12-27-12 03:50 PM
36 12
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  1. JeepBB's Avatar
    Except royalties are per phone, Apple sells millions of phones so the licensing and royalties are obviously higher.
    If you had a company and wanted to sell 10,000 phones using Nokia's patent, they are not going to charge you $608 Million.
    You'll be charged based on wanting to use it in 10,000 phones.

    My point is, the licensing and royalties are proportional to whatever RIM sells. So it's not exactly a significant loss.
    I do take your point about proportionality, but the figures involved won't be parking-meter change as you imply.

    IIRC, the patent covers all WLAN capable phones sold by RIM since 2008, which I suspect includes pretty much every BB phone out there - 80M subscribers wasn't it? - and Nokia will want those past royalties paying now I'm sure (I know I'd want any lawyer working for me to demand that!). And then there's the royalties payable on all future handsets, which for RIM's sake I hope will be measured in the millions of handsets. If RIM's sales aspirations are measured in 10,000's of phones, they might as well call it now!

    I guess we'll find out the licensing costs in the next set of results.
    12-22-12 03:47 AM
  2. BThunderW's Avatar
    Obviously if Nokia and RIM reached a deal without having to get courts to do a ruling, the details of the deal must be favorable to both parties. It could be as simple as more patent sharing between the two companies on top of small royalties.

    I do take your point about proportionality, but the figures involved won't be parking-meter change as you imply.

    IIRC, the patent covers all WLAN capable phones sold by RIM since 2008, which I suspect includes pretty much every BB phone out there - 80M subscribers wasn't it? - and Nokia will want those past royalties paying now I'm sure (I know I'd want any lawyer working for me to demand that!). And then there's the royalties payable on all future handsets, which for RIM's sake I hope will be measured in the millions of handsets. If RIM's sales aspirations are measured in 10,000's of phones, they might as well call it now!

    I guess we'll find out the licensing costs in the next set of results.
    BB10BelieveIt likes this.
    12-22-12 06:46 AM
  3. JeepBB's Avatar
    I doubt it's as simple, or as cheap for RIM, as a cross-licensing deal... but I'm sure we'll find out in the next figures.

    And it did go to court - an arbitration court (in Sweden) whose judgements are binding (and seemingly un-appealable) worldwide. The (brief) history of this is that RIM went to binding arbitration a few months back, and lost, then were tardy in agreeing a settlement over the royalties they owed Nokia... so Nokia recently asked a Court to stop RIM from selling phones until settlement was reached. Unsurprisingly, that kick-started discussions and RIM/Nokia have now agreed on the past and future royalties due.

    So, whilst the deal is clearly acceptable to both parties (else they wouldn't have settled), the idea that this was a mutually favourable arrangement arrived at through some convivial chat over brandy and cigars and without legal "threats" hanging in the air just isn't the case.
    Last edited by JeepBB; 12-22-12 at 07:58 AM.
    BB10BelieveIt likes this.
    12-22-12 07:26 AM
  4. BB10BelieveIt's Avatar
    I guess we'll find out the licensing costs in the next set of results.
    Very interesting discussion folks! One point I would make is that we may never know the terms of this Nokia deal. Are these types of agreements usually made public in regulatory filings?
    12-25-12 02:52 PM
  5. BB10BelieveIt's Avatar
    BTW, I think the OP could be spot on with their assessment. Think about it from the perspective of the short seller; they short this company, RIM, that they believe is ultimately going to zero. All the news this last 3 months has been positive and has actually got some people thinking that RIM might actually be quite the winner here. The negative catalysts are drying up; the product looks amazing, management is executing, carrier support is increasing, developer support is increasing, the service fee obstacle for carriers is gone, and now RIM has enough cash in the bank and 79 million subs to sell BB10 into AND the uncertainly of a bad quarterly report is gone until after BB10 launch. That must be terrifying.

    Perhaps institutional shorts that saw the writing on the wall 'wagged the dog' to shake out weak retail longs and cover their dangerous short. I'm sure they were thinking that there is a GOOD possibility the stock could continue running up to the launch and they would not get another chance.

    In this case we may be completely wrong, but anyone who says that stuff like this doesn't happen does not understand how the institutional big money game is played. Just ask Cramer (but don't follow his stock picks)

    Jim Cramer on market manipulation - Wikipedia, the free encyclopedia
    zyben and Acumenight like this.
    12-25-12 03:10 PM
  6. Acumenight's Avatar
    I must say, movies like "Wall Street" gets their story plots inspired by market realities.
    12-25-12 04:11 PM
  7. JeepBB's Avatar
    Very interesting discussion folks! One point I would make is that we may never know the terms of this Nokia deal. Are these types of agreements usually made public in regulatory filings?
    I'm not in finance, so I honestly don't know for sure, but I would be surprised if a lump sum payment from RIM to Nokia of $xM (representing the historic royalties) plus a continuing obligation to pay $y per handset forevermore isn't reportable somehow, somewhere.

    Surely it would form part of the "material facts" that every public company has to disclose - debtors/creditors, etc? And even if that's not the case, it'll leak... after all, the payment Apple made to Nokia for the same licence appears to be "known".
    12-25-12 04:47 PM
  8. randall2580's Avatar
    I doubt it's as simple, or as cheap for RIM, as a cross-licensing deal... but I'm sure we'll find out in the next figures.

    And it did go to court - an arbitration court (in Sweden) whose judgements are binding (and seemingly un-appealable) worldwide. The (brief) history of this is that RIM went to binding arbitration a few months back, and lost, then were tardy in agreeing a settlement over the royalties they owed Nokia... so Nokia recently asked a Court to stop RIM from selling phones until settlement was reached. Unsurprisingly, that kick-started discussions and RIM/Nokia have now agreed on the past and future royalties due.

    So, whilst the deal is clearly acceptable to both parties (else they wouldn't have settled), the idea that this was a mutually favourable arrangement arrived at through some convivial chat over brandy and cigars and without legal "threats" hanging in the air just isn't the case.
    And I don't think it was a coincidence RIM did what they could to delay the matter till now.

    RIM has been doing everything they can to keep a positive spin on what should be a tough time for them. Their losses have been less than expected. They hadn't lost subs until this quarter thanks to aggressive marketing in new markets, and they worked very hard on keeping cash on hand stable to growing. I think they sold out of a lot of inventory previously purchased and have not reinvested that money in the new build out yet, that will be done this quarter - which again is another quarter RIM is expected to struggle. By postponing these payments - they were able to push them forward and keep them from affecting cash balances, and having to explain that the settlement kicked in blah blah blah.

    RIM has done a very good job of managing the money so far. Thorsten said in the last conference call that he expects cash to stay "above 2 billion" in the next quarter, so about 900,000 million will be used to clean up the Nokia mess, build and market the new phones. That's a good bit of coin being spent to do that, while continuing to keep the cash on hand positive, if he's right (and he's been good at being right).

    Thorsten does very well when he sticks to the talking points (when you watch the RIM executives go out - watch and listen to them all basically saying the same words, not the same ideas, virtually the same words - good preparation - politician style), when he gets questions he didn't expect, and they didn't practice he seems to struggle a bit more like on service fees.

    What leads me to believe this is not just about fees:

    1. Charts went through some important support levels and have a very large gap now that challenges the bull move, at least in the short term. Yes fees might have started the move, but it's become more than that now.

    2. Thorsten has been on every major North American business channel (that I saw) probably others around the world for the last 2 days and has been his usual articulate self now that he knows how to say what he needs to say in wall st speak. He's done a good job of changing the tone of this I believe.

    So what haven't we spoken about?

    No one seems to be mentioning the Kantar WorldPanel share of sales and the picture it painted.

    First let me say, as I have been corrected in the past, that I understand a large part of growth for RIM has been in Africa and Asia (notably Indonesia and India ) who are not mentioned here, and they would paint a different picture I believe from what I read and hear here..

    However look at 12 weeks ending 27 Nov 2011 to 12 weeks ending 25 Nov 2012 in:

    USA: 7.0 to 1.4% down 5.6%
    Austraila: 1.5 to 0.3% down 1.2%
    Urban China: No report previous to 0% in 2012
    Brazil: 8.4 to 1.9% down 6.5%
    EU 5 (Germany,Great Britain, France, Italy, Spain): 10.8 to 4.4% down 6.4%

    That is some pretty tough numbers and explains some of the subscriber loss in the last quarter, and expect at least similar numbers in the next quarter maybe even larger with Christmas sales in all of those Countries and RIM loyalists now firmly fixed on BB10. It was the first report where WP was #3 in the USA with RIM falling to #4. (details here: News - Apple achieves its highest ever Smartphone share in US - Kantar Worldpanel). The last time this same report was released had a negative effect on the stock price for a short time.

    In the end those who have said to expect a volatile ride until the fundamentals change have been proven right and will continue to be so I would bet. There is quite a bit of disagreement on the success possibilities for BB10, and some bulls have even remained cautious about overall success potential. Of course we here cannot possibly understand this as we all expect to own a BB10 phone as soon as we are able to do so. The fundamentals change when the numbers above indicate the rest of the smart phone buying public agrees.

    The charts say we could have some more down before we go up, but that gap above will be challenged IMHO, as I have said before, nature and charts abhor a vacuum. Lets see what happens when we get back there to try what is now overhead resistance.
    JeepBB likes this.
    12-25-12 04:56 PM
  9. mrfreetruth's Avatar
    The short numbers are out for the US and short Interest increased to 120 million shares short up from 113 million . This does not include. The Canadian side which would put the amount of shares short at over 25% of rim total outstanding shares. The insider's hold 60% plus of outstanding shares plus institutions hold a nice chunk. The amount of free trading shares are so small that if these shorts has to cover rim would be $25-30 which would be where the sp should be today. Keep digging that hole shorts.
    12-26-12 06:57 PM
  10. Andrew4life's Avatar
    I doubt it's as simple, or as cheap for RIM, as a cross-licensing deal... but I'm sure we'll find out in the next figures.

    And it did go to court - an arbitration court (in Sweden) whose judgements are binding (and seemingly un-appealable) worldwide. The (brief) history of this is that RIM went to binding arbitration a few months back, and lost, then were tardy in agreeing a settlement over the royalties they owed Nokia... so Nokia recently asked a Court to stop RIM from selling phones until settlement was reached. Unsurprisingly, that kick-started discussions and RIM/Nokia have now agreed on the past and future royalties due.

    So, whilst the deal is clearly acceptable to both parties (else they wouldn't have settled), the idea that this was a mutually favourable arrangement arrived at through some convivial chat over brandy and cigars and without legal "threats" hanging in the air just isn't the case.
    Just as I predicted, the payment is relatively small.
    Only about $65 Million (1/10 of what Apple paid) + Royalties.
    http://forums.crackberry.com/news-ru...eement-759456/
    12-27-12 01:26 PM
  11. JeepBB's Avatar
    I wish I lived in your world where the word "only" can be inserted before "$65 Million".

    The on-going royalties per phone would be interesting to discover. Anyone know? Is that also declarable to the SEC (or someone)?

    I tend to agree with randall above. RIM have played a very good game so far in pushing this inevitable (given the binding arbitration decision) financial hit into the same quarter that BB10 phones will launch. Kudos to them.
    12-27-12 03:50 PM
36 12

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