Saturday, September 28, 2013

TOP 3 FOR THE WEEK!

Hey Everyone! Hope you all had an amazing week. I have a busy weekend ahead of me but couldn't leave you without the top financial stories for this past week. And here we go!  

R.I.P Blackberry



 So ladies and gents it appears that Blackberries will now go down the path of those companies that were simply not able to keep up with the popularity of newly-developed devises and strenuous competition. On September 23rd, the announcement was made that an insurance company in Canada by the name of Fairfax Financial (one of blackberry’s larger shareholders) has decided to acquire the company for $4.7 billions, an average of $9 per share which is a premium to the current stock price. Just a week before this announcement was made blackberry had informed shareholders it would lay off about 40% of its workforce and would likely be reporting a loss of nearly 1 billion dollars on their next earnings call. If that was not a hint that things were not going well (like, at all) I don’t know what is.

So what does Fairfax financial intend to do with blackberry? Well, although there is probably a lot of speculation truth is that only they know for sure or maybe they don’t even know. There are a lot of patents and technology involved within the blackberry emporium which they will likely be able to profit from one way or another.

You may recall that just until a few years ago BlackBerrys were still a popular devise. I remember my first “transition” in to a “smart phone” (meaning a phone that had access to the internet) was a blackberry back in 2010. I have to admit, I was late to the “blackberry party” but how can we forget how extremely popular these phones were? Everyone and their mother had one and if you were caught without a blackberry in your hand you were simply not cool enough.

Well if you had any doubts whatsoever  about how incredibly fast the world of new technology moves and how it can completely destroy a #1 company at the speed of light; let this be your prime example. As a business student, something that gets drilled in to our heads from our very first class is the importance of sustainable competitive advantage and staying ahead of the curve. Is not enough to simply have a product that’s “original” and that everyone wants to get their hands on but is also important that this edge is sustainable for the long term and strong enough to fight competition.

Established corporation that fail to remain aware of new technology and evolution within their industry end up in very risky grounds. I am not saying that Blackberry was not aware of what was going on; specially with competitors such as Apple and Android  (who didn't ) but perhaps the technology moved so incredibly quickly that they could not keep up  with the competition fast enough and much less surpass it.

We've all witnessed the way companies that were once #1 and even had some sort of virtual “monopoly” going on against consumers are now bankrupt or worth millions (if not billions) of dollars less than what they once were thanks in [major] part to technology and major strides within the industries which left many “major” corporations behind.

Who can forget about the infamous movie-rental company Blockbuster, which was completely wiped out by Netflix and other rental/online streaming companies?!  Or, how can we forget companies like AOL which was a pioneer  in the industry and today barely exist, if at all?! I applaud companies like Yahoo! Which somehow has remained alive and well after so many “innovation tsunamis” have wiped out so many companies. 
Rest In peace blackberry, you wont be forgotten!

Thought Apple was left for dead? Think again!



The same week in which blackberry makes the announcement that they are being bought, apple announced that it sold over 9 million new IPhones in their first weekend ALONE since the new phones came out. As per AAPL CEO Tim Cook, this represents record-breaking sales for a weekend in the iphones history. They actually sold out of their first supply of phones and as per Cook are still “working hard to build enough new iPhones for everyone.” If that’s not a perfect scenario of supply and demand for a company I don’t know what is!

Whomever thought apple was left for dead (I have to admit, even I had my doubts!) was in for a huge awakening when apple made this announcement. What does this mean for the stock price? Well, it shoot up like light fire! Is the price sustainable? Not quite sure. AAPL stock seems to be on this pattern of shooting up when a new product comes to market (and proofs to be successful) and then somewhat stabilizing as the months go by until the “next new gadget” comes along.
 
As previously mentioned, I no longer own shares of AAPL but this past week was a good one for current shareholders. Not to mention dividend payments and share-buy back programs that AAPL executives have put in to place.

Great Job apple! Still a solid company with billions of dollars in reserves—there is really no comparison no matter how you slice it! If you are a shareholder, you just had a pretty good week.

Twitter continues its IPO process; decides to pair up with the NYSE

In case you didn’t know-- twitter is not a publicly traded company (yet) but they are in the process of becoming one. As an IPO (initial public offering—which is usually what stocks of a company are called when they first become public) a company can choose where they want to be listed. For example, the NASDAQ and the NYSE are two examples. Twitter decided to go with the NYSE and some say is because they don’t want to be associated with Facebook in any way, shape or form. Whether that’s the reason or no, who knows! Read the full story here. Would you invest in twitter when it comes out?


Have an amazing weekend everyone! Cheers to a bull atmosphere next week. I am excited because earnings season is just around the corner!