Who would have ever thought Research In Motion (RIMM) would throw off reflected glory? But the troubled Waterloo-based phone maker reported a better-than-expected loss and Nokia (NOK) was up in sympathy, despite the fact that yesterday Bloomberg reported the self-evident: burning through cash at $300 million a month, Nokia may eliminate its dividend.
But damn the torpedoes, full steam ahead. Nokia was up over 3%.
You got that? Less than $13 billion in its dwindling cash mound and counting. Nothing but big hairy question marks on the product front, as the company has hitched its wagon to the fading Microsoft (MSFT) star ... and the stock is up on RIM fanfare?
Let's back up and look at RIM.
Although I was right about Nike's (NKE) earnings this week, I missed the mark on RIM. To be sure, RIM isn't going to meet its maker just yet. It has enough cash to fight tomorrow or, at least, to get out its BlackBerry 10, which will miss the Christmas season due to incessant delays but finally come out early next year.
An expected loss of 47 cents came in at 27 cents and there was dancing in the streets, with the stock soaring 20%. But cooler heads should prevail.
"Beating estimates is not recovering," tweeted Herb Greenberg, concerning the overreaction to RIM's earnings. Indeed. RIM's losses are still beyond steep, its margin issues abound, and let's not even talk about the long-shot prospects of the BlackBerry10.
And then there is Nokia. It's Microsoft hook-up is unproven at best and all indications are it will be permanently unloved. The next person who thinks the Lumia can take on Apple (AAPL) and Google (GOOG) will be the first. Think I'm being too harsh? Perhaps. But it's hard to have gut-level love. Nokia has a mere 3% speck of the market, fewer apps, Windows, its platform is uncool, and in Europe the Lumia 920, the first to run on Windows 8, is selling at a sharp premium to Samsung's Galaxy S3.
How's that going to go for you, Nokia?
Even though the pricing decision is furrowing a lot of brows, maybe the planets will align correctly and it will work out. But with so much riding on the Lumia, I wouldn't be buying on a hunch. Forget Nokia's earnings. We're just looking for this company to outlast its cash. Considering the rate at which it's burning it, I'd forget about RIM as well. Linking the two on the upside is delusion. So when it comes to Nokia, pretend RIM does not exist. Regarding its Lumia, I'd simply wait and see.
A note on performance: Each Friday, we'll take a look back at my last five trading suggestions when there have been two days to determine whether I was a "hero" or a "goat." Here's a look at this week's last five.
On RIM, the first time: a hero. On Starbucks (SBUX): a hero. On Apple: a goat. On Ford (F): a hero. And on RIM the second time: a goat. That marks a good week, after two bad weeks in a row. But remember -- as any trader worth his or her salt knows, all that matters in the end is that your good trades outweigh your bad. We'll keep count as we go on.