Research In Motion Regains Footing

Some difference 3 months can make. Research In Motion (RIMM) stock 3 months ago was bearing the brunt of sell-off at the behest of disappointing performance and guidance, dipping from the mid $80s to the high $60s per share. The stock had mostly held water of late, sliding slightly to the low $60s but was in a position to change all that with another earnings report.

With the increasing competition from Apple's (AAPL) iPhone, Palm's (PALM) Pre and heightened marketing given to several smart-phones running Google's (GOOG) Android software RIM had to deliver, on all fronts, and it has. Blowing past all expected metrics is leading shares of RIM higher by 11% early in after hours trade.

The lines: Revenue of $3.92Billion vs $3.78Billion estimated; Income of $1.10/share vs $1.04/share estimated; Subscribers at 4.4Million vs 4.1Million estimated. RIM also shipped 10.1Million units during the quarter, including a milestone generating 75Millionth.

Seems the analyst talk of RIM's mighty fall via the dual-pronged iPhone/Android sword will have to wait for the time being as the folks from Waterloo can pop the bubbly for at least another quarter as going into the Christmas season the guidance RIM provided was very strong. Revenue of $4.3Billion vs $4.11Billion and EPS of $1.27/share vs $1.12.

So, with RIM so firmly positioned, what's wrong with the company and why isn't it a must own in the growing smart-phone industry? Two main reasons: Interfacing and Extensibility.

In interface design RIM is not even close to the same league as Apple, let alone the various flavours of Android that are appearing in the market-place. The company has such a culture entrenched in the corporate world that functionality for the consumer has always seemed like an after-thought with the current incarnations of the BlackBerry OS. This was most evident in both versions of the touch screen device Storm that the company debuted to scolding and muted critical response.

In regards to extensibility its hard to call RIM's platform a leader in any sense of the world. Its BlackBerry App World platform is another after-thought and in the days of the highly successful iPhone/iPod Touch AppStore, being an afterthought is just about being dead in the water. While Android is still nowhere near Apple's 100,000 applications catalog, it is getting there with over 16,000 available for various handsets. In this race RIM is already well-behind.

But there is a silver lining, the company makes very good looking hardware, for the most part, and is a staple in the corporate world, which is a business that isn't going anywhere and will grow with the rise of smart-phones world wise. Prospects continue to look good, and if the engineers can get their software act together for a new version of the BlackBerry OS, it really can be a 3 pronged fight in the mobile space for the decade to come, and that kind of potential will have analysts and investors eager to jump on board.

Disclosure: Author does not hold any position in RIMM, is long AAPL, GOOG

Markets fading to start December. What's in store for Christmas?

The first week of December has been one dominated by the sordid affairs of Professional Golf's most notorious figure, and as the rumor mill churns to fill gossip websites and supermarket rags, critical economic, fiscal and international issues are bumped to Page 2. So let's take a look back at what's been making the rounds.

The President of the United States, Barack Obama, always seemingly juggling several critical agendas, has his work cut out for him as he steers the US Senate in the Health Care debate behind closed doors, outlines a plan to send 30,000 more troops to support the War in Afghanistan and holds a Jobs Summit to deal with unemployment. The administration hopes to deploy unused or paid back Financial Bailout Money to support small businesses in lending and hiring and to ignite country wide infrastructure and energy efficiency projects, and to top that all off, newest laid out plans call for the creation of the biggest government transparency project in the Nation's history.

Certainly an ambitious agenda that is sparking controversy from either side of the American political aisle, but as Health Care is being actively debated in the floor of the Senate a passage of a reform bill seems ultimately likely. As for jobs, a very positive report for November had the US losing only 11,000 jobs in that month, with further reductions in previous month loss estimates. A far cry from the over 700,000 per month that were lost in the early parts of the recession. Still, with unemployment sitting at 10% of Americans something more has to be announced and followed through by the Administration.

On the market's side, the recent rally in Gold finally hit a bit of a stumbling block as the US Dollar found some fitting via comments from Ben Bernanke and the Federal Reserve. An interesting trade on gold has been a double gold short fund, PowerShares Double Gold Short (DZZ), posting a 15% gain over the last 5 trading sessions, including a 4% gain Tuesday. As economic footing returns and the possibility of rising Interest Rates in the US into next year this is a really interesting speculation play on a breather in Gold's record rally.

Bank Of America (BAC) has indicated its intention of paying back $45Billion in financial rescue money it had received from the Government as part of the Troubled Asset Relief Program (TARP), leaving its banking brethren Citigroup (C) and Wells Fargo (WFC) still without plans for re-payment.

Technology news of the day has several firms in the spotlight. Google (GOOG) has recently hosted an event in which it showcased several new search initiatives including real-time search, which include public updates from social spaces such as Twitter and Facebook, a Google Goggles tongue-twister project, which allows mobile phones running Android, and soon other platforms to take photographs of virtually anything and get legions of information back to the smartphone.

Apple (AAPL) has purchased music streaming service Lala, which for all intensive purposes seems to likely fit into the mold of furthering a cloud based iTunes architecture and perhaps a streaming alternative to the pay for download model the company has currently been enjoying. With all eyes on a potential tablet offering from the electronics company, several publishers are already lining up to create a joint venture that will put the likes of Sports Illustrated and Time magazine in specific new tablet formats with advanced interactive and connectivity features.

In the entertainment world Activision Blizzard (ATVI) set all sorts of records with the release of Call of Duty: Modern Warfare 2, selling pretty much a bazillion copies of the popular franchise video game and making more money in 24 hours than any other release in the history of entertainment.

As Christmas comes around the corner, in the retail and tech space it'll be interesting to see what the must-have gadget of the year is to be. Will the iPhone dominate again, will console wars push to new sales highs, will consumer spending continue to rise as the jobs picture improves on a bedrock of subtle economic growth?

This time of year always seems to set traders into a bullish mood, and that will be especially true if reports of record bonuses from the financial industry continue to ring true. But just remember, Goldman Sachs (GS) can't be blamed for everything, or can it?

Disclosure: Author owns C, GS, AAPL, GOOG

Google Shows Off Chrome OS in Technical Preview

Google's (GOOG) entry into the Operating System space is at least a year away, but the Internet and Search behemoth showed off a technical preview of what they've been tinkering with to an audience of journalists and "techies".

Expanding on the browser that Google released called Chrome, and its currently advertised 40Million user install base, the operating system advanced by Google is a means to the future of cloud computing. All applications on Chrome OS will be web apps and all data is in sync with the cloud at all times. Basically a user would be able to log into any Chrome OS computer and treat it like your own. The Browser is the key.

Major targets for Google with this system are speed and security. With all major components of the OS, either incredibly lightweight or in the cloud, the time to get a computer up and running will be drastically reduced. The demo netbook that Google showed off was ready to go in 7 seconds. The security model Google is working on with Chrome OS is also designed for the Internet age. Building specific locks to the core of the system from applications will allow Chrome to remain unharmed by viral and malicious programs. The Internet connected self-update and synchronization system will essentially allow Chrome users to always have the most current and safest version of the operation system. If something does go wrong, Chrome can re-install a clean version right on the spot and re-sync all the user's data, almost transparently. Some advanced thinking from a company with a lot of advanced thinkers.

But, how will it all work, what about the powerful desktop applications the computing public has grown accustomed to? Well, initially Chrome is situated for a secondary computer, Internet connected for on the go work, like the netbooks and smart-phones of today. As users get more accustomed to living in the "cloud", it is Google's hope that Chrome can grow into larger and more advanced hardware. Internet technologies have also come a long way in the last couple of years, allowing for far richer web applications than in years past. That alone makes the web app only Chrome a solution to think about, as increasingly more work, social and play is done online.

So, what's in it for Google, and more specifically Google's investors? Well, the long-term battle on several fronts between Google and Microsoft (MSFT) just got a lot more interesting with today's demonstration. Netbooks are the fastest growing computer segment, according to several analyst and consumer measurement reports, and it is a field now dominated by Microsoft, first with Windows XP, and now, or so the hope is, Windows 7. Since Chrome OS is open-source and will be free to manufactures, the Zero price point will put a lot of pressure on the folks from Seattle. But to Google, this is the start of a next generation of cloud-only computing users, a part of the business, where from an infrastructure stand-point Google is dominant. The company can afford to guide development here making nothing from it, but enabling a generation of faster, and more secure web surfers, who'll in turn be more trusting of the cloud, and in turn more receptive to tailored Google advertisements .

There's that buzzword again, the cloud. Google, like other giants in the tech space, want to be the big fish in the cloud business. There are other companies that would focus on the corporate market first and get tangible business that way. A lucrative business that will be as well, but Amazon (AMZN), IBM (IBM), Microsoft and HP (HPQ) are all in competition to provide the infrastructure and cloud services for business. Google's reach has always been about advertising to the consumer, and by providing products and services for free, it's building a trust with the consumer that companies rarely have an opportunity to experience. Granted, user data in the cloud brings up many privacy concerns, but Google seems to be able to side-step its way around most issues in that realm, all the while gathering more tailored information about the surfing and shopping habits of its users.

Google's mantra is clearly changing, of course they are still behind the well publicized "Don't Be Evil" but in the new age of computing and business, Google's really striving to serve up "The Perfect Ad". Because the most lucrative ad, is the one that's as tailored as it can possibly be, because it gives the highest potential of a sale, and after all its the sale that drives business. Chrome OS is the next step towards that potential sale.

Disclosure: Author owns GOOG

Job Market healing, albeit very slowly

Employment in this economic environment has been a very sensitive subject for both politicians, investors and most importantly job-seekers. The economic issue is first and foremost on the mind on many Americans, but it is also causing political upheaval in Washington as the slowing of job losses can be used as an argument only so many times before political capital and goodwill is eroded completely.

Jobless claims data out today showcased that first-time claims came in at just over 500,000, which is the fewest since January of this year. The four-week average for first time claims, about 520,000, is off 20% from peak claims levels. For October, job losses numbered in the 190,000 range, well off peaks of 700,000 during this recession. Accumulation is a big issue, as jobs lost since the recession began number more than 7.3Million, and despite government figures that point to job creation/savings of about 600,000 from the stimulus package it still is a difficult data point to swallow, for those trapped without employment, making the march for continuing jobless benefits.

The market's have reacted bearishly to the jobless claims, but overall losses today have been muted, with the major market trackers off about half a percentage point. Materials and Energy sectors are leading the decline today, with Financials barely trailing for the prize of day's worst performers. With the S&P holding levels around 1100 points, the market has been pricing in recovery during its recently extended rally. Investors, to keep this rally going, are going to need to see tangible upticks in demand and that means some tried and true job growth going into 2010. If anyone is to keep this market going next year the need will be to have jobs creation to build on the economic recovery GDP figures have already suggested is here.

Warren Buffet Completely Bets on Rail, and America

If not so much on rail, than on the American economy, the bet by Berkshire Hathaway (BRK.A) and Warren Buffet on Burlington Northern (BNI) buying the remaining 77% stake to take complete control over the railway company is a stern statement about the direction and prosperity of America. The $44Billion value of the deal including debt and previous investments makes it, for Berkshire, the biggest investment in the history of their business.

An efficient rail system, especially one built on high-speed rail transit, has been one focus of the current US Administration with plans calling for an $8Billion investment in rail as part of the Stimulus Package, with another $5Billion rail investment set aside in the budget for 2010. While President Barack Obama's plans call for efficiencies and high speed in the passenger rail business, the infrastructure work is sure to bode well for the transports and delivery businesses as well.

It is in this business that Mr. Buffet plans to play the recovery of American economics. Eventually as demand for good picks up with improving unemployment, the demand for transport of those various goods for manufacturing and sale will boost the prospects of companies like Burlington Northern.

Investors over the years have learned to trust the calculated wisdom of Mr. Buffet, and it generally isn't a good idea to bet against the man that's built one of the biggest fortunes of our time. As he's shown as recently as the financial crises (with an investment near the bottom in Goldman Sachs that's bore much applauded profits), the Oracle of Omaha isn't sitting on any of his laurel's. This investment is as much a bet on an American recovery in jobs and economic growth as it is about the prospects of the two hundred year old rail business.

Even if investor's aren't convinced rail is the future, the actions of one of America's wisest and most patient investing minds have to taken seriously.

Disclosure: Author holds no position in BRK.A nor BNI