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Andrew Tonner: I think we can identify some pretty impressive secular trends that are going on, obviously. There are a lot of them we've seen, maybe even dead-cat-bounce-type stock scenarios. But two rallies I'm definitely skeptical of, and maybe one more than the other, is the Research In Motion rally.
This is a stock that's soared nearly by three-quarters since its low. Granted, it was down a cool 80%, and that's a serious pullback for any stock, but at the same time I don't think anything necessarily outside of a launch date for their next OS has fundamentally changed.
Their market share is still shrinking. The company isn't shipping any products, and you're seeing during this entire period people are moving into these new ecosystems, and we know that a lot of times when you're in a new ecosystem you tend to be locked there, at least it's a stickier experience for you.
We've seen some positive reviews of BB10, but at the same time it's a company I'm not sure I have a lot of faith in.
You see a similar but different dynamic with Nokia as well. The company has been on a huge run as well, but at the same time they're shipping product now. Granted, you can say the Lumia phones, maybe people's expectations were a little bit high for them, but they're getting a lot of financial help from Microsoft now.
There's not the same sort of risk of potential bankruptcy, say three to four years down the line anymore. But at the same time is it going to be a winner of, say, the rise of the Windows Phone?
It probably will have a presence. It very well could be the third de facto operating system in the mobile space, but at the same time is Nokia going to be a big winner? Are they shipping devices? We're not seeing very impressive numbers come out of this.
Those are two rallies that I'm a little skeptical of.
Other points of caution in this space would be looking at some of the PC makers as value plays. I actually had a friend Facebook message me the other day, asking me what I thought of Hewlett-Packard stock. He said, "It's down huge. Is this a value play?"
I said, "Of course not. Stay away from it."
[laughter]
Matt Koppenheffer: Of course not.
Andrew: I couldn't emphasize this enough. It's stock that's, again, hugely depressed. There is some balance sheet... at least not total weakness there, but at the same time it's on the receiving end of the secular trend...
Brendan: It missed the mobile revolution.
Andrew: Exactly. They tried to acquire Palm for $1.2 billion and launch springboard with webOS and Palm's mobile operating system into this game but the TouchPad, which was their real attempt at a tablet at least, was a complete flop as far as sales go. They had to heavily, heavily discount it to even move the product. They took huge losses on it.
Granted, you could maybe say buying into the Meg Whitman turnaround story could be a potential win for them. I don't entirely disagree. She's been pretty clear about, first, being very proactive on restructuring and cost-cutting, but at the same time they can either pivot in one of two directions.
You can pivot to the consumer side and move into tablets and smartphones -- I think they're probably locked out of that space at this point -- so the other option is to pivot into the enterprise space, which has been what Meg Whitman has talked about.
Matt: It's kind of like an IBM thing, right?
Andrew: Right. And that's the problem there. When you try to move into that space, you're going to be going up against the big, well-practiced incumbents, the IBMs of the world, the Oracles of the world.
Even Dell's trying to execute a similar strategy, and another problem there as well is a lot of times to access that industry you have to grow through acquisition, and HP's got probably the worst record in corporate America in growing through acquisitions.
Those are other areas I think I'm pretty skeptical of looking at the next year. Depressed stocks don't always mean value stocks.
