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  • Is Blackberry Under Dog Gangster Story?

    Recent waves are being created by the newly introduced Blackberry 10's foray into this highly competitive Smartphone and secure data market. One begins to wonder that why so many consumers, analysts, and investors are reacting to this comeback company with some heavy emotion not seen very often with other comeback stories in the market.

    Blackberry's market share is only a drop in the bucket, and according to its harshest critics, it was "dead on arrival". But if the company truly is doomed, then why are so many analysts seemingly afraid of it? Are there kind hearted Blackberry bashing critics that feel sorry for other people's money and decide to dedicate the vast majority of their time educating people to not trust in blackberry? Why is Blackberry's failure is so important to so many analysts and pundits out there? It's almost like a cheesy 1970's gangster movie where the villain not only kills the mob-boss but also dedicates all of his time into trying kill his kid because the villain is horrified of the child coming back to get revenge a few years later.

    A quick look at the competition that Blackberry faces shows that some of them have long history of doing business in not so business kind of way. Samsung is a prime example according to this recent article published in CNN Money ( http://alturl.com/yfytw and http://alturl.com/x44r8) which states that Samsung is being probed for allegedly paying individuals to post unflattering reviews of rival phones online.

    Sadly, this isn't an isolated case, a quick web search regarding Samsung shows many examples of anti-competitive behavior as supported by the following court documents. alturl.com/ug3hw

    July 7, 2004: Jury advised of adverse interference when Samsung allowed emails to be automatically deleted even after it was told to retain relevant emails. After Samsung's appeal, Judge William Martini found "Samsung's actions go far beyond mere negligence, demonstrating knowing and intentional conduct."

    October 17, 2005: The U.S. Department of Justice fined Samsung nearly $300M for memory price fixing within the U.S.

    Feb.. 7, 2007: U.S. government fined Samsung for $90M for memory chip price fixing for violations in 2006.

    Jan.15, 2008: Samsung's offices in Korea were raided after evidence showed that a slush fund was used to bribe government officials and other business leaders.

    July 16 2008, Samsung chairman, Lee Kun-He was found guilty by Seoul Central District Court of financial wrongdoing and tax evasion. Despite prosecutor request of seven years in prison, sentence was reduced to three years followed by a pardon by the South Korean Government in 2009 to allow him to help with its successful bid to host the 2018 Winter Olympics. He is now a member of the International Olympic Committee and this 'pardoned criminal' returned as Samsung's Chairman in March 2010. http://en.wikipedia.org/wiki/Lee_Kun-hee

    May 19, 2010: The EU Commission fined Samsung for being part of a cartel that shared confidential information and fixed memory chip prices (along with eight other firms).

    Nov. 1, 2011: The Korean Fair Trade Commission fined Samsung for being part of a cartel that fixed prices and reduced output for TFT-LCD screens between 2001 and 2006.

    March 15, 2012: The Korean Fair Trade Commission fined Samsung for a mobile phone price fixing scheme and consumer fraud whereby consumers would by paying more than what the discounted prices advertised.

    July 25, 2012: Magistrate Grewal informs the jury that they could take into account that "spoliation" of evidence occurred when Samsung destroyed evidence that could have been used in the Apple lawsuit; Samsung had a policy of automatically deleting emails that were two weeks old and should have suspended that policy between August 2010 (when Apple informed Samsung of patent infringement) and April 2011 (when Apple initiated the lawsuit).

    August 24, 2012 a jury returned a verdict finding Samsung had willfully infringed on Apple's design and utility patents and had also diluted Apple's trade dresses related to the iPhone. But Samsung continues to fight the ruling, and continues in their copying behavior.

    April. 2013, And now Samsung is accused of and now admits hiring students to falsify reports of HTC phones "constantly crashing" and posting fake benchmark reviews.

    Besides Samsung, we all know that many hedge funds are heavily invested in Apple. Apple stock has been slumping lately and none of the big guns are not happy about it. One just needs to watch CNBC's interview of Blackberry CEO Thorsten Heins after Blackberry announced better than expected results in the last quarter. Rather than asking questions about how Blackberry managed to pull off such a surprising and positive result, the CNBC hosts treated him like he killed their dog or something.

    Everything about Blackberry 10 is polarizing. It almost seems like Newton's 3rd law is accelerating day by day in this economically driven verbal tug of war. Every article about Blackberry 10 generates more comments, tweets and web traffic than one would see from an allegedly "doomed" company. Furthermore, 33% of the stock is shorted which is also rarely seen, and stock movement is almost perfectly in line with negative and positive news, dropping slightly with the bad and rising by a similar amount with the good. Negative or positive, Blackberry 10 is creating more buzz around the company in the market, which is good for Blackberry due to the free advertisement (after all, no press is bad press).

    Blackberry is too far out now from the reach of negative marketing. It is almost back firing and working in the favor of Blackberry recently, keep in mind that most successful movies are almost always about the underdog.

    Investing and trading are two different animals but in Blackberry's case it is creating a perfect storm on a daily basis for the traders and longer term for the investors. Short or long, Blackberry is creating stories for all of them to share and that's what Blackberry needs.

    Blackberry has the power to make normal people go out personally to the stores and check out sales numbers themselves because they do not trust the experts. When that happens, it means the negative marketing is back firing and no longer working as those who are curious about the company want to make their own decisions and not blindly follow what the media feeds them. For Blackberry it is moral victory made possible by their (still) considerable brand power.

    Blackberry knows who their enemies are and therefore it is proceeding with extreme caution. Remember Blackberry has very capable board of directors who understand the market very deeply. The board has mixture of technology pioneers and very successful directors who not only move the company forward but also invest heavily in it. Prem Watsa invested when stock prices were going downwards and the market had left Blackberry for dead; Prem's record speaks for itself.

    Aside from all the noise, I would only listen to the Blackberry CEO. He admitted that the company was in a bad position previously but "now Blackberry is on a real solid ground".

    I gave up my Blackberry a year and half ago after 10 years of continuous use. Since then I have purchased 3 iPhones, 4 iPads and one Samsung tablet for me and my family. I love iPads and the iPhone 5 is a good product, but I am going back to Blackberry Q10 after seeing my son's Z10. Not only that, within 3 days of using my son's Z10 I invested in Blackberry stock, LONG Term and I buy and sell short term as the market plays out.

    Disclosure: I am long BBRY.

    Tags: BBRY, AAPL, SSNLF
    May 28 10:55 AM | Link | 15 Comments
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