Watsa loses $400 million on RIM, still confident.
Interesting perspective for anyone who's thinking about purchasing RIM stock.
Value investor loses big on Research In Motion- MSN Money
Watsa started to buy RIM in the third quarter of 2010. He bought about 2 million shares when the stock was trading in the $50s. He then added to his position as the stock price collapsed to the $40s then $30s and $20s in 2011. The last time he bought was January of 2012. He doubled down on his position and bought another 14 million shares.
We estimate that his cost per share is around $30. He owned 26.8 million shares as of January 2012, which is about 5% of the shares outstanding. At the current price of around $12 a share, Watsa has had more than $400 million of paper loss on his position in RIM.
The key to averaging down is to have confidence in the company. Watsa certainly displayed great confidence in the recovery of RIM.
No actual loses, just 'paper loses'.
Although he could be investing the money in something else that might already be showing a profit.
My point is that he's got that much confidence in RIM's ability to turn this around, he knows he'll make money with them.
- CrackBerry Genius
05-10-2012, 04:44 PM #5
- 1,642 Posts
The good thing is that he has confidence in the company. If he thinks the company has gone down the tubes (which most people in the US thinks), he won't be keeping his holdings (alternatively he might just be thinking about profitting if and when RIM gets acquired)...
- CrackBerry Genius of Geniuses
05-10-2012, 04:44 PM #6
- 6,163 Posts
The trouble is, the stock price now has to quadruple in price before he even breaks even. It could happen, but it will take years if it does. Meanwhile, anybody who jumps in now ...Ed
Be bold. Be pantless. Then go take a nice long nap.
- CrackBerry Abuser
05-10-2012, 04:51 PM #8
- 236 Posts
Funny, his initial purchase price and subsequent average down prices are pretty much in synch with mine. He's probably seeing the same things I'm seeing.
As a result I'm feeling the same pain as he is, although obviously his dollar amount is much greater than mine.
I am also quite optimistic regarding RIM's future, and if BB10 turns out to what it's shaping up to be, RIM is easily a 3 digit stock.
- CrackBerry User
05-10-2012, 08:11 PM #11
- 65 Posts
Past performance (by others) in no way guarantees future returns, especially when a miracle was involved.
Apple was a different company, with a different history, in a different industry, with different competitors back in the early 1990s. Its comeback is well known because it was miraculous. It started with a radical housecleaning and a laser-sharp view to the intersection of technology and the consumer market. It also took fifteen years. It is likely not repeatable in this age of the world.
Watsa, as a major stakeholder, would be crazy not to act confident in public. He might well be buying at $11.75 in an effort to mitigate his vast losses, should the stock bump up to $15. I seriously doubt he is expecting an Apple-like renaissance. (My doubt is based on the evidence that he is not a fool.)
The industry has changed, but Apple isn't the innovator it once was.
Apple's innovations aren't even that innovative.
A monolith with a touch screen. Wow.
A bigger monolith with a touch screen... double wow.
The same monolith with a much sharper touch screen...... yeah thats really bleeding edge stuff you've got there.
- 05-10-2012, 10:38 PM #14
NO! you BUY stock and you SELL it to make money. you cannot HAVE stock and LOSE money...
you also have to consider that if this was a 5 year investment GOING IN then he had ideas the stock would go lower, and maybe even hoped for it. What looks better for him:
1] buying 14 million shares when its at $10 and being seen as a 'bandwagoner'
2] buying shares at $50 and averaging out to 14 million shares at $30 each... then when the RIMpire strikes back he will be looked at as someone who 'knew' what RIM was capable of. Sure it is a HUGE risk, but any stock is a risk.
He clearly believes in RIM and I wouldnt be surprised if he buys more shares to bottom out his average at $25 or so... then when RIM hits $50 he will have DOUBLED UP!
- 05-10-2012, 10:56 PM #16
are you saying that upgrading your screen on a $700 device IS innovative...
I think that what people have to look at is the fact that the Playbook wasnt just RIMs first tablet... it was the FIRST QNX adaptation. It started at ZERO, and if you ask me it is already at 11! It took the iPad A LONG time to get this good... and I am NOT saying that the PB is out performing the iPad in first year, technology has changed A LOT since the iPad was first released so the FIRST iPad and Playbook performance/reception cannot be directly compared... it is impossible. If the PB came out before the first iPad it would have sold A LOT more, but it didnt... and 'imagining' possible scenarios of the past wont help anyone fix the problems of the future.
The Playbook is continually getting BETTER ratings then when it was released, and even better then many, or most, android tablets on the market right now. What other tablet do you know that has INCREASED interest/hype/demand AFTER being on market for a year? I can think of only one... so to say that the PB is NOT innovative, but the iPad is would essentially be the same as saying that no tablet other then the iPad is an innovation. AND THAT is a very BOLD statement to make... especially with all the things the PB has shown us in the last 3 months
- CrackBerry Abuser
05-10-2012, 10:59 PM #17
- 470 Posts
All hail apple. King of everything. No one could ever innovate anything like they do. I wonder why anyone would even try to compare anything to them. They have proven that you can sell ice to Eskimos if you make it seem cool. (no pun intended )
And by the way, beer drinking chick's are all sexy and thin, according to apple. So what you are seeing is not in fact reality
Torch 9800Black Z10. playbook 16gb playbook 64gb torch 9800White Z10(2nd) PlayBook ™ 16GB. (3rd)
- 05-10-2012, 11:08 PM #18
And trust me when I say that the Playbook does not inspire the jaw-dropping awe it does "outside" these walls. That isn't a slam; it's just reality. In terms of performance, I cannot name another tablet that has hurt its companies bottom line more. And to say that demand has increased... no comment. When BKC does its Whoppers sales, demand increases.
I don't think anyone at HP is touting Touchpad adoption after slashing prices either.
- 05-10-2012, 11:22 PM #19
As for the inspiration/demand levels of the PB... I know that RIM is struggling in the states so I understand that you may not be seeing what I am in Canada. I can also tell you that I know A LOT of people that are interested in purchasing my 32GB Playbook, but they are all waiting to see the pricing of the new PB... i dont see ANYTHING wrong with that, i actually suggested that they do that because I dont want them to buy my PB and then feel ripped off. My cousin paid $400 to replace the screen on his 6 month old iPad2 and then 2 weeks later the price of an entire brand new unit with 1 year warranty was at a cheaper price then he just paid to fix his screen... he feels ripped off and is very upset... THAT is what I DONT want from the people that buy my playbook. The Shopping Channel just had another 'bundle' on PBs... would they do that if there was no demand? Especially because they already had a 'bundle' which is how I got my 64GB... Would they spend all that money purchasing MORE playbooks when the other ones didnt sell? (i know these are 'new purchases' because they are all 32GB models so they cannot be left over from 64GB bundles).
I guess you will have to take my world for the inspiration/hype in canada...
My point regarding the iMonoliths is just that there's really nothing new in what they did. Star Trek and Space Odyssey had them. Apple was just the first to market copying ideas that already existed.
RIM has done something different. For one, they've incorporated bezel gestures, which is a definite innovation over simple touch interfaces that smooths out a lot of UI interaction.
They've got a microkernel, which was the dream of computing back in the 90s. Apple built their OS off the Mach microkernel, butchering it back into a hybrid monolith. If they'd wanted to stay relevant with the research, they should have been looking into moving back to a microkernel when the L4 kernels solved the IPC problems.
The QNX microkernel itself is a networking dream, designed to seamlessly communicate with other devices. Once the platform is complete, there will be a ton of tools to allow seamless interaction between devices, another leg up from the competition. TAT has already demo'd a few that use NFC and they've been quite interesting.
What's most amazing is how much they've done in such a short period. You won't find anything comparable in what Apple did. It took Apple 5 years to move from purchasing NeXT to releasing Mac OS X 10.0. And the NeXT environment wasn't even built from scratch, just updated. 5 years!
Android was started in 2003, bought by Google in 2005. It was another 3 years before the HTC Dream was released, the first Android phone.
RIM has gone from purchasing QNX in 2010 to releasing the PlayBook with OS in 1 year. That's an unbelievable rate of development.
As for other innovations, they've added a plethora of functionality to the bridge concept that no other phone offers and will only increase as the phones themselves are updated to merge with the tablet seamlessly, thanks to transparent distributed processing.
What are you going to do when your tablet and device pair so tightly that they can perform load sharing between devices? When your tablet and your phone can actually act as a unit and each operate more efficently just due to the proximity of the other device? Thats the kind of innovation QNX enables. It's f-ing beautiful.
You can call me a fanboy, or a rimbecile, but do your research first. There's something special being created in Waterloo. It goes beyond the shiny monolith metaphor. Now its vast seamless networks of them.
05-11-2012, 02:28 AM #21
- 5,676 Posts
- Hey, what did you expect ?
05-11-2012, 02:33 AM #22
- 5,676 Posts
- Hey, what did you expect ?
While media is slowly quitting the bashing attitude, no one yet can say the overall signal is clearly green. But it tends to be orange, while it's been red for over a year now. So ... patience is vertue.
- CrackBerry Master
05-11-2012, 06:37 AM #24
- 1,132 Posts
We need to have this microkernel discussion in another thread probably. I wonder why no one here ever talks about the disadvantages of microkernels. I understand that the QNX team staked their professional reputations on that design and have stuck to it for this long. But when I worked on Mach, we were already seeing the downside of microkernels. This is why NeXT and Apple moved away from the pure micro design. It's also the reason why Microsoft also abandoned their ideas of a microkernel. This is why Linus chose not to go in that direction despite quite some pressure when microkernels were so in vogue in the early 1990's.
Microkernels were popular in the early 1990's because processors were very different then than they are now. Now, the performance and energy cost of running a pure microkernel is a huge issue. It was a big issue by the late 1990's and even more so now.
There is a reason QNX became a very small niche player compared to where everyone thought they would be when they were popular 20 years ago.