Investopedia: Research In Motion Sliding Toward The Cliff

There's a quote in one of Peter Lynch's books that goes something like "it's always darkest before pitch-black." Personally, I like to harken back to the quote that the light at the end of the tunnel is often an oncoming train. Take whatever snarky, pessimistic quote you prefer; Research In Motion (Nasdaq:RIMM) certainly deserves it. An arrogant and mis-run company is now paying the price for its mistakes and shareholders are looking at not only a long road back, but a road that may well lead to nowhere.


Third Quarter as Expected, But ... 
Research In Motion had previously alerted the Street to most of the salient details about this quarter, so the financial performance was not all that surprising, but it was still unpleasant to behold. Revenue fell 6% from last year, on a 1% shipment decline in smartphones. As it stands now, it looks like RIMM's smartphone market share has fallen apart 10%.


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Investopedia: Smoke Starting To Billow From The OmniVision Story

For some time now, I have thought that the bears had it wrong on OmniVision (NASDAQ:OVTI) and that even if the company was losing some of its technological lead over Sony (NYSE:SNE), Aptina and STMicroelectronics (NYSE:STM), the stock was still too cheap relative to its prospects and cash on the balance sheet. As it turns out, though, those wisps on the horizon weren't just clouds, but actual smoke, and it seems like OmniVision may have a very real problem on its hands. 


The News Is Getting Worse
OmniVision didn't exactly have investors excited with its last earnings report in August. At that point, the company talked about some product delays and revised revenue guidance lower - due supposedly to problems with tablet customers.

As it turns out, the company did not go nearly far enough. OmniVision announced on November 7, 2011 that it was once again revising guidance lower, taking the numbers for the next quarter down another 20% or so to a range of $212 million to $217 million, a steep fall indeed from the $300-million-plus level of not so long ago. Making matters worse, the company was fairly cryptic about the reason - simply referring to "unexpected cutback in orders for certain key projects."


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Investopedia: Apple's Secret Sauce Smothers Rivals

In the space of a week, two of Apple's (Nasdaq:AAPL) biggest potential competitors largely packed up their tents and conceded that they could not compete on their own in markets like smartphones and tablet computers. While the circumstances are indeed quite different - Hewlett-Packard (NYSE:HPQ) is basically exiting the consumer PC and portable electronics business, while Motorola Mobility (NYSE:MMI) accepted a buyout from Google (Nasdaq:GOOG) - the fact remains that precious few companies have taken Apple's best shot and come out swinging for the next round.



What makes Apple special? And perhaps more to the point, does Apple's way of doing business give it an enduring advantage on its current and would-be rivals?

The Squishy Bits
Words like "culture" are thrown around too readily sometimes, but there is at least some kernel of truth in the idea that a distinct operating philosophy can make a real difference at the bottom line. In the case of Apple, this is a company that largely trusts its own vision(s) and does not feel the need to endlessly consult with focus groups to take a committee approach to design. What's more, there are plenty of accounts that Steve Jobs has established a demanding culture at Apple where high expectations are the norm.



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Investopedia: Google Pays Big Money To Be More Like Apple

Apparently, it is not enough to control the software and allow others to design the box. That would seem to be one easy conclusion to reach from Google's (Nasdaq:GOOG) announcement on Monday that it had reached an agreement to acquire Motorola Mobility (NYSE:MMI) for $12.5 billion in cash. With this deal, Google is now clearly a player in the hardware space, but it is uncertain the extent to which this is a threat to the likes of Apple (Nasdaq:AAPL) or an opportunity for the likes of Microsoft (Nasdaq:MSFT). 

A Whopper of a Deal  
There has been much speculation of what Google might do with its $30 billion-plus cash hoard, and now we know that a big chunk of it is going towards a large risky acquisition. Google will be paying $12.5 billion in cash for Motorola Mobility, though that price drops closer to $7 billion after subtracting net cash, investments and deferred tax assets. At the announced value of $12.5 billion, the $40 per share price represents a 63% premium to Motorola's prior close. On an adjusted basis, Google is still paying well more than 20 times trailing EBITDA but a little more than half of trailing revenue. 


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Investopedia: Is The Worst Of It Over For Texas Instruments?

Sometimes "less bad" passes for better on Wall Street, and such may be the case for Texas Instruments (NYSE:TXN). Although the company's second quarter results and third quarter guidance don't suggest a rampant recovery in the chip sector, it does seem that business has stabilized. Even still, investors would likely do well to remain suspicious and cautious. 

A Second Quarter More or Less As Expected  
The results that Texas Instruments reported late Monday seemed more or less consistent with the company's earlier guidance. Revenue fell 1% from the year-ago period, but rose 2% on a sequential basis. Growth was boosted by strong results in embedded chips, held back by wireless, and analog was more or less in line with the company averages. 


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Investopedia: Would A Smaller HP Be A Better HP?

Summer is the time for idle rumors and speculation around the market, mainly because there's so little real news out there that nobody will be too hard on any new idea that floats by (hey, at least it's something to talk about). Prior to the Fourth of July holiday, the markets were briefly abuzz with the idea that Hewlett-Packard (NYSE:HPQ) should bow to pressure and split up some of its operations. Although it is probably not too likely (CEOs like to run bigger businesses, not smaller), it is an idea that is still worth exploring. 


Everything Old is New Again
This latest round of "how to make HP better" chatter is reportedly coming from a consortium of private equity groups (Blackstone (NYSE:BX), KKR (NYSE:KKR) and TPG Capital). While specifics are lacking, this group has noted the relatively poor valuation on HP's stock and suggested that the company could benefited from a strict diet - getting rid of the PC business and perhaps the printing unit as well.

Investors should realize, though, that this is not the first (or the likely the last) time such a move has been suggested. Journalists and commentators penned plenty of pieces in the wake of former CEO's Hurd messy departure that suggested HP should take that opportunity to become leaner and more focused. Going back even further, Merrill Lynch analyst Steven Milunovich penned a note in 2004 that recommended HP split in two, creating a consumer-focused company and a business/enterprise-focused company. 



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Investopedia: Now May Be The Time For Jabil

There are plenty of valid reasons to take one look at an EMS provider like Jabil Circuit (NYSE:JBL), Flextronics (Nasdaq:FLEX) or Celestica (NYSE:CLS) and not bother again. After all, this is a highly cyclical market where the companies have minimal control over their own revenue, narrow margins and returns on capital that arguably do not cover their cost of capital. 


And yet, savvy investors realize that there may be a time and place for almost any stock. With the tech market in the doldrums and several major customers gasping, Jabil should be in rough shape. Oddly enough, the company is doing relatively well and may in fact be worth a look from investors who understand that this would not be a permanent engagement.

Decent Third-Quarter Performance
Third-quarter results at Jabil were not too bad, particularly given the weakness at customers like Research In Motion (Nasdaq:RIMM) and Cisco (Nasdaq:CSCO). Revenue rose 22% from the year-ago level, and 8% from the prior quarter, surpassing the consensus estimate by almost $100 million. Growth was strong in the Enterprise and Infrastructure and Diversified Manufacturing Services units, and those offset weakness in High Velocity Systems.
 

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Investopedia: Where Have All The Tablet Sales Gone?

When Apple (Nasdaq:AAPL) launched the iPhone in 2007, it ushered in a wave of smartphone development, and customers responded by buying millions of the things from Apple, Motorola Mobility (NYSE:MMI), Research In Motion (Nasdaq:RIMM), Samsung, HTC and other vendors. When Apple introduced the iPad in 2010 there was a similar expectation that tablet computers would quickly sweep up similar retail sales.

Curiously, there has been a rather sizable pothole on the way to tablet prosperity. While Apple has indeed seen good demand for the iPad platform, rivals running on Google's (Nasdaq:GOOG) Android platform have not fared nearly so well. The question is, then, whether the tablet market can still live up to initial expectations or whether it will prove to be a step too far for the mass retail segment. (For related reading, see The 4 R's Of Investing In Retail.)

Few Successes, Ample Disappointments
Apart from Apple and Samsung, few tablet manufacturers have seen demand meet their expectations. RIM shipped just 500,000 units in the first quarter, decided to delay a 4G version until the fall, and supposedly cut internal sales expectations for the PlayBook in the second quarter to one-third of the initial level (800,000 to 900,000 units versus 2.4 million).

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Investopedia: Can Investors Buy Into Adobe's Next Act?

There are at least two different ways to assess Adobe's (Nasdaq:ADBE) performance over the past 16 years. In terms of execution of its business plan, Adobe has been a breakaway success - products like Photoshop and Acrobat dominate their niches to the point were "Photoshopping" and "PDFing" are verbs that almost everyone recognizes.


On the other hand, Adobe has not been such a runaway success as a stock. True, the stock is up about 400% over the past 16 years, but that is not all that impressive relative to Oracle (Nasdaq:ORCL) or Intuit (Nasdaq:INTU) and basically matches Microsoft's (Nasdaq:MSFT) performance - even though Adobe should have the advantage of being a more nimble company with more opportunities for growth.


The question for investors, then, is perhaps not so much whether Adobe can maintain its dominance and expand into new territories like smartphones and tablets, but whether investors will reward that growth.

 

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Investopedia: The Obligatory RIM Merger Speculations

When former high-fliers come down hard, there is often a thriving trade in M&A speculations. Maybe it feeds on the hope of bruised shareholders that they'll get some of the money back, or the hopes that the shareholders in the rumored acquirers will get the chance to buy crumbled dollar bills at a big discount. Whatever the motivation, the troubles at Research In Motion (Nasdaq:RIMM) have now put this stock on the M&A hot stove.

A Long and Fast Fall From Grace 

Three years ago, RIM shares cracked $140 and the company's devices were so popular they were often referred to as "Crackberries." Then along came Apple (Nasdaq:AAPL) and its iPhone, Google's (Nasdaq:GOOG) Android platform, and a host of phones from improbable contenders like Motorola Mobility (NYSE:MMI), HTC, and Samsung, often powered by chip architecture licensed from ARM Holdings (Nasdaq:ARMH).

Since then, RIM has been losing market share like water through a sieve, mirroring the decline in Nokia (NYSE:NOK). Making matters worse, the company's line-up is aging, there aren't many exciting models in the near-term pipeline, and the company seems to be talking a little too much about its offerings for the lower-end of the market. While chip investors eagerly wait to tear apart new models from Apple or try to find hidden meanings in press releases and speeches, nobody seems to care about who Research In Motion is building into their phones - perhaps the best sign of all that investors have written off RIM. (For related reading, see How To Profit From Debt Securities In Failing Companies.)

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Investopedia: Is The PC Back From The Dead?

Horror movies have a lot to teach us. That noise is never "just the cat," it's a bad idea to go into the woods at night wearing only underwear, and tape recordings of demonic incantations tend to spoil a weekend in the woods. But perhaps most important is this lesson - nothing is ever truly dead so long as someone can figure out how to make money from it. 

To that end, perhaps the death of the PC has been exaggerated. With encouraging results from Best Buy (NYSE:BBY) and stronger than expected guidance from Hutchinson Technology (Nasdaq:HTCH) - a manufacturer of suspension assemblies for hard-disk drives - it seems like their may be life yet in the market for desktops and laptops.

Best Buy's Earnings - Maybe Not So Good for PCs  
Best Buy certainly had a good quarter, and the market responded accordingly. Whether it was great news for the PC market, though, is not so clear. There is no question that sales growth from computing and mobile phones was the leader for the company, but the problem lies in the details. Mobile phones from HTC, Motorola (NYSE:MMI) and the like continue to be hot sellers, as do tablets from Samsung, Research In Motion (Nasdaq:RIMM) and so on. Unfortunately, then, while Best Buy management's indicated that notebook sales had improved, they aren't necessarily strong. 


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Investopedia: It's Always Something With OmniVision

I've been writing about the markets and individual stocks for a while now, and it always seems like there's something wrong with OmniVision (Nasdaq:OVTI). I remember widespread beliefs that the image sensors that OmniVision makes were destined to become commodities and the company would face ever-shrinking average selling prices (ASPs), margins and earnings. 

Well, as it turns out, industry-leading innovation and the lateral spread of a product into new markets and applications is a pretty good remedy to commoditization. Not only has OmniVision become a leader in the chip sensor business, it has benefited from the introduction of new products like smartphones and tablets as well as deeper penetration into older markets like laptops and webcams. (For more, see Omnivision Hosts A Bear Roast.)


With still more markets yet to penetrate (automotive, security and healthcare), will OmniVision get a little love at last? 



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Investopedia: Atmel Getting Closer To A Sweet Spot

It is often remarkable that people who are entrusted with the responsibility of running millions (if not billions) of dollars are often so easily spooked. Right now, tech investors are running scared when it comes to the chip sector, leaving names like Broadcom (Nasdaq:BRCM) on the outs. Apparently Atmel (Nasdaq:ATML) can go on that list now too: Even though the company reported good results and consistent guidance, Wall Street does not seem overly impressed.


A Strong Start to the Year
Atmel reported revenue for the first quarter that just nearly matched the highest estimate and did surpass the average guess. Revenue grew just 1% on a sequential basis, while rising about 43% from last year on a like-for-like basis.

Growth was again led by the microcontroller business; now nearly two-thirds of the company's revenue base, microcontroller revenue was up 2% sequentially. Better still, the company's 32-bit microcontroller business was up 20% sequentially and the company continues to log impressive design wins in the smartphone and tablet industry. Non-volatile memory actually grew better than microcontrollers, while ASIC was the only segment to decline on a sequential basis. (For related reading, check out A Good Opportunity For Broadcom?)


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Investopedia: The Return Of The Norsemen?

Like its fellow Nordic tech brother Nokia (NYSE:NOK), Ericsson (Nasdaq:ERIC) can only look back fondly on the days when it was a favorite of the tech crowd. Not only did the excessive build-out of the late '90s poison the well, but Ericsson has had to deal with the rise of Chinese competitors like Huawei and aggressive marketing and pricing moves from rivals like Alcatel-Lucent (NYSE:ALU) just trying to stay in business.


A Surprisingly Strong First Quarter
Even though Ericsson is not a widely loved stock in the analyst community, the business has been staging a comeback, and the first quarter was surprisingly strong. Revenue rose 17% as reported, and although this was a 16% sequential decline, it was better than analysts had expected. It is also worth noting that on a constant-currency basis year-over-year growth was actually on the order of 25% - a pretty respectable quarter by any standards.


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Investopedia: Is RIM Turning Into Nokia 2.0?

If Apple (Nasdaq:AAPL) is the smartphone company that can do no wrong, then Research In Motion (Nasdaq:RIMM) is the company that cannot seem to deliver what the Street wants. Now, with the company giving very iffy guidance for its next fiscal year and seemingly losing momentum at the high end of the range, the fear is that the company may be slipping past a point of no return. 

An Uninspiring End to the YearThe absolute details of RIM's quarter were not bad, but near-term stock market performance is almost always a game of performance relative to expectations. RIM did post 36% revenue growth, with device sales making up about 81% of the total. This top-line result did miss estimates, though. Below the top line, results were okay, but not exciting. Gross margin weakened from the year-ago level, dropping about 150 basis points. Likewise, operating income rose more than 22%, but margin contracted two and a half full points.

A Very Tough Year on the Way
Although RIM made the claim that the BlackBerry was the best smartphone in the U.S. in 2010, that is the sort of press release filler that makes absolutely no difference in the assessment of the stock. What matters far more is the fact that there will apparently be no new models in the first quarter, and that there were will likely be a lot of inventory-clearing in the front half of the year. That means that margins are going to take a hit, expectations will be back-end-loaded into the second half, and analysts and investors will have plenty of doubts about management's view of the company's earnings power.

Although management did confirm that the new Playbook will support apps that run on Google's (Nasdaq:GOOG) Android, that was about it for the good news.

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