BBRY

How We Add Incremental Value to Your Research and Analysis on Apple

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There’s a lot we can talk about with respect to Apple’s solid fiscal third-quarter results–and we will–but the most important takeaway from this article is how we strive to add incremental value to your research and analysis of the iPhone giant. First of all, we don’t play the quarterly earnings beat-or-miss game at Valuentum. You can read about how we think about near-term forecasts and what we think are the most important drivers behind a firm’s long-term intrinsic value here. Most sell-side analysts and commentators spend the majority of their time analyzing factors that impact the company’s financial performance (not necessarily its stock price) over the next couple years, a time frame that generally accounts for ~20% of a company’s total … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

5 Steps to Understand Why Apple Is Cheap; Shares Continue to Be Unfairly Weighed Down By ‘Palm Pilot’, Moto Razr” and “Blackberry’ Memories”

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Executive Summary: For Apple to be fairly valued at its after-hours price, normalized earnings per share would have to be assumed to be about $20 per annum, half of Apple’s current annual earnings of $40+ per share. We think normalized earnings at the iPad maker are much higher than what the market is giving it credit for, especially considering the promising ideas in its product pipeline. We’ve raised our fair value estimate of Apple to $680 per share thanks to the time value associated with rolling our model one year forward, offset in part by a slightly lower growth trajectory following fiscal 2014 first quarter results (ending December 28, 2013). We continue to like shares, which are currently trading at just … Read more

Heins Bails, Blackberry Fails

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On Monday morning, beleaguered smartphone maker Blackberry (BBRY) announced the resignation of CEO Thorsten Heins, as well as a $1 billion private placement of convertible debentures. Heins’ departure comes as little surprise in the wake of weak performance from Blackberry 10 which coincided with a write-down of nearly $1 billion in inventory. As for raising capital, one might assume that a well-capitalized company like Blackberry wouldn’t need new capital; however, its current cash-burn suggests an interjection is necessary if the company wishes to attempt (another) fundamental turnaround. The New Leadership John S. Chen will replace Heins as interim CEO and chairman of the board of directors. Chen is best known for his reign atop Sybase where he was responsible for … Read more

Take the Money and Run: Fairfax Bails Out Blackberry

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Late last week, smartphone maker Blackberry (click ticker for report: ) preannounced terrible second quarter results. Revenue likely declined approximately 43% year-over-year to $1.6 billion, which is nowhere in the ballpark of consensus estimates in the $3 billion range. This amounted to 3.7 million phone sales, far less than the number of units Apple (click ticker for report: ) sold during the first weekend of its iPhone 5S/5c release. The firm will post an operating loss of $950 million to $995 million driven primarily by a pre-tax inventory charge of $930 million to $960 million. Cash fell to $2.6 billion, and the firm announced that it would lay off 40% of its global staff, leaving the company with 7,000 total … Read more

They Like It. They Really Like It! Reviews Praise New iPhone

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Following shares of portfolio holding Apple (click ticker for report: ) has been an interesting task during the past week. Shares dropped 8% following the announcement of the iPhone 5S and 5c and the lack of a statement about a final deal with China Mobile. We continue to believe the China Mobile announcement will eventually occur, but for now, let’s look at what some top reviewers are saying about the iPhone 5S. The New York Times: “The best part is that it actually works — every single time, in my tests. It’s nothing like the balky, infuriating fingerprint-reader efforts of earlier cellphones. It’s genuinely awesome; the haters can go jump off a pier… The iPhone’s ecosystem is a deal-sweetening perk — the best apps; … Read more

Margins Will Drive Apple’s iPhone 5S and 5C Outcome

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Apple (click ticker for report: ) announced the release of its iPhone 5S and its even longer-awaited “cheap” iPhone 5C Tuesday, both of which we believe will be a big hit with consumers. The firm is also reportedly close to announcing a deal with China’s largest mobile carrier, China Mobile, which will help Apple sell even more units. The 5C Image Source: Apple The iPhone 5C is one of the most anticipated products in Apple’s history, and not because people thought it would be the best product ever, but rather because it is believed to be Apple’s emerging-market solution. The phone will retail (unlocked) for $549, $100 below the price of the 5S. The phone contains an internal steel construction … Read more

Blackberry: Strategic Alternatives Signal Failure

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After the launch of its new phone and operating system came and went without much fanfare, smartphone maker Blackberry (click ticker for report: ) announced that it is exploring strategic alternatives for the company. Although most tend to associate strategic alternatives with selling the company, Blackberry is also open to partnerships and joint-ventures. Let’s start with the obvious inference out of this news: Blackberry 10 didn’t save the company. If this wasn’t clear enough when Blackberry reported weak results for its fiscal year 2014 first quarter, we think the situation is obvious now. Consumers, particularly of the high-end smartphone variety, simply do not want Blackberry products. The app world is far inferior to competitors Apple (click ticker for report: ) … Read more

Price Momentum Got Ahead of Fundamentals at BlackBerry

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Canadian smartphone maker BlackBerry (click ticker for report: ) reported weak results for its fiscal year 2014 first quarter Friday morning. Revenue increased 9% year-over-year to $3.1 billion, which was well below consensus estimates. Earnings per share had several moving parts, but when adjusted for one-time issues, came in at a loss of $0.06. The loss was a drastic improvement from the same period a year ago when the company lost nearly $1 per share, but fell short of consensus expectations calling for a slight profit. BlackBerry 10 shipments were also below consensus estimates, coming in around 2.7 million units compared to the 3 million units the Street anticipated. Geographic Performance Image Source: BBRY Q1 FY2014 Earnings Release Geographic data reveals exactly … Read more

Revenue Growth Not an Issue at Synaptics

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After persistent rumors surrounding weakness in Samsung Galaxy S4 sales weighed on the stock, touch-screen control supplier Synaptics (click ticker for report: ) raised its fourth quarter outlook Tuesday. The increase wasn’t a small one either–the firm increased its revenue outlook to the range of $227-$230 million, much higher than the initial guidance calling for revenue in the range of $190-$205 million. Gross margins are expected to be around 50%, which will be a modest improvement from the previous quarter. Though no company ever likes to see demand cuts from one of its largest customers, it doesn’t appear that the cut will have much impact on Synaptics. The firm provides technology for all sizes of touch screen experiences, and it … Read more