Market Talk

Dow Jones’ Roger Cheng reports:

BlackBerry maker Research In Motion (RIMM) might be a bit late to the game, but it finally unveils its highly-anticipated tablet computer and operating system in an effort to attract more consumers.

WSJ has the details, including this great paragraph describing where RIM currently stands among consumers:

The announcements come as RIM revamps its iconic BlackBerry smartphones—originally made for businesses to handle email—for a market driven increasingly by consumers looking for fast handsets and cool software. Users and developers complain BlackBerry’s operating system is slow, clunky and lacks fun apps; the handsets are facing tough competition from Apple’s iPhone as well a handsets that run on Google Inc.’s Android operating system, particularly in the critical U.S.

On paper, Research in Motion’s Playbook tablet has a lot going for it, including a dual-core processor, full Flash, two high-definition cameras, and USB ports.

But in the end, it’s still all about the applications. RIMM faces the same dilemma Palm did with its new smartphones: an unproven product that may not attract app developers like Apple (AAPL) or Android.

RIMM is spending the latter half of its presentation focusing on “Super Apps” and making life easier for developers. IDC’s Al Hilwa notes that it will still take some time to build up the number of apps available to the product, which runs on different software than Blackberrys.

The Playbook, unlike the Blackberry, will not feature a cellular connection. So who will sell the tablet? RIMM has traditionally relied on its wireless carrier partners to push Blackberrys, either to business customers or consumers. But without a 3G connection, there really isn’t any motivation for the carriers to sell the Playbook.

Will RIMM try its hand at the direct retail business? More likely, it will rely on a retail partner like Best Buy (BBY).

Research in Motion shares were recently up 1.2% to $48.95 in after-hours trading.

- AIG and Treasury reportedly discussing an accelerated sale of the government’s stake. WSJ reports Treasury’s likely to convert $49B in AIG preferred shares to common and gradually sell its stake.

- “In case you lost track of this sorry affair, AIG, the biggest ward of the state in human history, continues to get the kid glove treatment,” Yves Smith writes at naked capitalism. “Funny, isn’t it, how creative and accommodating the Treasury can be when dealing with large distressed firms, and its skill seems to evaporate when contending with underwater homeowners.”

- This is not a typical stock picker’s market. Far from it. Since the May 6 “flash crash,” correlation of S&P 500 stocks to the overall index has reached its highest level since the 1987 crash. “The stock market has turned into a schizophrenic herd of sheep,” the Pragmatic Capitalism blog says. “Currently, the herd is grazing happily with not a care in the world. But don’t be fooled — when something spooks them you’ll get trampled if you don’t run with them.”

- Retail sales rise for second straight month and the 0.4% rise in August is the highest percentage gain since March. “If we look at the monthly trend of late, there’s an upside bias,” James Picerno writes at The Capital Spectator. “It’s hardly definitive or strong enough to close the book on worries, but considering what might have been it’s okay and more than welcome.”

- Microsoft’s (MSFT) Bing has overtaken Yahoo (YHOO) as the No. 2 search engine in the US, at least according to Nielsen’s August report. Firm says Bing had 13.9% search share last month, compared to Yahoo’s 13.1%. This will “will surely cause a firestorm of controversy in the search arena today,” Kara Swisher says at All Things D. Regardless, Google (GOOG) still dominates as it holds 65.8% of search, up 0.9% month-over-month and 0.5% from a year earlier.

- The outcome from Basel III has been critiqued left and right, but Reuters blogger Felix Salmon finds some positives, calling Basel III a “quiet victory” and saying the banking restraints are fairly constructive. “The Basel committees did a masterful job of depoliticizing the process as much as possible,” he says. “If politicians and the media had got involved, that might have made the process more democratic, but it would also have made it much more chaotic and quite possibly would have derailed any chance of an agreement at all.”

- Couch potatoes rejoice! Google TV, the new Internet television product Google (GOOG) is rolling out, will hit stores in the middle of October, possibly on Oct. 17, Engadget reports. Citing an internal memo from Best Buy (BBY), the blog says BBY had originally planned to begin selling Google TV on Oct. 3 but the launch has been pushed back by two weeks.

- Investors who try to time the market may be better off sticking with a buy-and-hold strategy. Barry Ritholtz posts a chart at The Big Picture looking at how investors would do if they bought the S&P 500 in 1993 and how their performance would be dictated if they missed the 10 best days or avoided the 10 worst days.

- Rimarkable blog wonders why the BlackBerry Curve 3G doesn’t run on BlackBerry 6 out of the box. Research In Motion (RIMM) says BlackBerry 6 will be available for the Curve 3G upon network certification in the coming months. And RIMM notes the device, which will sell initially through Verizon Wireless, is BlackBerry 6 ready. But for now, it will run on BlackBerry 5, prompting Rimarkable to wonder why RIM would release a device with an “old deprecated OS” a month after the debut of its next-generation operating system.

- Rafael Nadal finally solves New York. Congrats Rafa.

- National savings rate in June inched up to 6.4% from 6.3% a month earlier and is approaching the 50-year average of 6.9%. “On the one hand, higher savings will put a crimp on consumer spending which of course makes up a majority of US GDP,” says Miller Tabak’s Peter Boockvar.. “But on the other, higher savings is the fuel for investment which helps to finance businesses everywhere that are getting crowded out in their borrowing by the enormous needs of the US government and some European ones.”

- The Wells Fargo/Gallup Small Business Index hit its lowest level since the index’s inception in 2003. Most of the poll’s decline came from the “Future Expectations” category of the survey, which follows business owners’ expectations for cash flows, new jobs, access to credit and capital spending. “In other words, as dour as the subjects are about the present sitch, they are even more so about the near future,” Josh Brown writes at The Reformed Broker.

- By next year, Apple (AAPL) will likely become the second-largest semiconductor buyer in the world, thanks to the iPhone, which prompts TechCrunch’s Steve Cheney to ponder: “Should Apple own its own wireless chip development?” Rumors are swirling Intel (INTC) may be close to acquiring Infineon’s (IFX.XE) wireless chip business, but “based on Apple’s deep relationship with Infineon, and its famed secrecy around M&A, it is a pretty safe bet that Steve Jobs is analyzing the implications of a deal.”

- Consumer spending and personal income were both flat last month, slightly below economists’ expectations. “That’s not terribly surprising these days, but it’s hardly encouraging. Perhaps the best we can say is that it’s more of the same,” James Picerno writes at The Capital Spectator.

- Android may not be a money-maker, yet, but it’s still a success. Google’s (GOOG) strategy differs from Apple (AAPL), which sells great products while tightly controlling its hardware and software distribution. Conversely, Google “sprays its software all over the place for free, betting on owning the future of the mobile Internet and search advertising businesses the way it owns them on the web,” Dan Frommer notes. “That’s why, despite Apple’s huge financial lead, Android is already a big early success for Google.”

- About the Fed potentially plowing cash from its maturing debt back into the Treasury market: “It’s not a huge move, but letting the MBS portfolio slowly burn off is inherently tightening,” Joe Weisenthal says at The Money Game. “Rolling over that portfolio, therefore, maintains the status quo.”

- “Lately the Fed seems more interested justifying why it doesn’t need to do anything more to boost the economy rather than grappling with actual data showing that the economy needs more help from the Fed,” University of Oregon economics professor Mark Thoma writes.

- Ever since stocks bottomed out in early July, gold hasn’t been able to generate a sustainable rally. And for much of 2010 gold and the US dollar, which are usually inversely correlated, have essentially moved in lockstep. “Over the last six months the two assets have been more positively correlated than at any other time in at least ten years,” Bespoke Investment Group says.

- Research in Motion (RIMM) Co-CEO Mike Lazardis calls BlackBerry Torch launch one of most important in the company’s history, which certainly isn’t an understatement. But the question remains: Is this device a “buzzworthy breakthrough or just another BlackBerry?” asks Digital Daily blogger John Paczkowski.

- Many corporations and their shareholders are enjoying surging profits and boosted dividends, but employees are still waiting on returns of the 401(k) matches.

- Big Picture blogger Barry Ritholtz addresses the ongoing inflation/deflation debate. “Deflation is a fact. It is happening now, it is real, and we see it in the actual data,” he says. But the first hint of inflation will come from the bid-to-cover ratio on Treasury bond auctions. “That will be your early inflation warning. But now? It’s nowhere in sight.”

- Initial jobless claims are still “stubbornly high” at 457,000, Miller Tabak’s Peter Boockvar says. “GM not shutting auto plants as is typical this time of the year is still a distortion but it is surprising that claims aren’t lower because of it,” he says. “Thus current levels still remain a concern at this stage of an economic recovery.”

- And what’s worse, jobless claims have essentially been stuck in neutral during the last eight months, The Economist’s Free Exchange blog notes. “Claims are stuck at an historically high level. Perhaps that merely reflects some new structural dynamic in the labor market, but it mainly seems suggestive of continued economic weakness.”

- While the advertising industry was crushed during the financial crisis, recent signs have pointed to a comeback. “But it’s not back everywhere. And it’s probably not as strong as you think it is,” MediaMemo blogger Peter Kafka cautions.

- RIMM’s rumored new operating system “should have released years ago, one that should give its devices a bit more appeal in a market increasingly enamored of super-smartphones,” Digital daily blogger John Paczkowski says. “So if the 9800 is announced next week along with a rumored mid-August ship date, RIM will have taken its first big step in addressing the competitive issues that are tarnishing its growth prospects.”

- Moody’s, S&P and Fitch have recently refused to allow their ratings to be used in bond registration statements, fearing they’ll be exposed to new liability from the financial reform legislation. “You can file this one under D for Despicable,” Joshua Brown writes at The Reformed Broker. “Let me put this in schoolyard terms: The ratings agencies are playing chicken against the US economy. The message is to insulate them from responsibility or else they’re taking their marbles and going home.”

- Investing is “an uphill climb against human nature to be bullish when conditions are poor,” the Dorsey Wright Money Management blog says. “To buy when the outlook is dim takes a real leap of faith — and a steadfast optimism that things will improve over time. When things seem like they can’t get any worse, it just might be because they really can’t get any worse–and are about to get better.”

- Payrolls typically lag durables by four months. “Now, the year-over-year change in durables probably peaked a couple of months ago at 19%,” Invictus writes at The Big Picture, noting comps are going to start getting harder to beat. “I fear the hour is growing late and we’re rapidly running out of time as the labor market continues to struggle. I see nothing stimulative on the horizon as far as employment goes.”

- Avis goes to war for Dollar Thirfty. NYT’s Deal Professor Steven Davidoff has the details.

- “Erasing years of academic progress, state education officials acknowledged that hundreds of thousands of children had been misled into believing they were proficient in English and math, when in fact they were not,” WSJ says.

- Retail sales dropping 0.5% last month isn’t so bad considering the broader trend, James Picerno notes at The Capital Spectator. “That doesn’t mean that there’s nothing to worry about, but for the moment the annual pace of retail sales is still comfortably in positive territory.”

- Retail sales data were weak this morning, adding to a string of poor economic reports recently. “The economic data we have seen of late — manufacturing, employment, personal income — all suggest a slowing in economic growth,” Edward Harrison writes at Credit Writedowns.

- Research in Motion (RIMM) CEO Mike Lazaridis is pretty confident about his company’s upcoming BlackBerry 6 operating system, saying it’ll make “anyone that looks at it…say ‘I want a BlackBerry.’” “For RIM’s sake, let’s hope so because the company’s current OS certainly isn’t doing that now,” Digital Daily blogger John Paczkowski says. Consumer interest in the BlackBerry is dwindling, according to ChangeWave Research, just as smartphone demand is rising.

- Retail sales of Microsoft Office 2010, which Microsoft (MSFT) released to consumers last month, are so far a “a bit disappointing,” market researcher NPD Group says. NPD doesn’t reveal specific sales figures, but says revenue generated and copies sold are down from Office 2007′s initial two weeks of sales.

- Apple (AAPL) has purchased 3-D mapping company Poly9, according to Canadian newspaper, le Soleil. The company, best known for creating maps that can be viewed in a Web browser, has already relocated most of its employees from their native Quebec to California’s Silicon Valley, the paper reports.

- “Mortgage applications have fallen off a cliff,” Calculated Risk notes, after weekly applications for purchase fell 3.1%. “The weekly applications index is at the lowest level since December 1996, and the four week average is at the lowest level since September 1995 –almost 15 years ago,” blog says, noting the four-week average is off 35% since “the mini-peak in April.”

- The rich are getting richer, and they’ve been getting richer faster than the rest of us, and that exposes a real problem, Yves Smith writes at naked capitalism.

- Miller Tabak equity strategist Peter Boockvar cautions short sellers to tread carefully from now until year end. “Combine a settling down of European credit stress with potentially a better than feared earnings season, the growing possibility of gridlock in Washington DC come November, a Fed that wouldn’t know a rate hike if even the Bank of Japan wrote it on Bernanke’s forehead and a very underinvested money management community and we are set up for a big rally over the next 5 1/2 months which may have already started.”

- “You may not love the stock market, but you have to love how it can make a fool out of just about anyone,” Evan Newmark says.

- For all Jamie Dimon’s gloomy talk, JPMorgan’s future is looking pretty bright post-credit crisis, NYT’s Eric Dash writes.

Newswires’ Roger Cheng reports:

Research in Motion’s largest strength is its ability to release a steady stream of new Blackberrys. It’s also, however, the company’s biggest liability.

With RIM on the wrong end of a widening technology gap between itself and Apple’s iPhone and Google’s Android software, the company doesn’t need incremental improvements to its phones; it needs a quantum leap to catch up. It’s becoming more necessary with each passing day, as both the iPhone and Android make ground in taking RIM’s U.S. smartphone crown.

RIM’s unveiling of two new devices — both updates to existing Blackberry lines — illustrates its strategy of churning out phones with minor updates. In this case, the Bold 9650, which replaces the Tour, and a new version of the consumer-focused Pearl, were announced as part of the company’s Capital Markets Day and RIM’s WES Conference. Both add new features like a touchpad, but neither break significantly new ground. One analyst called the new phones “underwhelming.”

The strategy, however, has been a key to its success. Carriers like it because they consistently have a new product to market. The “Crackberry” faithful appreciate it because RIM has had a solid track record of identifying and eliminating problems with subsequent models of a phone line.

But with phones coming out with more bells and whistles, RIM can’t rely on its much-loved messaging platform alone.

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Maybe Palm should start making these bad boys? Maybe not.

As word circulates that both AT&T (T) and Verizon Wireless could be getting new iPhones sooner than later, we can’t help but wonder if Palm is close to hitting rock bottom.

As we detailed a few weeks ago when Palm released disappointing results and a putrid outlook, the company’s famed bet on Pre, Pixi and its WebOS operating system hasn’t lived up to expectations. Since peaking in September, the stock has cliff-dived, losing 75% of its value during the last six months.

With the already-crowded smart phone market potentially set to get new iPhones, Digital Daily blogger John Paczkowski wonders if this is turning into Palm’s worst nightmare.

“Going head-to-head with the iPhone 3GS on AT&T will be difficult enough for Palm,” he says. “Competing with the smartphone’s souped-up successor on AT&T and perhaps Verizon could be disastrous.”

Palm CEO Jon Rubinstein previously said if Pre could’ve launched on Verizon prior to Motorola’s (MOT) Droid, it would’ve received more attention than it’s currently getting.

“Will he make similar claims if Palm suffers further woes from a next-generation iPhone on AT&T — or a brand new one on Verizon?” Paczkowski ponders.

It’s been a rough few months for Palm, and without a happy ending in sight it seems like the smartphone pioneer’s destiny is heading down one path: a buyout, Saad Fazil writes at VentureBeat. And Research In Motion (RIMM) may be the buyer that makes the most sense.

Fazil says Palm would help RIM compete in the dog-eat-dog smartphone market, especially as it’s currently losing market share to Apple (AAPL) and Google (GOOG).

“In the long run, when WebOS and BlackBerry devices converge, RIM will come across as a formidable competitor to iPhone, Windows Phone and Android,” Fazil says.

- It’s been a wacky week for home sales. One day they’re up, the next they’re down. What gives?

- Regardless, home buyer tax credit clouds true housing demand.

- S&P 500 breaking through a 15-month high, but more importantly, watch financials as a gauge for future market performance, Bespoke says.

- Rising mortgage rates don’t present a serious concern, yet. “The big test will come with the turn of the calendar,” Tom Petruno says. “Come January, will investors figure that long-term Treasury yields are high enough to be attractive again – or still too low to compensate for the risks to bonds from a bona fide economic rebound?”

-The Blackberry outage has gotten a lot of attention. Maybe it’ll influence Research In Motion to incorporate a decent real-time status page where it can update users about any disruptions to its networks, Paul Kedrosky says.

- Fred Wilson also weighs in on the situation, suggesting RIM should stick to what it’s good at. “The Blackberry approach to providing services via the carrier networks is not ideal,” he says. “They are playing carrier, software provider, and hardware provider all in one. That’s not good.”

- On the bright side, the outage shows how attached people truly are to their blackberrys. “As discouraging to the company as no doubt such outages are, they do perversely prove the loyalty and dependence of the customer base. Not bad things for a business,” Neal Lipschutz says.

- It’s no secret the nation’s biggest banks have cut back lending dramatically. The reason also isn’t surprising. “It’s the rational thing to do,” Barry Ritholtz says.

- VIX below 20 doesn’t mean selloff is coming.

- Ratio of existing home sales to new home sales in November hit a new all-time high, Calculated Risk says.

- Here’s a glimmer of hope for the 2-26 NJ Nets. Their Brooklyn arena appears inevitable with financing deal.

Maybe RIMM should start selling these bad boys? Maybe not.

Research In Motion (RIMM) shares plunge today after the BlackBerry maker posted lower-than-expected 2Q results and a weak 3Q revenue forecast.

A number of factors contributed to the disappointing guidance. The weak economy combined with the growing smartphone market – especially competitive pressure from Apple’s (AAPL) iPhone – may finally be catching up to RIMM. The company also said its average BlackBerry selling price dropped to approximately $320, more than $20 below analysts’ estimates.

Goldman Sachs cut its rating on RIMM to neutral from buy, saying a number of metrics in 2Q “challenged our prior thesis on the stock.” Specifically, the firm cites weak results from new BlackBerrys Javelin and Tour which have failed to drive similar subscriber growth compared to previous device launches.

That makes Goldman doubt Research In Motion’s ability to maintain North American market share.

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