Ronnie05's Blog

Do Facebook and Blackberry make a good marriage?

Posted in Industry updates by Manas Ganguly on June 4, 2012

RIM has hired JP Morgan and RBC Capital to help search for a partner to license its software. However, Bankers don’t normally help in mere partnership capacities. They become involved when a company has put itself up for sale. And there is no doubt this is exactly what RIM has done. Its announced job cuts last week was a move to make itself more attractive to potential suitors. (Read earlier posts about Blackberry’s fall here –  Part 1, Part II, Part III and Reprise)

Whenever RIM/Blackberry is said to be a target of an acquisition, there is the obligatory mention of  Microsoft, which makes perfect sense; it would relish the opportunity to beat Apple and Google at their own games while strengthening its existing partnership with Nokia. For that matter, there are plenty of reasons why Nokia might enter the mix and make a play of its own for RIM.

However, the focus really is another company which is trying to make its own smartphone- Facebook. Even while trying to assess whether of nor exactly the value of social media is $96 billion, Facebook has announced its interest in smartphones (not a smart idea really!). We have seen examples of another tech lord miserably failing in terms of hardware – Google and yet its Moto acquisition. If that be the direction Facebook is rooting itself to – Facebook needs RIM as much as RIM needs Facebook.

Facebook has to justify a lot of $s on its ability to monetize 900 million users and its ad revenue model.  In RIM, not only will Facebook get a better enterprise presence; it will acquire assets such as RIM’s BB10 software, a growing music service as well as RIM’s Mobile Fusion, a product that supports the collaboration of enterprise mobile devices, even that of competing models such as iPhones and Android devices. These services, as you realize will help Facebook diversify and hedge its risks and further its mobile ambitions.

In Essence, Facebook immediately becomes a hardware and services company while silencing critics who assert that the company does not monetize well and enough and hence the valuation is merely a fad, a bubble.

For RIM, the game is over — end of story! But marry it to Facebook and a whole new dimension could uncover.

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End of road for Sony?

Posted in Mobile Devices and Company Updates by Manas Ganguly on June 4, 2012

Technology companies keep a lot of cash and investments for a reason, to tide them over in bad times, and to fuel turnaround strategies. When the cash starts to run out, however, that’s a clear sign that we’re no longer talking about a turnaround.

A headline that caught my eyes today, was that Sony shares had breached the 1000 yen level in Nikkei. This was the first time after 1984 (28 yrs) that Sony has seen such a valuation. Worse, Sony now has less cash than a quarter’s sales.

Compare that with Microsoft which could get by for three quarters on its cash, if sales fell to zero. Or Cisco, which could live for a year on its cash and short-term investments.

Kazuo Hirai’s turnaround plan for Sony has yet to show any results whatsoever. There is a point in the life of every technology company’s lifecycle where you go from turnaround mode to survival mode. At that point it’s usually too late to do much of anything. The next best option is then to sell the non-core assets of the holdings and draw money to support core operations. 

Read my earlier posts about Sony: The choices for Sony, Of lost opportunities and bygone glories, Profiling Sony’s accumulated losses across categories

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