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The announcements come as RIM revamps its iconic BlackBerry smartphones—originally made for businesses to handle email—for a market driven increasingly by consumers looking for fast handsets and cool software.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.

- Time’s Curious Capitalist blogger John Curran offers several themes to keep an eye on about current market conditions. “First, stocks are going nowhere,” he says, as there are lots of headlines and big moves in both directions, but the market is still flat year-to-date. Corporate earnings are way up, though mostly on cost-cutting. Oil prices are inching backing up, especially as dollar weakens. Consumer spending isn’t improving, savings rate is increasing and European debt crisis isn’t over.

- AOL’s struggling so much that it couldn’t even meet the Street’s diminished 2Q expectations. MediaMemo blogger Peter Kafka notes two important themes to watch: AOL’s ad business and rate of decline at its subscription business.

- Investors and consumers have been so conditioned to look out for inflation that the threat of deflation, particularly in housing and wages, isn’t being taken as seriously as it should be, Yves Smith writes at naked capitalism. “It is hard to prove in a tidy way, but I see more signs of discounting in the economy, even in goods and services aimed at upper income consumers supposedly unaffected by the downturn.”

- “Inflation expectations are falling and there is currently no end in sight,” notes David Beckworth, assistant professor of economics at Texas State University. “Let me be very clear what all of this implies: by failing to stabilize inflation expectations the Fed is effectively tightening monetary policy at a most inopportune time. I hope this is not how the Fed wants to be remembered.”

- Hackers have released their latest set of instructions to help iPhone 4 owners run their devices on multiple carriers.

- Bearish sentiment among advisers fell for a second-straight week, according to Investors Intelligence. Now, only 33% of the survey’s respondents say they are in the bearish camp. “While a decline in bearish sentiment is typical when equities rise, one could make the case that it should be lower,” Bespoke Investment Group says. “After all, the current level of bearish sentiment is the same now as it was when the S&P 500 was trading at it correction lows in early July.”

- “Maybe, just maybe, the thing to do is let the deleveraging/saving/expense cutting process take place,” Credit Writedowns says. “Just as forest fires are a part of the natural life cycle of forests, so is the cleansing and seeding process of an economic downturn.”

- Research In Motion’s (RIMM) Torch may be the best BlackBerry to date, but it’s not as good as Apple’s (AAPL) iPhone or the plethora of phones using Google’s (GOOG) Android software, Dan Frommer writes at Silicon Alley Insider. “The biggest problem is that RIM has not been able to build a mobile operating system that feels nearly as modern and elegant as Android or Apple’s iOS,” Frommer says. “As a result, even RIM’s newest phone feels old next to a new iPhone or Android device.”

- Oracle’s Larry Ellison joins other billionaires in following a call by Warren Buffett and Bill and Melinda Gates to pledge the majority of their wealth to charity.

- Mosque near Ground Zero gains approval, but opponents are expected to fight it in court.

- 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.

- A wider probe of Wall Street may ease the heat on Goldman. “If everyone is guilty, nobody is guilty,” Joe Weisenthal writes at Business Insider. “That principle doesn’t apply in a legal sense, but we think it applies in a reputational sense. There’s no good reason to leave Goldman for some other firm, if in the end their behavior was very similar.”

- Determining what caused the financial crisis has taken on a shift in narrative, Mark Thoma notes at Economist’s View. “Fraud, deception, and other questionable if not illegal behaviors are beginning to take on a larger role in the story of what happened to bring about the problems in the financial sector.”

- Gold surged to another all-time high yesterday as fears of EU’s bailout plan represents another “step down the road to severe inflation or debasement of paper currencies, or both,” Tom Petruno says. “And after last week’s stock market ‘flash crash,’ prudence is all the more in vogue.”

- Initial jobless claims dropped 4,000 to 444,000. The four-week moving average also ticked lower to 451,000, a six-week low. But “for an economy that has begun creating jobs again, claims should be running below 400k at this point in the recovery and thus implies that this recovery is not your typical one,” writes Miller Tabak equity strategist Peter Boockvar.

- Claims have been bouncing around 450,000 for much of 2010, and “it’s still unclear if claims will break through this floor any time soon,” James Picerno says. Still, two months of job growth have renewed hope, suggesting either jobless claims will finally begin to tail off or the rebound in nonfarm payrolls will stall out. If that happens, investors should watch out.

- Adobe (ADBE) hearts Apple (AAPL) in its latest newspaper ad. And it was only a matter of time before the Adobe founders jumped into the Apple-Adobe-Flash fray. They published their own essay about the importance of open standards on a new section of Adobe’s website dedicated to choice.

- Recovery chatter is running rampant, especially with retail sales up and the labor market improving. But Mike Shedlock, an investment advisor for SitkaPacific Capital, still isn’t convinced. “Believe what you want, but I refuse to believe a recovery is in progress when federal income tax collections are off a half trillion dollars, and state after state is still showing declining revenue,” Shedlock says.

- Rumored BlackBerry tablet doesn’t sound so hot. Boy Genius Report confirms the device will be 9.9″ large and should be ready for a December launch. But “RIM employees have privately voiced their frustration to us regarding this initiative,” BGR says.

- “It’s not a promising sign for RIM if its own employees are thinking the BlackBerry tablet will be DOA,” Jay Yarow writes at Silicon Alley Insider. “Overall, the tablet sounds pretty dull and uninspired.”

- “History books will one day describe this stretch as one of the most interesting and important junctures ever for the financial market construct,” Todd Harrison writes at Minyanville. “The script is still being written, which is why we need proactive stair-step solutions rather than reactive blame and haphazard policy. I’m not exaggerating when I say the future of free-market capitalism hangs in the balance.”

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.

Continue reading…

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.

Palm struggling to find its way.

So much for all the hype surrounding Palm last year.

The smart-phone maker dealt a big blow to investors today, slashing revenue guidance way below analysts’ expectations and acknowledging its devices aren’t selling as well as it expected. Shares plunged.

From WSJ:

Palm rolled out its new Pre and Pixi phones last year in an attempt to regain ground lost to Apple Inc.’s iPhone and Research In Motion Inc.’s BlackBerry. While the phones have won praise from reviewers, sales have stalled amid tough competition, heavy marketing support for more popular phones by the top two U.S. wireless carriers, and a dearth of “apps,” the third-party programs and games that have driven much of the appetite for smart phones.

The company said Thursday wireless carriers are ordering fewer of the phones than expected and are deferring orders they have made to future periods. As a result, Palm said its revenue for the fiscal year ending in May will be “well below” the $1.6 billion to $1.8 billion it had forecast. The company’s shares dropped about 15%.

“Driving broad consumer adoption of Palm products is taking longer than we anticipated,” Chief Executive Jon Rubinstein said in a release.

Palm shares plunged $1.56, or19%, to $6.53, and is now trading at levels last seen in April 2009. The stock had a huge run-up last summer amid potential that the Pre could become an iPhone killer. Looks like those expectations may’ve been a bit premature.

Continue reading…

- 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.