So my thesis on RIM continues to play out, although slower than I thought it would. When I bought the stock at $7.54, rumours of an Amazon acquisition popped up and the stock jumped 12 per cent. That quickly fizzled and the stock gave back those gains, and sunk another seven per cent or so (this was on an unexpected bad news item that popped up, which was that RIM had lost a patent suit for $140M and change). Since then the stock has found its way back to where I bought it, currently trading at $7.41.
So should I sell? Not just yet as my thesis that RIM will enjoy a PR speculation period still holds and we are beginning to see that unfold.
The recent news cycle is starting to turn speculative.
Fairfax boosts stake in RIM
RIM channels Apple in BlackBerry comeback bid
RIM developing Blackberry 10 photo filtering suite to rival Instagram
So should I sell? Not just yet as my thesis that RIM will enjoy a PR speculation period still holds and we are beginning to see that unfold.
The recent news cycle is starting to turn speculative.
Fairfax boosts stake in RIM
RIM channels Apple in BlackBerry comeback bid
RIM developing Blackberry 10 photo filtering suite to rival Instagram
The two stories worth PR commentary though are the Fairfax story on the marketing story.
1) Fairfax boosts stake in RIM
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| Prem Watsa |
Prem Watsa, CEO of Fairfax Financial Holdings, has doubled his investment in RIM and now owns 9.9 per cent of the company. Now, it's worth noting that he was buying RIM at $30 a share I believe, so despite being considered the "Warren Buffett' of the North it's definitely legit to question whether his doubling down on RIM is merely chasing a bad investment thesis.
Having said that, from a PR perspective, it gave RIM a solid floor on the share price. No one drops 100M-plus on a stock they think will be worthless in the near future. Money talks and Prem's confidence in RIM, especially given his seat on the board now, suggests there is value in RIM.
What I find interesting is that Prem is doing exactly what I'm doing. He's bearish on the equity markets and yet bought RIM stock regardless.
Personally I won't go near the stock market because currently it does not reflect what is really going on with the world. It's propped up by sticks and bubble gum (ie. endless rumours of stimulus) and in my opinion has decoupled with the state of the real world out there. When it eventually re-couples and stocks are priced based on the real economy (versus quantitative easing in the US and Europe) we'll see a crash. And even if this ponzi scheme can keep going indefinitely, the upside is limited at best and pails in comparison to the downside.
Yet, I still saw value in RIM because it was being priced as though both feet were in the grave, when only one actually was. In a weird way, RIM is actually being priced based on the real economy (or worse, based on a crash scenario, which means it's fairly valued / cheap compared to other stocks that are inflated due to macro bullshit out of the Fed and ECB).
Prem's increased stake in RIM will give investors a reason (albeit tepid one) to stick around while RIM works to get BB10 out the door. So from a PR perspective, it was a win for RIM this week.
2) RIM's CMO says 'bb fans secret weapon'
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| Frank Boulben, CMO, RIM |
Ok, this made me laugh. RIM's Chief Marketing Officer, Frank Boulben, has been talking about how BB fans are his secret weapon and how RIM will be aggressively using social media (things like online videos) and buzz to generate interest regarding BB10.
Here's my two-cents on what this really means. He likely has half the budget and half the staff he needs to really market BB10 the way he needs to. Read that again folks - HALF. Unless you've worked in marketing and PR you can't understand how losing half your resources crushes your options for what you can and cannot do. It's like suddenly being dropped in quicksand.
He likely does not have the money or resources to do a massive overhaul of the brand - for instance tearing down and building a new blackberry Web site (the current one is crap when compared against Apple for instance).
So Boulben is making the best of a bad situation in framing RIM's marketing efforts as a strategic choice versus one of necessity. If you suddenly gave Boulben a billion dollars, I guarantee you their 'strategy' would suddenly change and you'd see massive ad buys and the like.
But here's the thing... I LOVE that RIM has to do things the hard way. Seriously, the biggest problem with RIM has been that it got big and then got fat and lazy. Marketing? Oh pay some agency gobs of money to come up with stuff that is boring and mundane.
Lean and mean is exactly what RIM needs. They need to get back to owning their message. They need to be forced to communicate the value of RIM themselves, instead of paying someone else to do it. They, internally, need to own their brand and the brand needs to be the result of their own sweat, blood and tears. A certain amount of outsourcing is always required, but when you put your brand on auto-pilot and turn it over to some mega-agency to manage, it turns to crap (as we've seen with RIM).
If you have a brand that was built internally and has strong internal ownership, then you can augment it with external resources, but you can't build your brand from the outside in. You have to build it from the inside out. That has always been RIM's major issue, they've sucked at marketing and branding. Like most Canadian companies, they never took marketing seriously, and to the extent that they did, I suspect they never took ownership of the brand internally. Sure, someone was 'responsible' for the brand internally, but did anyone ever really own it?
So do I think Boulben is blowing a little smoke up our butts here? For sure. But nonetheless, I think the strategy is exactly what RIM should be doing.
One super sexy video of BB10 on YouTube can do more to create buzz and excitement than a $20M ad buy.
This will also put onus on marketing to push R&D and product development to give them things that will excite the market. I suspect that R&D has been driven more by the sales folks than the marketing folks at RIM. Carrier X needs this feature make it happen as opposed to We need features that are going to wow people and make them want to buy our product.
The question now becomes, can RIM get back to basics and do some really exciting marketing? Or will they simply pump out crap - the 'polished turd' model of marketing? Only time will tell.
I can tell you this much, they should create a splash launch page for Blackberry.com that shows a big, beautiful picture of a BB10 device and underneath would be eight black boxes with dates under each of the boxes marking the unveiling of some super cool feature in BB10.
Get people to buy in to the excitement of the slow release of each feature of BB10. Visit the site on that date, click the box (which would no longer be black) and launch in to a feature page regarding that feature on BB10.
If Frank does not do something to redesign the current Blackberry Web site (which has gone from utterly horrible to simply boring, which is an improvement) then as far as I'm concerned, all this talk of 'marketing' will turn out to be nothing but hot air.
And for heaven's sake Frank, get a picture taken of you holding a blackberry device! You do a google image search on Frank and all you get are head shots.
So from a PR perspective I like that Prem shows confidence in RIM and that they are going to have to do some good old fashioned marketing and PR (with no big spending, agency model to do the work for them).
Now hopefully there are no more 'surprises' (ie. negative news stories) for the foreseeable future and my PR speculation theory on RIM can unfold without disruption. RIM, even given its current state, should be a $12 stock.
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