Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Many people also bought into RIMM, including some investors who I respect highly - such as Yacktman and Fairfax Financial's Prem Watsa. People believed/believe it has a lot of value. If it does, it's eroding all the time and management doesn't seem to have the answers. Watsa is on the board and now says the turnaround could take 3-5 years (http://www.bloomberg.com/news/2012-04-26/rim-turnaround-could-take-three-to-five-years-watsa-says-1-.html) and while long-term investing is fine (although he notes the possibility that RIMM could collapse), technology is rapidly evolving and RIMM continues to lose share. Selling would appear to be a better option.
At a few bucks a share, things like Nokia and Sprint are lottery tickets or, better yet, looked at a a "sum of the parts", but that would depend on whether that value can be unlocked (as noted in the article: "Some of the things that we look at on the fundamental side are, we ask ourselves, and this is not always the obvious answer when you look at these situations, does management have a sense of urgency? Do they understand the magnitude of the problem and the speed with which they need to fix it? ") Some of the elements discussed (Microsoft, and I'm not sure how much of a positive that'll turn out to be) are not new by any means.
Best Buy is another one that comes to mind many thought was a terrific value when it came down from something like 50 to 30.
Great values or value traps is the question. Whether or not D & C's value style is being tolerated by shareholders is one question (there are more than a few comments on the article), but one can also ask whether management has been effectively handling their value strategy over the last 5+ years or not.
Nokia? Who knows. As I mentioned above, the M* interview offers questions (will they, can they?) and "known"'s. If it's because Nokia is "cheap", it can get cheaper. D & C management doesn't really make much of a case. If it's a "sum of the parts", who's going to unlock that value?
All I see are an increasing amount of CEOs/boards/etc who are not good stewards of their company, from Yahoo and false resume information to an immature Groupon CEO talking about the company having to "grow up" after apologizing for drinking too much beer at a company meeting and umpteen other recent examples - the whole Aubrey McLendon/Chesapeake deal is a major one. You also apparently have another situation with a director (co-founder, apparently?) trading Green Mountain Coffee Roasters outside of the company's internal trading policy yesterday afternoon. Nokia has not apparently demonstrated anything that would convince the market the management sees the situation in the company as urgent over the last year or more. There are many great CEO's, but I just feel like I'm seeing an increasing amount of instances where I don't see why people would have the confidence in management unlocking value. GE is another one with Immelt and I'm not sure Meg Whitman will turnaround HP anytime soon.
RIMM may eventually unlock much discussed value (although one has to ask how it got from where it was to this point), but it would clearly appear as if that happens it would be through activist shareholders pushing rather than management itself. I'm guessing it eventually is sold.
Carl Icahn had a great interview not that long ago about the negative changes he's seen in boardrooms in recent years. I wish I could find that (although there are a couple of youtube videos of him doing business-related standup comedy at Carolines in NYC.)
The other question becomes opportunity cost of sticking with a company that's in a mess of a situation who has questionable management that has overseen the situation leading up to that point. If you're Third Point's Dan Loeb and you can send nasty (if admittedly amusing) letters to the board and be an aggressive activist, then fine, but that's not what D & C is. Maybe that's what more mutual funds need to be. I don't get the sense they have the urgency nor does anything signal NOK does (nor did I really think D & C makes much of a case, but whatever.)
Good points, Scott. Wife and I both own DODFX and have even looked at DODWX. But I've read lately that key members of the team that built DODFX's record have retired. The fund still has a strong record, but the firm has made some remarkable blunders. Even their bond fund took it in the shins during the market downturn in a way many others did not.
I had thought DODFX was a good bet given the fund's team orientation. Now I have my doubts.
I think of Kodak when I think of RIMM. A lot of trapped value. Some companies reinvent themselves like Xerox and IBM. IBM would seem like a good partner for RIMM to team up with. Both heavily involved in business services. IBM is quietly proving itself again and again. Finding a new niche is key.
Reply to @Shostakovich: Reply to @scott: Oooh, I almost forgot a huge example of a "value"/turnaround play. Sony. I thought Sony looked like a value at 20, trading less than book value. It's now 15 only a couple of months later. You have these companies that got too comfortable while others out-innovated. If you read the Isaacson bio of Steve Jobs, there's a lot about what went wrong on Sony's side. Can you turn around a Sony, an HP, a Nokia, while other companies continue taking market share, or do you instead focus on the new experiences that will come out of having all these smartphones in the world?
I'm admittedly a reformed skeptic on the mobilization of the world, but I think it's difficult to deny, and Sony got left behind - it's now around its worst levels in 2008/2009. Look at the video game industry: Electronic Arts, which is an enormous name in the physical video game space, is getting demolished. You can get games that are really pretty good in the App Store for free or 99 cents, and then if you like the game, you can make "in app" purchases to get "add ons" if you want to. These games are not going to provide the kind of epic experience that the "Halo" series is going to offer on Microsoft's XBOX system (for example), but they also aren't $60. It's becoming very clear to me that there's a massive shift going on in video gaming, and even though 99 cent games aren't going to offer the kind of experience that "Halo" (for example) is, people don't care - 99 cents is just such a significantly better value proposition.
Video game sales in March were down 25% y/o/y.
So, given Microsoft's push into video games, how have they planned for the future of gaming? What is going to happen to Gamestop? What about Best Buy? Sony?
What if people don't print out their pictures as much and just show them on their mobile devices? (HP and printers) What if - despite the fact that they don't provide nearly as good quality, people move further away from digital cameras and just use their smartphone cameras? (Sony again.)
So, are some of these values, or just not evolving and adapting to changes?
Can you have an HP or Nokia in your fund or in your portfolio? Sure - one or more of these might be value, but it seems like we're in an era where there is going to be a shift in consumer electronics and some consumer areas where there are going to be companies that are winners and those who aren't, and those who aren't are going to include some big names that people a few years ago probably could never imagine could be not on the winning side (HP).
Best Buy is downsizing stores. Again, these may be values, but I also feel like it's becoming apparent to me that what may be happening is just a larger shift in these industries (video games, retail, consumer electronics and others) where companies are either adapting and evolving or they aren't - and some of the biggest names did not adapt fast enough or at all (or had other issues.) If you focus entirely on which big companies in this space and have been left behind can get their act together, maybe none of them do - it may take too much time. RIMM taking 3-5 years to turn it around? Maybe, but how much happens in the meantime with technology and other companies moving so quickly? Turning Sony around is going to be a huge task and while it still seems like a good "sum of the parts" value at this level, their new products are not encouraging.
I'm not crazy about the idea of pushing towards mobile payments, but you look at Visa's "Currency of Progress" ad campaign, and it becomes they are pushing for it, not only from the technology and consumer demand with all these mobile devices out there, but the idea that there's billions of people who don't have access to financial services, but have a mobile phone. Visa's uber-slick ads (one of which is linked below) push their move as "financial inclusion", but it's clear their push towards mobile payment is also a large part offering financial services to those who have no bank account/access to financial services, but who have a phone - which is a very large amount of potential customers in emerging markets and a fairly large amount of people in developed markets. Mastercard and AMEX, too.
Currency of Progress: Rwanda Parts with Visa to Advance "Financial Inclusion".
Reply to @Shostakovich: In its early inception DODFX was remarkable and it was the "international fund" to invest in. Soon hot money piles in and D&C refused to address the AUM issues by closing the fund. In 2008 the fund did poorly relative to its peers due to significant exposure to EM (more than average diversified international funds) and poor stock selection.
There are many positive attributes in Dodge & Cox company as a whole. Some of their stock picks just keep the investors wondering what happened to D&C.
Reply to @Maurice: "That's why people like Buffett avoid them." And Sequoia offered the same discussion on CNBC last year, and there are others. And I agree with them, to some degree.
I definitely understand deep value investing - Whitman, Mutual Discovery (and its managers both present and past) etc.
As for Apple, the Jobs bio by Isaacson is a fascinating discussion of Apple's history.
I have absolutely nothing against value investing and I completely understand value investing. I actually quite like value investing. My largest individual holdings are firmly in the value camp.
However, when it comes to ***technology*** (since this thread started with Nokia) in particular (and entertainment-related tech, such as video games, consumer electronics, etc), my question becomes whether or not a series of companies did not adapt fast enough to changes (Sony, Electronic Arts) and watched as Apple and other, younger companies were able to be more nimble and innovative.
Some things just change. Look at - as I mentioned above - Best Buy and Gamestop. Best Buy is shrinking stores and I'm not sure what Gamestop does when people migrate more and more over coming years to 99 cent (or less) mobile games rather than paying $60 a pop for new physical games.
How does Sony reshape itself in terms of less interest in physical games, digital cameras and a number of other divisions? Their announcement today would suggest it's starting - although I think it has a long road ahead - and at 15 bucks, those who believe Sony can get it together, it's trading under book value. HP has to face declining printer sales.
http://tech.fortune.cnn.com/2012/03/29/hps-printer-problem/ (someone apparently from Xerox responds in the comments section, oddly enough.) "Printers have long been a cash cow for HP, but they are losing popularity as people share pictures in the cloud, looking at them on tablets and smartphones. The decline has been increasingly evident. HP's printer and imaging division has seen its revenue decline by 12% since its 2008 fiscal year. The group comprises a smaller portion of revenue – 20% last year, compared with 31% for PCs and 28% for IT services – but it's historically had fatter profit margins. During the holiday season, fewer shoppers bought printers – consumer printer revenue slid 15% on year. HP's new CEO Meg Whitman, who calls the printing division "the lifeblood of HP," responded to the decline by folding it into the PC division, which saw a 15% drop in revenue last quarter. That will solve one problem: concealing the extent of the decline in HP's printer margins by blending it with lower-margin PCs. "
I fully agree that one or more of these companies may be able to turn the ship around , but I think that *again, I emphasize in the technology space*, the rate of change and evolution seems faster and faster these days. Companies will have to face significant challenges that one could argue they maybe should have seen coming. Again - that doesn't mean they can't - but simply that they face clear and significant headwinds (and questions) in their attempts to regain competitiveness.
There will be companies that turn things around, but there will be some names that will surprise people (names that no one would have expected 5 years ago) that will be left behind. When Circuit City exited the picture, so many believed that Best Buy had clear sailing. For a number of reasons, it hasn't.
One talks about RIMM needing 3-5 years to turn things around, my view is that the way technology is progressing, they don't have that much time. Additionally, when it comes to unlocking what is believed to be intrinsic value, I just think (and I said this above) the level of quality in terms of management at companies overall seems to be eroding in recent years to the point where it would not surprise me if more fund managers started to push more aggressively for changes. There's not another Steve Jobs and I think there are not even that many Howard Schultzs - strong leaders with a clear vision.
As I'm writing this, the next segment on CNBC is about a failure of leadership in corporate America.
"When talking about value stocks or value traps, it is easy to make generalities, and that makes it easy to criticize their mistakes."
Maybe some people criticize some value managers too harshly, but I've noticed a few people on the opposite end, talking about value managers with a degree of reverence that would strongly seem to suggest they can do no wrong.
"They don't wring their hands worrying about buying at the bottom."
I will say value managers certainly do wring their hands worrying if they got their thesis right as much as any other management style. There is as much hand-wringing as any other strategy and probably, in some ways, the potential for more.
"That's not information readily available to the casual observer."
There was a lengthy discussion on CNBC this morning with Henry Blodget (he of the deeply irriating Business Insider website and infamous former analyst) and former car czar Rattner, and both said individuals have no place in individual stocks. The odds are significantly stacked against them and the situation has only grown in recent years. Rattner suggested index funds. I don't agree, but an interesting discussion on the topic of information not readily available.
As for technology in particular, I simply think a shift has already taken place with mobile, and I think - as I've said in other threads - the "trickle down" from that that will take place over the next decade will be massive. Technology is moving faster than even I'd like, and as a young person, I'm supposed to be excited by all this. But, even as a reformed skeptic, it's difficult to deny that the sheer volume of mobile devices in the world will not create new services, new experiences (mobile payments), etc. Some big names will adapt, new and nimble names will become household names, some big names will not.
As for Nokia, I still think the interview didn't make a particularly compelling case in any way.
"NPD's report showed a 32 percent decline in total U.S. sales of videogame hardware and software in April, after similar declines throughout the first quarter.
As someone who has enjoyed video games a fair amount, the rate of change is pretty - I think - remarkable. A 99 cent game on a mobile device is not going to provide the same experience one can get on a physical game for $60, but the 99 cent game is a much better value proposition. Angry Birds, a fairly simple (but rather fun) 99 cent game on mobile devices, has toys now in stores, a movie soon and theme parks in Europe (and soon) China.
Disney: "The Walt Disney Co. says revenue at its interactive media division rose 13 percent while the unit trimmed losses. The interactive unit is still on pace to be profitable by 2013 as the company **prioritizes social and mobile games over expensive-to-produce games for video game consoles like the Xbox 360."**
One can see with Nintendo's new console what they are trying to do in terms of mobile integration and trying to appeal to mobile users with an "Ipod-like" controller. This is absolutely an example of a company *trying* to be innovative to figure out how to adapt to a changing market. Who knows if it will work, but the trailer looks neat.
What Nintendo is trying to do is really an example of the challenges many tech (consumer electronics, etc) companies face - responding to a market that is changing faster than many of them thought possible.
Reply to @bee: I agree with you Bee. Kodak and Xerox both had their manufacturing start here where I live, Rochester NY. Xerox has evolved into more of a service company now with pretty good success. An here's a bit of trivia. Joseph Wilson, founder Xerox, had a small company called Halloid. They made photographic paper and equipment. Wilson went to Kodak with his ideas for xerography back in the late 50's early 60's and offered to partner with Kodak. Kodak turned him down, so Wilson started his company, Xerox, right in Kodak's back yard here in Rochester.
I work at Kodak (still), so I know first hand about the value trap it has been. As our Film manufacturing volume declined because technology was moving to digital, management fumbled it's way to "re-invent" itself. Kodak invented the digital camera in the '70s and then didn't market it, falling behind competitors in the digital world. Our CEO in the early 80's was George Fisher, the manager who got a ton of credit at Motorola for the start of mobile phones. You think he could have taken that concept a step further and incorporated using the phone to capture and transfer images - which Kodak had pattens on even then??? No, someone else came up with that idea. Kodak value always appeared good versus it's stock price because of still high revenues from it's declining film business. Heck, even though we are much smaller, film is still one of the only money makers Kodak has today.
So, if management doesn't have the foresight to reinvent itself with bright new creative concepts - continually, forget it. As you point out, RIM was not much different. They had a strong business because they were first with the Blackberry. But then what... not much.
By the way, Bill Miller fell for the Kodak value trap big time in the 90's and road the stock down. On paper, I suppose it looked good at the time - value trap.
"We believe that to date most attention has been focused on Nokia’s deteriorating handset position. However, we are perhaps more concerned with the rapidly deteriorating cash position. Firstly, by excluding NSN from our calculations we find that the company actually went through over €900m in the first quarter alone. Secondly, we find that the handset division could burn though €1.6bn this year in operations. "
Reply to @Sven: "Bill Nygren has admitted to his past mistakes in the public (annual reports) and that is rare."
--- Yes but he just can't catch a break. Still known for his Wamu disaster he also made a case for Best Buy which he reported I think last year in his commentary.
His top 10 holding in OAKLX include JP Morgan Chase and Dell --- 2 back-to-back ding'ers lately. Dell dropped 17% today.
10-yr annual returns now put OAKLX at 3.79% whereas Vanguard Total Stock Market is at 4.62%.
So it'll be interesting to see what's in store for his future performance and if he can rebound.
Comments
At a few bucks a share, things like Nokia and Sprint are lottery tickets or, better yet, looked at a a "sum of the parts", but that would depend on whether that value can be unlocked (as noted in the article: "Some of the things that we look at on the fundamental side are, we ask ourselves, and this is not always the obvious answer when you look at these situations, does management have a sense of urgency? Do they understand the magnitude of the problem and the speed with which they need to fix it? ") Some of the elements discussed (Microsoft, and I'm not sure how much of a positive that'll turn out to be) are not new by any means.
Best Buy is another one that comes to mind many thought was a terrific value when it came down from something like 50 to 30.
Great values or value traps is the question. Whether or not D & C's value style is being tolerated by shareholders is one question (there are more than a few comments on the article), but one can also ask whether management has been effectively handling their value strategy over the last 5+ years or not.
Nokia? Who knows. As I mentioned above, the M* interview offers questions (will they, can they?) and "known"'s. If it's because Nokia is "cheap", it can get cheaper. D & C management doesn't really make much of a case. If it's a "sum of the parts", who's going to unlock that value?
All I see are an increasing amount of CEOs/boards/etc who are not good stewards of their company, from Yahoo and false resume information to an immature Groupon CEO talking about the company having to "grow up" after apologizing for drinking too much beer at a company meeting and umpteen other recent examples - the whole Aubrey McLendon/Chesapeake deal is a major one. You also apparently have another situation with a director (co-founder, apparently?) trading Green Mountain Coffee Roasters outside of the company's internal trading policy yesterday afternoon. Nokia has not apparently demonstrated anything that would convince the market the management sees the situation in the company as urgent over the last year or more. There are many great CEO's, but I just feel like I'm seeing an increasing amount of instances where I don't see why people would have the confidence in management unlocking value. GE is another one with Immelt and I'm not sure Meg Whitman will turnaround HP anytime soon.
RIMM may eventually unlock much discussed value (although one has to ask how it got from where it was to this point), but it would clearly appear as if that happens it would be through activist shareholders pushing rather than management itself. I'm guessing it eventually is sold.
Carl Icahn had a great interview not that long ago about the negative changes he's seen in boardrooms in recent years. I wish I could find that (although there are a couple of youtube videos of him doing business-related standup comedy at Carolines in NYC.)
The other question becomes opportunity cost of sticking with a company that's in a mess of a situation who has questionable management that has overseen the situation leading up to that point. If you're Third Point's Dan Loeb and you can send nasty (if admittedly amusing) letters to the board and be an aggressive activist, then fine, but that's not what D & C is. Maybe that's what more mutual funds need to be. I don't get the sense they have the urgency nor does anything signal NOK does (nor did I really think D & C makes much of a case, but whatever.)
http://www.businessweek.com/articles/2012-05-08/why-dan-loeb-loves-yahoos-r-sum-gate
I had thought DODFX was a good bet given the fund's team orientation. Now I have my doubts.
I think of Kodak when I think of RIMM. A lot of trapped value. Some companies reinvent themselves like Xerox and IBM. IBM would seem like a good partner for RIMM to team up with. Both heavily involved in business services. IBM is quietly proving itself again and again. Finding a new niche is key.
I'm admittedly a reformed skeptic on the mobilization of the world, but I think it's difficult to deny, and Sony got left behind - it's now around its worst levels in 2008/2009. Look at the video game industry: Electronic Arts, which is an enormous name in the physical video game space, is getting demolished. You can get games that are really pretty good in the App Store for free or 99 cents, and then if you like the game, you can make "in app" purchases to get "add ons" if you want to. These games are not going to provide the kind of epic experience that the "Halo" series is going to offer on Microsoft's XBOX system (for example), but they also aren't $60. It's becoming very clear to me that there's a massive shift going on in video gaming, and even though 99 cent games aren't going to offer the kind of experience that "Halo" (for example) is, people don't care - 99 cents is just such a significantly better value proposition.
Video game sales in March were down 25% y/o/y.
So, given Microsoft's push into video games, how have they planned for the future of gaming? What is going to happen to Gamestop? What about Best Buy? Sony?
What if people don't print out their pictures as much and just show them on their mobile devices? (HP and printers) What if - despite the fact that they don't provide nearly as good quality, people move further away from digital cameras and just use their smartphone cameras? (Sony again.)
So, are some of these values, or just not evolving and adapting to changes?
Can you have an HP or Nokia in your fund or in your portfolio? Sure - one or more of these might be value, but it seems like we're in an era where there is going to be a shift in consumer electronics and some consumer areas where there are going to be companies that are winners and those who aren't, and those who aren't are going to include some big names that people a few years ago probably could never imagine could be not on the winning side (HP).
Best Buy is downsizing stores. Again, these may be values, but I also feel like it's becoming apparent to me that what may be happening is just a larger shift in these industries (video games, retail, consumer electronics and others) where companies are either adapting and evolving or they aren't - and some of the biggest names did not adapt fast enough or at all (or had other issues.) If you focus entirely on which big companies in this space and have been left behind can get their act together, maybe none of them do - it may take too much time. RIMM taking 3-5 years to turn it around? Maybe, but how much happens in the meantime with technology and other companies moving so quickly? Turning Sony around is going to be a huge task and while it still seems like a good "sum of the parts" value at this level, their new products are not encouraging.
I'm not crazy about the idea of pushing towards mobile payments, but you look at Visa's "Currency of Progress" ad campaign, and it becomes they are pushing for it, not only from the technology and consumer demand with all these mobile devices out there, but the idea that there's billions of people who don't have access to financial services, but have a mobile phone. Visa's uber-slick ads (one of which is linked below) push their move as "financial inclusion", but it's clear their push towards mobile payment is also a large part offering financial services to those who have no bank account/access to financial services, but who have a phone - which is a very large amount of potential customers in emerging markets and a fairly large amount of people in developed markets. Mastercard and AMEX, too.
Currency of Progress: Rwanda Parts with Visa to Advance "Financial Inclusion".
Sony...WWII...and Bell Labs...interesting history:
http://www.talkingwebtechnology.com/web-technology/a-brief-history-of-sony.html
There are many positive attributes in Dodge & Cox company as a whole. Some of their stock picks just keep the investors wondering what happened to D&C.
I definitely understand deep value investing - Whitman, Mutual Discovery (and its managers both present and past) etc.
As for Apple, the Jobs bio by Isaacson is a fascinating discussion of Apple's history.
I have absolutely nothing against value investing and I completely understand value investing. I actually quite like value investing. My largest individual holdings are firmly in the value camp.
However, when it comes to ***technology*** (since this thread started with Nokia) in particular (and entertainment-related tech, such as video games, consumer electronics, etc), my question becomes whether or not a series of companies did not adapt fast enough to changes (Sony, Electronic Arts) and watched as Apple and other, younger companies were able to be more nimble and innovative.
Some things just change. Look at - as I mentioned above - Best Buy and Gamestop. Best Buy is shrinking stores and I'm not sure what Gamestop does when people migrate more and more over coming years to 99 cent (or less) mobile games rather than paying $60 a pop for new physical games.
How does Sony reshape itself in terms of less interest in physical games, digital cameras and a number of other divisions? Their announcement today would suggest it's starting - although I think it has a long road ahead - and at 15 bucks, those who believe Sony can get it together, it's trading under book value. HP has to face declining printer sales.
http://tech.fortune.cnn.com/2012/03/29/hps-printer-problem/ (someone apparently from Xerox responds in the comments section, oddly enough.)
"Printers have long been a cash cow for HP, but they are losing popularity as people share pictures in the cloud, looking at them on tablets and smartphones. The decline has been increasingly evident. HP's printer and imaging division has seen its revenue decline by 12% since its 2008 fiscal year. The group comprises a smaller portion of revenue – 20% last year, compared with 31% for PCs and 28% for IT services – but it's historically had fatter profit margins. During the holiday season, fewer shoppers bought printers – consumer printer revenue slid 15% on year.
HP's new CEO Meg Whitman, who calls the printing division "the lifeblood of HP," responded to the decline by folding it into the PC division, which saw a 15% drop in revenue last quarter. That will solve one problem: concealing the extent of the decline in HP's printer margins by blending it with lower-margin PCs. "
I fully agree that one or more of these companies may be able to turn the ship around , but I think that *again, I emphasize in the technology space*, the rate of change and evolution seems faster and faster these days. Companies will have to face significant challenges that one could argue they maybe should have seen coming. Again - that doesn't mean they can't - but simply that they face clear and significant headwinds (and questions) in their attempts to regain competitiveness.
There will be companies that turn things around, but there will be some names that will surprise people (names that no one would have expected 5 years ago) that will be left behind. When Circuit City exited the picture, so many believed that Best Buy had clear sailing. For a number of reasons, it hasn't.
One talks about RIMM needing 3-5 years to turn things around, my view is that the way technology is progressing, they don't have that much time. Additionally, when it comes to unlocking what is believed to be intrinsic value, I just think (and I said this above) the level of quality in terms of management at companies overall seems to be eroding in recent years to the point where it would not surprise me if more fund managers started to push more aggressively for changes. There's not another Steve Jobs and I think there are not even that many Howard Schultzs - strong leaders with a clear vision.
As I'm writing this, the next segment on CNBC is about a failure of leadership in corporate America.
"When talking about value stocks or value traps, it is easy to make generalities, and that makes it easy to criticize their mistakes."
Maybe some people criticize some value managers too harshly, but I've noticed a few people on the opposite end, talking about value managers with a degree of reverence that would strongly seem to suggest they can do no wrong.
"They don't wring their hands worrying about buying at the bottom."
I will say value managers certainly do wring their hands worrying if they got their thesis right as much as any other management style. There is as much hand-wringing as any other strategy and probably, in some ways, the potential for more.
"That's not information readily available to the casual observer."
There was a lengthy discussion on CNBC this morning with Henry Blodget (he of the deeply irriating Business Insider website and infamous former analyst) and former car czar Rattner, and both said individuals have no place in individual stocks. The odds are significantly stacked against them and the situation has only grown in recent years. Rattner suggested index funds. I don't agree, but an interesting discussion on the topic of information not readily available.
As for technology in particular, I simply think a shift has already taken place with mobile, and I think - as I've said in other threads - the "trickle down" from that that will take place over the next decade will be massive. Technology is moving faster than even I'd like, and as a young person, I'm supposed to be excited by all this. But, even as a reformed skeptic, it's difficult to deny that the sheer volume of mobile devices in the world will not create new services, new experiences (mobile payments), etc. Some big names will adapt, new and nimble names will become household names, some big names will not.
As for Nokia, I still think the interview didn't make a particularly compelling case in any way.
That's all.
"NPD's report showed a 32 percent decline in total U.S. sales of videogame hardware and software in April, after similar declines throughout the first quarter.
Games software sales were down 42 percent last month, the report said"
http://www.reuters.com/article/2012/05/11/gamestop-idUSL4E8GADK920120511?feedType=RSS&feedName=cyclicalConsumerGoodsSector&rpc=43
Sony fell another 7% today to a **31-year low** after a record loss ($5.7B), despite the fact that they said earlier they would be profitable this year.
http://www.marketwatch.com/story/sony-shares-slump-to-multi-decade-low-2012-05-11?siteid=yhoof2
As someone who has enjoyed video games a fair amount, the rate of change is pretty - I think - remarkable. A 99 cent game on a mobile device is not going to provide the same experience one can get on a physical game for $60, but the 99 cent game is a much better value proposition. Angry Birds, a fairly simple (but rather fun) 99 cent game on mobile devices, has toys now in stores, a movie soon and theme parks in Europe (and soon) China.
http://www.pcworld.com/businesscenter/article/255300/angry_birds_maker_rovio_plans_for_amusement_parks_in_china.html
Disney: "The Walt Disney Co. says revenue at its interactive media division rose 13 percent while the unit trimmed losses. The interactive unit is still on pace to be profitable by 2013 as the company **prioritizes social and mobile games over expensive-to-produce games for video game consoles like the Xbox 360."**
"Nintendo sold 9.8 million Wii machines during the fiscal year, fewer than the 15 million a year earlier and below its initial hopes of selling 13 million machines"
http://finance.yahoo.com/news/video-games-industry-faring-205534711.html
One can see with Nintendo's new console what they are trying to do in terms of mobile integration and trying to appeal to mobile users with an "Ipod-like" controller. This is absolutely an example of a company *trying* to be innovative to figure out how to adapt to a changing market. Who knows if it will work, but the trailer looks neat.
What Nintendo is trying to do is really an example of the challenges many tech (consumer electronics, etc) companies face - responding to a market that is changing faster than many of them thought possible.
I agree with you Bee. Kodak and Xerox both had their manufacturing start here where I live, Rochester NY. Xerox has evolved into more of a service company now with pretty good success. An here's a bit of trivia. Joseph Wilson, founder Xerox, had a small company called Halloid. They made photographic paper and equipment. Wilson went to Kodak with his ideas for xerography back in the late 50's early 60's and offered to partner with Kodak. Kodak turned him down, so Wilson started his company, Xerox, right in Kodak's back yard here in Rochester.
I work at Kodak (still), so I know first hand about the value trap it has been. As our Film manufacturing volume declined because technology was moving to digital, management fumbled it's way to "re-invent" itself. Kodak invented the digital camera in the '70s and then didn't market it, falling behind competitors in the digital world. Our CEO in the early 80's was George Fisher, the manager who got a ton of credit at Motorola for the start of mobile phones. You think he could have taken that concept a step further and incorporated using the phone to capture and transfer images - which Kodak had pattens on even then??? No, someone else came up with that idea. Kodak value always appeared good versus it's stock price because of still high revenues from it's declining film business. Heck, even though we are much smaller, film is still one of the only money makers Kodak has today.
So, if management doesn't have the foresight to reinvent itself with bright new creative concepts - continually, forget it. As you point out, RIM was not much different. They had a strong business because they were first with the Blackberry. But then what... not much.
By the way, Bill Miller fell for the Kodak value trap big time in the 90's and road the stock down. On paper, I suppose it looked good at the time - value trap.
http://blogs.barrons.com/techtraderdaily/2012/05/14/nokia-socgen-cuts-to-sell-following-the-motorola-path/
"We believe that to date most attention has been focused on Nokia’s deteriorating handset position. However, we are perhaps more concerned with the rapidly deteriorating cash position. Firstly, by excluding NSN from our calculations we find that the company actually went through over €900m in the first quarter alone. Secondly, we find that the handset division could burn though €1.6bn this year in operations. "
--- Yes but he just can't catch a break. Still known for his Wamu disaster he also made a case for Best Buy which he reported I think last year in his commentary.
His top 10 holding in OAKLX include JP Morgan Chase and Dell --- 2 back-to-back ding'ers lately. Dell dropped 17% today.
10-yr annual returns now put OAKLX at 3.79% whereas Vanguard Total Stock Market is at 4.62%.
So it'll be interesting to see what's in store for his future performance and if he can rebound.