Bitcoin Accepted By More Retailers, 3d Sensor Technology; BlackBerry's Turnaround & Bombardier BBD.B More Orders Planes, Trains

          You know things are crazy when the most solid investment right now may not even be tangible !  Bitcoin, the most widely used virtual currency gained 5% in trading the Thursday following Christmas day.  This, on news that major online retailer overstock.com will begin accepting Bitcoin as payment early next year.  Bitcoin prices ranged wildly over the past couple months.. all time high is $1241 (November 29) up from just $100 in October... Bitcoin currently trades at ~$1240 USD.

Canadian Real Estate Investors Have Deep Pockets.. Makes Canadian Real Estate Market Less Risky

I'm optimistic about the Canadian real estate market, specifically commercial properties. Only 1.5 years ago, in May of 2012 Scotiabank sold Canada's second tallest building, Scotiaplaza to H&R Reit/Dundee Reit for an impressive $1.266 billion.  Then, last month we learn that Canadian real estate investors have been a major driving force behind the resurgent US real estate market;  between the years 2009 and 2013, Canadians outspent Americans by about $27 billion !

This year (ended August 2013) the biggest Canadian spenders south of the border were publicly traded companies ($4.6b), institutional investors ($2.3b), and private companies (1.3b).. they invested in office space ($4.2b), apartment buildings ($2.8b), and industrial complexes ($2.1b) among others.  You can be sure that these companies are eyeing the Canadian market and plan to step right in if and when Canadian prices start to decline.

Bad News at BlackBerry Being Overblown Again (surprise ?)

What hurts Microsoft won't hurt BlackBerry:  Unlike Microsoft, BlackBerry offers a robust operating system with the best reputation for security. What worked against MSFT won't work against BBRY. The last quarter was seriously hurt by Thorsten's for sale tag. People were confused about the future of the company, but now the situation is different the future is clear, BlackBerry is here to stay.

The media chooses to focus on only the worst news in the worst possible way !

• Either say that the company sold 1.9 million handsets or say that it lost $4.4b;  The $4.4b loss takes into account 4 million devices sold.
• The adjusted loss of under $400m compares favorably to the quarterly losses Microsoft's handset business has been racking up.
• Without its cheap devices Samsung would be doing bad too (sales of high end devices plummeted at Samsung).  BlackBerry just released Q5 and other low end devices which will appeal to users of the BB7 phones in developing countries.
• During this quarter (2q2014), BlackBerry had the worst kind of media attention possible, talk of the company collapsing which we now know to be false after revelations that the Chinese government was lobbying hard for Canada to permit a Lenovo takeover.  Now we are seeing a turnaround with Germany, and even the US Government favoring BlackBerry over iPhone.  As long as security remains a priority, BlackBerry will be a player.
• Cash equivalents up to $3.7 billion.  Even without the $1 billion share issue cash down by less than half a billion.  A true $4.4 billion loss would've plunged the company into bankruptcy.
• $4 billion of the $4.4 billion loss stems from structural changes + end of licensing deals made when the company was much larger + things that will not happen next year thanks to the foxconn deal.  
• Under construction is a new security technology center in Washington DC.  This will give BlackBerry a cosier relationship with its biggest clients - government and security agencies.
• New CEO John Chen is hiring a rebuilt sales force designed to target regulated industries, including government clients.
• Last quarter BB sold roughly half a million BB10 phones.  That number can only go up since new CEO John Chen has made it his goal of lowering the price of the phones.
• Market share remains strong in the middle east.  Service revenue remains strong being down by only -13% even though the number of devices sold fell at 3-4X that rate.

Thanks To Aldi, Supermarket Competition In the United States Will Intensify In 2014

Magna International (MGA) Reaches Record High On Sales, Gold Companies Get Leaner and BlackBerry's Survival (Fairfax FFH)

       A lot has happened since my last post not the least of which is news of BlackBerry's (bbry) disappointing quarter.  Although I'm confident the company will survive as a private entity within Fairfax Financial (aka the Berkshire Hathaway of Canada), as an investor you have to be frustrated with the way things turned out - BlackBerry has already inked a $4.7 billion buyout deal with Fairfax (ffh) which already owns 10% of shares - at $9 a share the offer gives shareholders almost no return for the tech maker's bes, qnx and consumer handset division :  7500 patents alone are estimated to be worth between $1b and $2 billion, then there's the company's $2.82 billion cash on hand (up $800m from a year ago).  In fact BlackBerry's 2500 security-related patents could form the cornerstone of a new secure enterprise company.

As an investor the deal doesn't make sense, but as a Canadian I'm content with it.  You see, Toronto-based Fairfax is headed by Prem Watsa who is a big supporter of Canada's tech industry (1800 technology firms present in Waterloo and Ottawa, Ontario is North America's 3rd largest tech hub after California and Texas).  If there's any company out there that will give BlackBerry a decent chance to survive intact it's Fairfax (taking company private means it won't be broken up).
Personally, I feel as though BlackBerry can still make it the market - the billion dollar quarterly loss-writedown was blamed squarely on unsold z10 phones, the same phone that holds the distinction of being the company's highest priced device (profit from one phone as much as 3X as much as Nokia Lumia).  The corporate market didn't mind paying more (German government and Nato bought it) but many other consumers didn't -  From the reviews I've read and those of my peers, it's obvious the problem with the phone was the high price not the device !  At times last year even Apple blamed slower sales on the price of its phones.

The good news :  BlackBerry has since launched cheaper devices (q5, z30) and a high-end device with touch pad catering to traditional blackberry lovers (q10).  When BlackBerry gets the price right, the phones will sell.  Blackberry Enterprise Server remains in a league of its own, the company's devices continue to receive rave reviews, market share similar to Windows OS which heavyweight Microsoft remains committed to (paid $7b for Nokia handset division).  How much longer can BlackBerry rely on the corporate market ?  by 2016 38% of companies are expected to stop providing mobile devices to staff.

Techstocks continue to shine !   Interbrand just released its annual ranking of the world's most valuable brands and technology companies took four out of the top five spots including, for the first time the top position:  #1 Apple ($98.3b +28%), #2 Google, #4 IBM and #5 Microsoft.  The next highest ranked tech company Samsung also moved up, to #8 from #9 last year.  Microsoft's recent acquisition Nokia was the worst performer, falling to #19 from #57.

Auto parts supplier Magna International is red hot!  

Though last quarter dividends per share didn't change from three months prior, sales (+16%) and earnings (+19%) were up by a healthy margin.  Not unsurprising given that, US auto sales rose at a torrid pace last summer (annualized rate for August was 16 million up 20% the strongest in six years).  Auto sales expected to slow to 1.15 million units this month (at GM only by a couple percentage points; GM is one of Magna's biggest customers); but a big reason for that is fewer selling days.  Ford also one of Magna's most important customers, reported a sales increase of 12% in August.  Last year, Ford awarded one of Magna's car plants in Brazil with a silver award for its 'superior quality, delivery and cost performance".

Since 2009 Magna has also been a key partner of Ford's electric vehicle division, it was in 2011 that Magna began assembling electric and hybrid vehicles for Ford (notable since this year 2013 Ford is on track to break its own sales record for hybrid vehicles of 35,500 reached in 2010).  Ford's August year-to-date auto sales totaled 221,270 +17.5%.

Barrick Gold Gets Leaner

With gold prices testing the $1300 level gold companies are being forced to adjust accordingly - gross production cost which includes expenses associated with exploration must be reduced so that companies can maintain healthy profits (investors have been shown to punish companies when earnings drop - they seem oblivious to the fact that a 20-30% drop in the gold price is going to make it next to impossible to avoid a quarterly earnings drop).  Barrick Gold has responded to this pressue by selling high cost operations;  Last summer it was the 3 Australian mines that comprise Yilgarn South (1h2013 196,000 ounces at a cash cost of $1145/oz), sold for a combined $300 million.  Then this month, the company announced its intention to sell two more mines for $100 million.  This would put Barrick Gold halfway through its ongoing plan to sell or lower output at 12 of its 27 mines.