Wireless Watch: Signs of life
Red Herring
April 18, 2001
In my column last week I wrote about the importance of political relations with China, and I implied that President Bush should just apologize already for the spy plane collision and let Americans get on with their business there. I opened the column by saying that No. 1 on my list of the "Top 100 Stupidest Things George Bush Could Do as President" is "Tick off China."
In doing so, I gravely offended several readers with my political insensitivity. I was called everything from a capitalist (guilty as charged) to a communist (can you even be both of those simultaneously?). And of course, many readers demanded an apology from me. Oh, the irony.
To show that I'm aware that I am, in fact, a technology writer first and a novice political postulator second, I apologize if any of my comments were taken the wrong way. And to let you know that I really mean it, No. 1 on my "Top 100 Stupidest Things Dan Briody Could Do as a Journalist" is now "Tick off readers." Now, back to business.
DECONSTRUCTING THE ECONOMIC-DOWNTURN MYTH
After all the insulting emails I received this past week, I feel the need for some positivism. So I, and what's left of my ego, scoured the headlines for some good news in the wireless industry. I have to tell you, it wasn't easy. But there are signs of life in the wireless world, and I'm here to testify to their existence.
Shares of Research in Motion (Nasdaq: RIMM) (RIM) stock headed north of the border last week after the Waterloo, Ontario-based company actually announced better-than-expected earnings and revenues. After reporting earnings of 10 cents a share -- 3 cents better than analyst expectations -- and handily topping revenue estimates of $75 million by turning in $90 million, the stock flew up 28 percent on Thursday.
The news was a real shot in the arm for the wireless industry, which, like the rest of the technology world, has suffered under the weight of countless earnings disappointments and negative outlooks. RIM's outlook was so positive, in fact, that chairman and co-CEO Jim Balsillie called the economic slowdown "mythical" and predicted a healthy second half. I'm not sure what Mr. Balsillie's definition of a myth is, but no matter what you call the current economic environment, RIM has been able to pull off a wireless miracle.
RIM stock roars higher on strong results
(New York Times on the Web, registration required)
DEATH WATCH
One company that has not been blessed this earnings season is Motorola (NYSE: MOT). At times it would seem that the Angel of Death is permanently camped outside the company's Schaumburg, Illinois, headquarters. Last week, Motorola reported its first operating loss in 16 years. For some historical perspective, the last time the company posted a loss, President Reagan had just met with Mikhail Gorbachev for the first time, Live Aid was rocking Philadelphia, and Coca-Cola had just introduced "New Coke" in the face of Pepsi's stiff competition.
Motorola missed twice-revised earnings estimates by 2 cents, posting a 9-cents-a-share loss, representing a $206 million loss for the quarter. The company still has 4,000 more job cuts to come, has indicated that next quarter will be worse, and has provided absolutely no guidance for the coming year.
Motorola posts 1st operating loss in 16 years
So how is this positive news, you ask? Things could not have been worse for Motorola last week, yet the company's stock held up under the pressure. In fact, the stock was actually up a couple of percentage points since the bad news broke. What this says to me is that investors have priced all the bad news about these wireless companies into the stocks, and expectations have finally fallen below reality, a critical benchmark in finding the bottom of the market. There may be more bad news to come, but there is nothing that can surprise us at this point. Or is there?
It's the good news that comes as a shock these days, and nothing came as more of welcome surprise last week than the news that the lending arm of the European Union is considering offering long-term loans to wireless companies saddled with debt, according to a Reuters report. In an attempt to ensure that third-generation (3G) networks will get built, after several European countries nearly bankrupted telecom carriers with sky-high spectrum auctions, the EU was looking into extending credit, according to EU Commissioner for Enterprise and Information Society Erkki Liikanen. The EU's expression of confidence in the carriers could go a long way toward allaying investor fears around the wireless community.
I DATE U
And from the bizarre-but-true files, proving that consumers still have some disposable income left, "virtual dating" is the hot new thing in Hong Kong. Subscribers pay $5 a month for the privilege of wooing nonexistent women over their cell phones. Called I DATE U, the software comes from Pacific Century Cyberworks (NYSE: PCW), and the drama is played out like a video game, with participants receiving points for giving gifts and the like, and losing points for missing dates, etc. More than half a million short messages have been sent through the service since its inception.
Virtual dating takes off in Hong Kong
There's a lot of lonely, sad, wireless weenies out there, folks. Could this be the killer wireless app we've all been waiting for? Let's hope not.
You can find this article at:http://www.redherring.com/index.asp?layout=story&channel=10000001&doc_id=350019035mf
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