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Research In Motion (RIMM) is paying Nokia (NOK) a one-time fee of €50M ($65M) as part of...
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Thursday, December 27, 2012, 2:16 PM ETResearch In Motion (RIMM) is paying Nokia (NOK) a one-time fee of €50M ($65M) as part of the companies' patent settlement, RIM disclosed in a 6-K. RIM is also making ongoing royalty payments as part of the deal, which covers the use of Nokia's Wi-Fi patents.
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This news story has 9 comments:
All the very best,
Don
RIM is doing a good job of balancing its books/cashflow and NOK is as well, while also leveraging its patent portfolio and selling non-core assets.
I like NOK's potential to grow emerging market share as well as its relationship with MSFT as I expect tighter Windows integration over time. RIM's overall growth potential seems constrained by its smaller ecosystem, corporate/enterprise/s... focus, and the fact that it likely has a hard time competing with NOK on price in low cost emerging markets which are growing (even though margins there aren't great).
I think both had gotten priced for bankruptcy (mostly in light of the Palm story) and much of the rebound thus far has been a result of that money changing its mind. As in, the bets are that both these companies aren't going away. So now the investor question is one of cashflow and return, and I think both companies have that potential, although I favor NOK right now until I see what happens at BB10 launch.
In the initial phase I think consumers (like you and me) will have to salvage RIMM's future (by buying boat loads of BB10) and enterprises might comeback much, much later. Given that Nokia and Samsung are trying to hit at every price point (and will likely undercut BB10) it is going to be challenging for RIMM to get back its foot holding. RIMM reported differentiations is that it can run Android apps (through a Dalvik (?) simulator on BB10 - with a performance penalty), if somebody is really interested in running Android apps they might as well buy Samsung or Motorola rather than buying BB10 as RIMM's native application portfolio is very limited. Their hardware specs also look to be pretty limited and not sure if they will be able to aggressively cut prices to compete with the likes of Samsung.
The other issue is that if indeed RIMM fails then I don't think there will be any other company that would want to buy them simply because there are enough "eco systems" out there already (iOS, Android and Windows Phone 8) and RIMM has nothing unique to offer. So, I guess that would essentially mean fire sale of RIMM's assets.
Although I like what RIMM has done so far IMO they are a bit late to the party. I am waiting for the euphoria to build up and I plan to buy puts on RIMM sometime after the launch of BB10.
I just want to point out one thing though with regard to: "RIMM reported differentiations is that it can run Android apps (through a Dalvik (?) simulator on BB10 - with a performance penalty)"
I've run Android apps on Playbook and find in some instances the performance hit isn't noticeable and in others its dreadful. I think what RIM is doing with regard to this bears notice: it's software and developer kits are better than they've ever been. I think if they make it easy enough the devs won;t stress about it.
I also think a nice differentiator for RIMis precisely it's lack of ecosystem. I'm a customer because I don't feel like I'm constantly being forced to join one service or another, or being upsold other products and services and being ad-addled...
So I think there is meaningful value in RIM's model, but I definitely agree that it's an uphill battle. I don't hold RIM stock but I do hold NOK.