By Relmor Demitrius

By now product reviews, projected sales information based in some reality, and media input aplenty is out on Motorola Inc.’s (NYSE:MOT) new smart phone, the Droid.  The Droid was the first smart phone to utilize Google’s (Nasdaq:GOOG) new Android 2.0 operating system, introduced as a direct competitor to the Blackberry and Iphone operating systems, as well as the Palm, which is reportedly not doing well.  With any technology that has fans that are loyal to other products, getting a real feel for consumer sentiment on any new technology is risky at first, and best left instead to time.  Enough time has now passed for a good feel on this phone to be achieved.  Sales numbers appear to be decent to good.  The reviews on the phone itself are mixed, but mostly positive.  It has been as boldly called the Iphone Killer (which is ridiculous) to a washed up attempt to catch up in the smart phone space that is going to fail miserably(even more ridiculous). What is that old saying?  Somewhere in the middle lies the truth?  I think that is exactly the case here.    

I don’t think the phone will be a failure, but the Droid has much competition, even within the same Android 2.0 market it uses to run its phone.  Since HTC offers the same operating system (OS) at the same dealers as does the Droid, there is competition even amongst the OS users themselves.  Imagine two very similar phones called the Blackberry and the Redberry, each phone basically the same.  Of course it would affect sales of the Blackberry.  Not only does Motorola have to compete with other smart phones, it has to compete with other smart phones running the same OS as they are.  Was Motorola blindsided when Google released and marketed heavily its version, the Nexus One?  Maybe, maybe not.  Would Motorola had done anything differently anyway?  Probably not.  Regardless, they did the right thing partnering with Google. 

Motorola is indeed back being relevant in the cell phone market it invented, but this offering is by no means going to kill anything, except maybe perceptions that Motorola can’t make a phone anymore people want.  People do want this phone.  Sales are brisk, and they are offered on the largest cell phone network in the United States, Verizon, with aggressive sales backing it up on the floor.  When I went to my local Verizon dealer, I asked for a good smart phone, and the salesman first showed me the Droid.  According to some reports, this is not untypical.  Over 500,000 units have probably been sold by now, and those numbers will increase as HTC stalls due to impending lawsuits from Apple over patent infringements on its smart phone.  Apple is claiming some of their features infringe on their “intellectual property”.  Ironic, I know.  Apple is considered an industry leader in “borrowed” intellectual property. Swallowing the irony, lets continue.

We have many parties chiming in on the phone now.  Reviewers from CNET, Los Angeles Times, and PCMag.com all give the Droid favorable reviews.  Time magazine listed the Droid as number one on their “Top 10 Gadgets of 2009″.  Verizon is quoted in November as being “very pleased” with Droid sales, and are excited about the product.  What are consumers saying.  Product review sites from consumers talk mostly positively about their experiences with the phone.  Enough reviews have come in by now that a decent real feel of sentiment can be seen.  Some points of interest from consumers:

It seems to be durable and the keyboard feature is something an Iphone does not offer.  (Personally I can’t stand touch screens, so it has a huge leg up on the Iphone right there.) It has a superior network than the Iphone.  If a cell phone is to be judged on its main feature first, usability as a phone, than this phone has a nice leg up on the Iphone from Apple (Nasdaq:Aapl) in that regard as well. 

If your not a Blackberry fan, and you like your phone to have the best service and blazing fast internet capabilities, maybe the Droid is the phone for you. 

It has a large screen with excellent picture quality. 

The camera is supposedly inferior to some phones, and this would be consistent with inferior cameras in many Motorola phones over the years. 

Some feel it is bulky.  Some actually like this aspect however.

The Droid will be just one of 6 smart phones Motorola sells in 2010.  Motorola has shipped 2 million smart phones total internationally in 2009.  They are committed to their smart phone line, and will continue to market them aggressively.  Any first smart phone from Motorola has to be considered relevant, and definitely a company to watch as they begin improving the version, and offer other models later down the road.  Is Motorola back in the cell phone game?  Maybe, but it’s way too early to tell yet.  But I definitely like the signs of life coming from a once proud innovator of many new technologies.  Their CEO, Sanjay Jha, is a great cost cutter and knows production.  Throw in some Motorola innovation and maybe the Droid is the first step to Motorola’s recovery process.

By Relmor Demitrius -

Video rental giant Blockbuster Inc. (NYSE:BBI) released its fourth quarter financial results in January of this year.  They showed declining year to year revenue and a large loss per share, although this was due mainly to a one time goodwill charge.  At a quick glance one might think twice about throwing money at this stock.  The results were not impressive to the street apparently.  The stock has been under pressure of late, but has rebounded nicely the last two days, rising from a low of 30 cents to over 39 cents as of Friday.  The stock was trading over 70 cents in January before S&P put them on credit watch after the company released Q4 numbers.

The company currently sits at a 48 million dollar market cap.  They only have 122 million shares, and a large percentage of them are insider owned.  The company reported 42 million in free cash flow during their fourth quarter.  These are a few of the basic reasons I am keeping an eye on this equity.  Yes they have a high cost basis, and declining revenue trends doesn’t sit well with investors, but anytime a market cap is presented this low on a once largely profitable company, that is now dominating the market share of an albeit fading business model, it definitely should be looked at closely.  If this company were to rebound, this stock is currently priced for a huge dilution, bankruptcy, or a hostile takeover attempt, large gains are on the board.  If these things can be avoided, and certain goals of management are seen to fruition, then there is a possible play here.   CEO Jim Keyes has been on a path of promoting change with the company, and trying to show to the street that the company is committed to lowering costs, and moving into the digital age of media distribution.  He thinks the brand name is strong and will aid them greatly in stealing market share from Netflix and Redbox.  It is possible that Blockbuster can credit some of their revenue losses on too many unprofitable stores and a down economy.  Blockbuster is currently in the process of cutting the fat on their bloated retail store numbers, and the economy seems to be improving. (more…)

By Relmor Demitrius

Sirius XM Radio may have spilled the beans again in their quarterly filings.  As is often the case with companies, a careful read of their annual report can provide many clues and hints to future plans.  Sirius XM’s annual report filed on February 25th appears to be no exception.  There are some changes from their third quarter report that are definately noteworthy.

Looking over expected cash contractual obligations from this filing, we will see there has been some changes from the November  filed third quarter report.  Here is what Sirius XM defined as their cash contractual obligations for the coming years on this current annual report.  These would be cash expenses that have been well planned for, consistent, and very much a part of their operating structure.  These assessments have proven in the past to be accurate and helpful in projecting their results.  So these figures are definitely to be respected.

From the 2009 Annual Report From February of 2010: (more…)

By Relmor Demitrius

Sirius XM Radio (Nasdaq:SIRI) reported its fourth quarter results on February 25th.  In that report they finally gave some details to their global expansion plans, hinted at in their filings since 2009 and earlier.  According to Sirius XM, they have begun discussions with a Mexican Telecommunications Company, ACIR DARS, to begin selling their subscription based service in Mexico.

Already serving Canada, the desire to add other markets is hardly new news, as their existing satellite array already covers this area and others nearby.  With plans to add coverage in Puerto Rico already in play, a clear plan to cover most geographical markets on this side of the hemisphere are being more defined as time progresses.  On the other side of the ocean, with Liberty Media, through Liberty Capital (Nasdaq:LCAPA), already announcing intentions to offer the satellite radio service to other international markets, more than likely through Liberty’s recent control of Worldspace assets (OTC:WRSPQ), a clear global growth story is in play.

If your satellite coverage can reach other markets already, it makes sense to use their existing cost basis to add more subscribers through local national companies that can better market and distribute the product.  ACIR DARS will probably be in charge of billing and national service issues, while simply paying a royalty to Sirius XM for the content and delivery.  Sirius XM will also have the ability to be a part owner of this project, as they did with Sirius Canada and XM Canada, if the venture proves profitable on their level.  This could also mean a nice boost in retail radio revenues as well, as the drive to add subscribers at first in Mexico will more than likely come exclusively through the retail market.  ACIR DARS is a company that is deeply entrenched in the Mexican market already, and would make a perfect partner for Sirius XM going forward.

Long SIRI