There’s an open letter that has been going round the Internet. In it, the letter shed some insights, missteps and frustrations from within RIMM.

RIMM has a response to the open letter.

RIMM’s statement is fair; highlighting its zero debt, cash that the have etc.

However, I just want to remind RIMM about one point that they highlighted.

In fact, while growth has slowed in the US, RIM still shipped 13.2 million BlackBerry smartphones last quarter

RIMM continues to reinforce the strength of their balance sheet and amount of devices shipped.

Well, we have seen this in Nokia as well. And where did Nokia goes? Definitely still around. But, the share price is nothing to be proud of.

I tried Nokia’s E7 which is a fairly new phone and runs on the Symbian platform. As a smartphone, there’s nothing to shout about. In fact, it exposes the very key reason why consumers and developers are jumping to another platform.

Back to RIMM. What lessons can we learn from the above?

For a start, what we see in Nokia can definitely be applied to RIMM. In Nokia’s cace, I am getting the E7 for free. Somewhere, someone is trying to make sure the inventories do not get stuck in the channels. Just a few months back, this same phone would have required me to fork out a few hundred dollars.

On top of this, we also have Palm as a case study. Palm too has shipment figures. But, that does not translate to sales.

While RIMM is still able to milk the entreprises on the BES licensing fees. This is not a strong proposition. It is a great cashflow but the growth may not be there anymore.

Look at iPad. Intercontinental Exchange Ltd (ICE) has already developed apps for it. That means financial institutes are going to encourage their traders to start using the platform. And this is just one case. I am sure there are others that have not been highlighted.

RIMM, NOK, GRMN belongs to the same group. They need to know that It is not the wins but the losses that shows your weakness.

Note:

I have PUT options on RIMM and have intention to establish new positions if the chart suggest so.

Many sites have also discussed the various advantage if Company XYZ acquires Palm.

That push me to think a little bit more about Huawei.

So far, most sites have talked about Huawei’s attempt to go into the mobile business and Palm will provide a great platform to build on.

However, if we are to take a step back and think. If you are the bankers, will this be the way you will try to sell to Huawei.

Couple of things we know about Huawei.

1. They are strong in networking, telco areas and is doing very well.
2. Without a doubt, Huawei is one of the great success stories of a tech company from China (apart from the likes of Baidu, Sohu etc).
3. Yet, despite having revenue of more than US$21B, Huawei is not listed.  (source: Reuters http://www.reuters.com/article/idUSTOE60303720100104 )
4. It’s rival, ZTE, is listed in the Hong Kong exchange.

What if Huawei use Palm to get itself listed? Though, I have to acknowledge that Huawei can get itself listed without going through this.

Surely, the investment bankers have to provide other value added services apart from peddling Palm?

If you have gotten the stock back in end 2008 or early 2009, you will have ride it to the top at around $17 from somewhere between $3 or $6.

Here’s one for the bearish trade. Do note that it is used for trend trading.

1. If we have went long back in 2009, the best time to get out is around Oct 23 or Oct 26 when the Tenkan sen cuts the Kijun sen to give a bearish cross.

2. The price also went down very fast with the kumo providing very little support.

3. Palm stage a rebound and tried to break through the kumo from Jan 4 to Jan 19.

4. There is a weak bullish cross around Jan 8 at $10.98 and if you tried to do a bullish trade it will ride you to the top at around $13.56 before it turns.

5. The key point to note here is how it hit the kumo and reverse; a very strong signal that there is no catalyst to push it forward.

6. For trend traders, a bearish Tenkan sen – Kijun sen cross will have been seen on Jan 29. In this case, we can see how with a weak trend, the trade will not be profitable if you wait till the bearish cross is confirmed.

7. A better way is to start taking profit when it dip below the Tenkan sen on Jan 22. Assuming an entry price of $11.04 on Jan 8, and an exit price of 12.50 on Jan 22, the profit will be around $1.46 per share.

8. Noticed how the price never went above the Tenkan sen after that? In fact, assuming we enter a short trade when the bearish cross is seen on Jan 29 at around $10.98 till now, Feb 24, … the closing price is $8.40. That represents a profit of $2.58 per share.

Note (Reminder) :

- No long entry if price is not above Tenkan sen (for short term trades)

- No long term entry if there is no confirmation from Tenkan sen and Kijun sen (long term trend trading)

The end of day chart shows a bullish Tenkan sen – Kijun sen cross just below the kumo.

This suggest that there may be resistance ahead (possibly at $12.60).

At the same time, this rally brings back memories of PALM at 1 year ago (when Pre was launched). Palm went from $6 to around $9 within a month.

What to look out for:

- more  distribution deals with carriers outside of US

- ‘killer-apps’ for webOS

- further out, webOS in other form factor (other forms of devices apart from cellphones)

- possible deals with media companies

As we can see on the chart :

1. Stochastic has just crossed the 20% line

2. Force Index is showing signs of bullishness

3. Palm has moved up from its consolidation below 11.62 and has crossed the Tenkan sen.

4. At this moment, the bullish trend has not been developed yet as there is no Tenkan sen – Kijun sen cross.