supposed to hear that. Reason was--- they missed analysts' estimates. What bothers me is they missed it by dozen cents. Negative earnings surprise. I understand that analysts on the street perform all fundamental analysis and provide their estimates. But I still consider a phrase "Failing to meet expectations" which may make another phrase "Clear Disappointment". If we compare all the numbers with its peers and industry overall, they are still the leader. There is nothing wrong happening with its revenue generating model. It is partially because of too much expectations, isn't it?

Based on Chipotle's news, I wonder what happens in the market if mammoth Apple Inc misses its estimates. Worse. Worst. Why? They never respect analysts' estimates and always believe it positive earnings surprise!! Yesterday, they announced those bottom line numbers 25% greater than estimates. And that sends the story to investors for their EXPECTATIONS from Apple in the next quarter...