RIM Follows Nokia, Announcing the BlackBerry 10 Is Coming

Even the most diehard BlackBerry bear will admit: This is going to be big. Research In Motion (NASDAQ: BBRY  ) announced on Nov. 12 that the new BlackBerry 10 platform, along with two smartphones, are scheduled for worldwide launch Jan. 30, 2013.

The beleaguered smartphone manufacturer has about as much riding on the new BlackBerry 10 release as Nokia does (NYSE: NOK  ) on its latest smartphones. The release of RIM's newest BlackBerry, like that of Nokia's recent Lumia smartphone running Windows 8, may not be their (respective) last-ditch efforts, but they're pretty close.

The BlackBerry 10 specs
All the specs won't be announced until Jan. 30, other than the usual rumors that are sure to surface, but CEO Thorsten Heins did share a few tidbits.

Out of the gate, the new BlackBerry claims its new OS will offer "a large catalog of the leading applications from across the globe and across all categories." And while this is suspiciously devoid of specifics, if true, users won't have to wait for the apps to catch up with their phones, something Microsoft's Windows 8 OS offering is struggling with. Navigation for BlackBerry 10 users, according to the press release, will use RIM's new BlackBerry Flow to easily navigate in and out of the BlackBerry Hub.

BlackBerry Balance allows users to bounce back and forth between work and personal data, maintaining security for the business side of things, while maximizing their personal use. One of the coolest features, at least on paper, will be the BlackBerry Keyboard. The app learns how a user types, and then will automatically adapt itself to the typing idiosyncrasies of each user -- relief for chopstick keyboardists (you know who you are).

Similar in many ways
Like Nokia CEO Stephen Elop, Heins was thrown into the proverbial fire after RIM co-founders and co-CEOs Jim Balsillie and Mike Lazaridis finally stepped down earlier this year. We all know the mess Heins was left with, and his objective of getting RIM back to doing what it does best -- serving the commercial and government marketplace -- is the right one. The new BlackBerry platform has already received FIPS 140-2 certification, opening the door for sales to government agencies.

Like Nokia, RIM is betting its latest smartphone will energize sales and return it to its former glory. The companies have something else in common, too: mounds of ready cash. RIM ended its most recent quarter with no long-term debt, and cash and equivalents of $2.3 billion, or about $4 per outstanding share.

With $11.75 billion on the balance sheet, Nokia's cash per share -- net of long-term debt -- nearly equals its current $2.70 share price. Of course, Nokia's stash has consistently dwindled the past several quarters, while RIM's been able to add to its balance sheet -- including $100 million last quarter.

Concerns abound
As if RIM and Nokia didn't have enough facing them, they've also got to contend with Apple's (NASDAQ: AAPL  ) recently released iPhone 5. As one of the most dominant smartphone manufacturers in the world, with a seemingly endless number of rabid iFans, making a significant dent -- if it happens at all -- will take years, not months. Does either RIM or Nokia have that kind of time, barring an acquisition? No, but neither company needs to unseat Apple to succeed -- what they need is to show signs of life. For example, exceeding sales expectations for their respective new smartphone offerings would at least give RIM or Nokia some traction to build on.

Taking a chunk out of Apple is a tall order, and it's hardly the only obstacle. As if Google (NASDAQ: GOOGL  ) and its dominant Android OS wasn't enough, the purchase of Motorola Mobility and the recent release of its own Nexus 4 smartphone is just the beginning from the online behemoth. And let's not forget Microsoft (NASDAQ: MSFT  ) and its recent Surface tablet. As I alluded to in an earlier article, Windows 8 and its shift to developing hardware means a Microsoft manufactured smartphone is a matter of when, not if.

RIM and Nokia: they're both aggressive plays with a lot riding on new product rollouts. But for the contrarian investor, Nokia offers more upside. Why? A couple of reasons: No. 1, with net cash on-hand nearly equal to its current share price, Nokia is a better value with less downside risk. No. 2, Nokia is sitting on one of the most valuable patent portfolios in the industry. Analysts figure the 40,000 worldwide patents Nokia either owns, or has pending, are worth $6 billion. If you want to take some risk in the smartphone market, the patents along with the balance sheet set Nokia apart.

As RIM and Nokia fight for their respective lives, the introduction of the iPhone 5 continues to be a challenge. To help investors understand this epic Apple event, and the impact on the smartphone market, we've just released an exclusive update dedicated to the iPhone 5 launch. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the launch, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.


Read/Post Comments (7) | Recommend This Article (1)

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  • Report this Comment On November 14, 2012, at 5:07 AM, jwjsprenger wrote:

    Wrong. What amateur wrote this.

    Nokia latest balance sheet is a shambles. Current Assets of Eur 20.2 billion against current liabilities of 15.8 billion. Only 4.4 billion Eur less long term debt of 3.8 billion Eur so net cash position is only 0.6 billion Eur. That's why they are going to the bond market. No real cash because they are not paying the bills. RIM on the other hand has $2.2 billion and no debt and positive working capital of $3.8 billion. RIM will easily outlast Nokia. Nokia has to get rid of many more employees once they discover they cannot sell enough phones while RIM is already more or less right sided.

  • Report this Comment On November 14, 2012, at 7:34 AM, RandomMeaning wrote:

    Nokia has one thing that RIM doesn't: a sugar daddy writing them billion dollar checks every year, provides them with software support, and advertising (at least for the OS if not specifically the phones themselves). Then again, Microsoft likes to throw their little strumpet under this bus from time to time so it's hard to say that their relationship is actually a healthy one.

  • Report this Comment On November 14, 2012, at 7:36 AM, timbrugger wrote:

    jwjsprenger,

    Though your review of Nokia's balance sheet is correct, you may note I mention cash vs. long-term debt, not all debt/liabilities. Why?

    Because if you use current liabilities you also need to add back in Nokia's account receivables (because account payables are included in your current liabilities figure), which come to about $7 billion U.S.

    As for RIM, at the end of last quarter, RIM showed current liabilities totaling $2.8 billion, and ready cash of $2 billion.

    Got your point though, but for me, long-term debt (vs. all liabilities) less cash is a legitimate formula for determining a liquidity figure. I mean, do we really want to get into the value of equipment, goodwill, etc.? Leave those for the accountants.

    Thanks for the post! Tim.

  • Report this Comment On November 14, 2012, at 8:37 AM, jwjsprenger wrote:

    Tim, I think your article is misleading because Nokia is running up large accounts payables to hang onto cash. 14.5 billion Eur of accrued expenses and provisions. These will eventually need to be paid and they cannot do it with their cash drain. This is why they needed to float recently the 750 million Eur convertible bond. Also, Nokia has twice the revenue of RIM, but earlier this year had so many employees that effectively each employee only generated 50% of the revenue of a RIM employee, and this was before RIM cut 5000 jobs. If Nokia cannot get sales to expand this will be a very large liability for them.

    I looked a few month ago at both companies and my conclusion was different than yours so I went with RIM. I also considered expectations for sales and basically think Windows 8 mobile will not do good because people are "sick of Microsoft" having had to put up with them for so many years on their PC. The last thing anyone wants is Microsoft on their phone...it just ain't cool. RIM still has many die hards, just like Apple had for many years to hang on. WIth a good BB10 offering these die hards will be back to upgrade and hopefully a few others as well.

  • Report this Comment On November 14, 2012, at 8:43 AM, jwjsprenger wrote:

    RandomMeaning, good point. It should almost be illegal. This is why I route for RIM and even Apple. At least these companies write their own software and do not sponge off "others for free" to get into the market like Samumg, HTC, and now Nokia. I think however, that ultimately software know-how counts and the likes of Samumg and Nokia will be nothing without someone else's software. They will become a HP or Dell.

  • Report this Comment On November 14, 2012, at 9:35 AM, timbrugger wrote:

    Good points, all.

    Nokia is certainly bleeding cash, unlike RIM, and are 'bloated.' The 10K job cuts by the end of 2013 will help, but is hardly a panacea.

    However, I still suggest there are a couple of things worth noting with Nokia: One, as alluded to by RandomMeaning, we can't neglect to mention those patents; they're huge. Secondly, Nokia Siemens actually had a nice Q3 (up 9% to EUR3.5 billion in sales), demonstrating diversified business lines - something I am a staunch supporter of.

    Oh, one more item (which, admittedly, may be a bit of a stretch); of Nokia's EUR490 million in negative operating cash flow, EUR390 million were 're-structuring' costs. Still bleeding, but some of it at least is accounting.

    Great insight folks, thanks again. Tim.

  • Report this Comment On November 14, 2012, at 3:20 PM, magnaman1969 wrote:

    RIMM is ready to roll....Nokia being tied to Windows 8 has an anchor around its neck and will sink.

    BB10 is revoloutionary.....WP* is nowhere even close to comparison.

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