Jim (cont'd):     

This is a total miscarriage of financial justice…. Research In Motion has the best franchise… the products that no one including the President-elect who is fighting tooth and nail to be able to keep his Blackberry when he’s in the Oval office… is willing to give up… he is not willing… can you imagine this… he is just not prepared to give up his Blackberry… the latest Blackberry models, the bold in the storm, cannot be kept in stock… and they are being pushed by the number one wireless provider in the country, Verizon… can’t keep em in stock… and somehow Research In Motion, even though it is the only one of these three that is expected to grow revenues this year… is cheaper… cheaper than both Nokia and Motorola… this is a first class aberration… this is an opportunity… an opportunity I see to sell the overvalued names and buy the cheapest.

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Right now with Research In Motion you are getting great growth at a reasonable price… about half the growth rate… but not that long ago we were willing to pay twice the growth rate for a stock like RIMM… I am calling this a four for the price of one Blackberry sale… now to take away from the annual consumer electronics show that just happened… always a big event as far as gadgets are going… it is that 3G smart phones sales appear to be solid… I am also getting this from my friend, Bill McCanless, at TheStreet.com where I am chairman… they are holding up in an environment where the rest of tech is falling to pieces… now let’s think about this… RIMM the cheapest is 100% mobile phones… Nokia is 70% mobile phones… and Motorola, the most expensive, is 41% mobile phones… I mean it is insane… I don’t think the situation will last...

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Look at Motorola... granted it is up 44% since hitting its 52 week low of $3 a share… and it did launch some new handsets at CES… but Motorola has been suffering from a slowdown in handset unit sells for years now… in 2006, Motorola had a handset unit growth of 49%… 2006 49%… 2007 sales had fallen by 27... it is expected that they have fallen by 34% in 2008... Motorola has been in full retreat for years… as its handset market shares have fallen from 21% in 2006 down to expected 8% in 2008... the introduction to new phones is not going to turn that thing around… alright, incoming has failed to produce and execute for
the last two years… it is the most expensive of the three.

How about Nokia?… nice yield right… I don’t know, a little nervous… well Nokia recently lowered its forecast for handset volumes in 2009... as the deterioration in many of the emerging markets where it sells its cheaper phones has accelerated… now Nokia expects less than 6% unit growth for 2009... although the company does still expect to gain market share… even as its sales and earnings are expected to shrink… now Nokia has got a curious strategy… it is hoping that the global economic slowdown/meltdown… will cause consumers to trade down to its lower cost phones… the strategy is not working… Nokia is still the number one player in the handset market with about 60% share… but in many ways… Nokia is a has been.

As we have seen from Research In Motion and Apple… consumers respond to innovation… and speaking of innovation by the way… we are working on this one… Palm’s new smartphone the Pre…looks super cool.. although they are not necessarily cool enough to justify the huge rally in Palm’s share price… Nokia’s strategy of making low cost devices… only gives the company more exposure to the most economically sensitive consumers, who may just forego buying a new phone until the economy picks up.

Now then there is Research In Motion… now there is RIMM… it is the cheapest… unlike Nokia or Motorola it doesn’t suffer from soft sales or market share loses…. RIMM is the broadest and most impressive product portfolio… it has been taking share for the last 4 years… in 2005 RIMM had 6% of the cell phone market… 2008 it is expected to capture 14% of the market… who has that growth… Verizon is still struggling to meet back order of the new Blackberry Storm… the first touch screen Blackberry… which actually feels like its clicking when you type… and unlike the I-phone, it allows you to cut and paste text… RIMM’s share prices have come down from… are you ready… $148... to $46... because of the recession and also cause of concerns of its projectory of gross margins… now the streets consensus earnings per share estimates have come down from 19.4% over the last 6 months, to a dramatically lower… the street hates the stock… just hates it… I think hating negatives are now baked into the estimate… maybe more baked into the price…you should not be able to get RIMM… clearly the better company… and the better stock… which by way is a superior attitude and a superior state of mind, not unlike Mason Storm, in Cramer fave “Hard to Kill”… you should not be able to get that for less than Nokia or Motorola. But now you can.

Here’s the bottom line...

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The Bottom Line!:     If I were you, this is what I would do right now… I would take this opportunity to buy RIMM on the cheap… okay, wait five days… if you pay up for it, you are wrong…. I would pay for RIMM on the cheap here… I would avoid Nokia, and I would sell Motorola…because sooner or later this anomaly of pricing must disappear… and RIMM will be the most expensive of the three again… and Motorola, alas, the cheapest.

Alright, remember, I am using pecking order analysis… traditional research analysis… not chart analysis… using price to earnings multiple and growth rate… and very strangely Research In Motion sells much more cheaply than Nokia or Motorola… you buy Research In Motion… you sell Nokia, well, avoid Nokia… and you absolutely should sell Motorola as of tomorrow.


[verbatim recap]

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Jim went on after this segment to take questions from callers, and responded with his comments...

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Q:     I want to find out about RIMM. I just want to know if we have got a target on it for let’s say for $67.50?

Jim:      Well, I will tell you something, I am always loath to put targets on…but I think this stock sells at 12 times earnings… I think it could sell at 15 times earnings… I mean that I think that you could put on … I think you could put on 10 points quickly… I think by the time it reports it wouldn’t be surprising to see the stock at maybe $70... I think that is reasonable. I think that this is one of the most attractive stocks that is out there, versus its competitors. What else?

Same caller:    I was just wondering, it is my first time investing, and this will be my first stock that I ever bought. I heard about Invest Tools, and Think or Swim, Inplus, and TD Ameritrade all merging into one company. So I was just wanting to know about the CEO’s, if you had talked to them or anything?

Jim:      No, I mean I mentioned yesterday that I think it is a great merger… I think that it is a great merger… and I am sticking by that, I think it is terrific. Now let me just point out, this is a high risk, high roller stock… this is by no means a cautious conservative stock like so many I mention with dividends… you can lose money in RIMM fast… it has cost money bad money… my judgment is, it is the cheapest of the three… if you want to buy 100 shares… let’s buy 25 and hope that it goes down… so you can buy the rest.

Q:     The last Mackarel conference, just completed. And the kids all love the Apple Aps and the I-pods, and obviously RIMM has the Blackberries coming out all the time, is now a good time to buy Apple.

Jim:      Let me just tell you a little story about Apple… I am trying to remember… I shouldn’t just cuff this like this… there was an article in the New York Times that talked about the need for celebrities to be more candid about the health problems they have… okay… and the doctor who wrote the article, mentioned that Patrick Swayze should have been more candid… and, I don’t want to judge anybody, I mean these are life threatening illness… whatever Patrick Swayze, god love him, I only hope the best for him… but it also mentioned that the doctor didn’t think… I think he did a very, very I would say sub rose a text… that he did not think that Steve Jobs was necessarily giving us all the information we need to know about his health… the stock has been going down every since that article… I think that when you read that kind of thing it causes question marks… I have not been gun oh about Apple.. because I am worried about what others are worried about… is that right… is it fair… is that the way people should think about a guys health. This business has nothing to do with right and fair… it has nothing to do with it… it has to do with money. And if people like the doctor who wrote that article are saying… that he is not… he is worried about whether Jobs is being forthcoming enough… what the heck do I know… I am throwing my lot in with that guy.


[verbatim recap]

[end of segment]
 

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