I expect to get ripped when I make a bad call on a stock. For example, I am a bit surprised that readers have yet to come after me for my recent Best Buy (BBY) bullishness. I see flaws in my own argument there, but the night's still young. While I tend toward having thick skin, I must admit I've been taken aback by some of the reaction to my Research in Motion (RIMM)-related bearishness.
First, allow me to disclaim. When I did talk radio, I did a show for the audience, not the callers. When I write articles, I write them for the audience, not the commenters. A distinction between audience and caller/commenter exists. Generally, callers and commenters make up roughly 1% of a talk show's or article's audience. (That unscientific number is one I have picked up after a couple of decades of doing radio and writing). That said, real passion surrounds any discussion of RIMM. And it would be unfair to cast off critical commenters as only part of a lunatic fringe, even if some have trouble living up to the lowest standards of civility.
I have a couple of theories. One, I don't believe the most angry RIMM supporters actually own the stock. I venture that they love the products - which I can see - and will support them to the death. And two, it's a fact of Internet-dominated modern life that people love the opportunity to say things to others via an anonymous message board that they would never work up the guts to say in person.
I do not mean to say that investors and other observers should not be angry; they should be furious. I think, however, that anger gets misdirected when it's shot toward a guy who has suggested being short RIMM for over $20.00. RIMM management should receive the brunt of any uncontrollable rage and fury. Investors often lose sight of the big picture, not just going forward, but when attempting to look back. I think that's part of what's happening with RIMM. Some mysterious and manipulative force did not sow the seeds of RIMM's implosion overnight. The story has been building for quite some time now.
Let's ignore the most recent circus that is RIMM EPS guidance vs. reality. It has been covered well.
When you go back into the virtual stacks it's not too difficult to find instances of the type of ineptitude that makes RIMM's dramatic freefall much easier to understand.
Consider news that made the rounds during the fall of 2010. First, via All Things D and Barron's, RIMM Co-CEO Jim Balsillie not only referred to mobile apps as "fads," he also made a professional and competitive error by attacking Apple (AAPL).
First, didn't Balsillie learn anything from Steve Ballmer about professional courtesy and putting one's foot in one's mouth? And second, maybe Balsillie was correct on some sort of technical grounds that nobody outside of a tech geek or two actually cares about. That's part of the problem. It really does not matter much if a product is "better" in the eyes of a well-schooled critic. If that's the case Bob Dylan's most recent albums should sell millions of copies. What matters is not critical acclaim (which RIMM does not get as much of lately, anyhow), but what consumers want and enjoy using. Apple gets this, Balsillie and RIMM clearly do not.
Clearly the exponential explosion of mobile apps makes Balsillie, well, just wrong. You would think he would have learned from one of his company's only recent successes - BlackBerry Messenger. That mobile app did alright for RIMM. In the above-referenced Barron's article, Balsillie stated that they only went that route for technical reasons. There's that pitfall again. People like mobile apps. It makes the experiences getting connected via a mobile device come with great ease. It's just another area where RIMM was left in the dust.
More from the Balsillie Unplugged Tour Fall '10:
Again, maybe from tech geekdom standpoints, Balsillie's correct. Not the issue. You set yourself up to fail and eventually appear foolish when you refer to "Apple's distortion field," as opposed to noting that you have the utmost respect for what Steve Jobs and his company has done. Beat them in the marketplace, not in a press release peeing contest.
Certainly, ardent RIMM supporters will say the following does not apply, but it absolutely does. Balsillie's failure to secure a National Hockey League franchise for Hamilton, Ontario, speaks volumes vis-a-vis RIMM's recent woes. As an honorary Canadian and huge hockey fan, it pained me to watch Balsillie basically throw away his prospects at making a successful bid for a region that deserves a team. You can read about how Balsillie failed in that regard here and here.
Balsillie has the tact of a bull in a china store. He speaks first and thinks way after "later." How a hockey-loving (and playing) Canadian with more money than he knows what to do with can fail to woo a roomful of NHL owners would baffle me if I did not know the score. You cannot walk into that room with swagger and bravado; you have to make these guys like you. Balsillie has the background that should have facilitated great relationships. Instead, he simply blew it. How it all went down highlights his aggressive style. Reckless abandon is fine, but only in strategically-placed situations does it work, not in haphazard shots at the world's most beloved tech company and men who should have been future partners (NHL owners).
I do believe room exists for being incredibly cocky. You just have to be able to, like Steve Jobs, back it up. I will never forget Balsillie's disastrous performance on an earnings call earlier this year. Right after it, I opined:
Of course, RIMM Co-CEO Mike Lazaridis deserves his share of the blame. You don't have to do much other than just read the words he spoke in feeble defense of RIMM back in early May:
The world is changing and we're doing all we can to prepare RIM for it. I hope you don't get a sense that I'm ignoring what's happened. I live it everyday. If you want an apology for being late on some of our products, I can give that to you, but it's not because we weren't working hard. It's because we wanted to bring the best possible product to market. Sometimes that doesn't fit nicely" into a quarterly earnings period.
I am not sure how RIMM management and its supporters could expect anybody to take the company seriously after both CEOs proved that they have absolutely no handle whatsoever on RIMM's business. Or, at least if they do, they prefer to feign the opposite. It's RIMM management that breeds an environment of uncertainty, not those of us who have seen it coming fo several months and expect it to continue into the foreseeable future. Investors do not like uncertainty. And you, on your PlayBook, thumbing your BlackBerry, you shouldn't either.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I may initiate a position, long or short, in BBY, AAPL or RIMM at any time.
