Mike Abramsky's bad RIM advice
I hate to pick on any particular analyst — especially one with as good a track record as RBC Capital's Mike Abramsky — but this is hard to resist.
When we last visited Mr. Abramsky, he had issued a price target for Apple (AAPL) of $70 — the lowest of all the analysts who track the stock — three weeks before the shares shot past $100. See Mike Abramsky's bad Apple advice.
Well, he's done it again, only on the other side of the trade, and this time with Research in Motion (RIMM), maker of the BlackBerry — the iPhone's chief competitor.
On Jan. 20, two business days after he downgraded Apple to "underperform," Abramsky upgraded RIM to "overperform" and raised his price target from $45 to $75. (link)
This morning, three weeks and a day later, RIM issued a warning that its fourth quarter earnings and margins will be coming in at the low end of its prior guidance — and well below the Street's expectations. (See here.) The stock opened at $50.20, off nearly 7 points, and closed at $48.76, down 14.5%.
As an aside, last week, Abramsky was the co-recipient of iPhone Asia's tongue-in-cheek Dean ("Animal House") Wormer award for bad advice. His firm's initials, of course, stand for Royal Bank of Canada, and the publication was suggesting that Abramsky was favoring a Canadian company (RIM) over an American (Apple). See here. I find that hard to believe. Neither Abramsky nor RBC Capital's spokespeople has responded to our requests for comment.
I was directed to this article from an aggregate of RIM related content while looking at RIM's stock price.
Two things about this article make me laugh.
1. Singling a person out because of their mistakes is in stock market picks is silly and unbecoming. Nobody gets it right all the time and some people may actually have a preference for a stock without it being a matter of national pride.
2. The constant need to compare the iPhone to RIM's offering is a lot like a little brother vying for acceptance. And there is no need for this. The iPhone is a fine product, which stands on it's own.
Mike Abramsky is an idiot. Let's not forget, it is analysts like him who gave Bear Stearns, Merrill Lynch, B of A and all the others, great ratings when they were doing bad stuff. Analysts are myopic in their view of companies. The average person can usually do a better job in predicting long term strength of companies with a little common sense applied.
My 20 years in retail & wholesale cellular phone sales makes this clear.
1. The iPhone is the best overall handheld cellular phone ever made.
2. Apple released it with the best pricing plan available at $599 and then made it better at $399. In the US wireless market in 10 years.
3. Apple blew it. Subsidized the iPhone. Walk into an AT&T store now, get on a phone call with AT&T customer service agent.
I have personally sold & activated THOUSANDS of cellular phones and AT&T has been a nightmare.
The biggest mistake Apple ever made in the last 5 years, and it will be shown as their largest screw up equal to New Coke, was subsidizing the iPhone.
Take the Motorola RAZR as another example.
A manufacturer hits a home run, and instead of SELLING their fantastic product, they listen to 'partner' who tells them, 'give your WINNER away to support our LOSER service'.
That will satisfy our customers.
Actually, everybody LOSES.
Check Motorola's stock.
RAZR, was the best phone on the market, it had no competitors, the price did not need to go down.
iPhone was selling out. Every single unit at $399.00
If you can't produce enough phones why lower the price?
To attract customers that can't afford the monthly bill?
Good plan.
Steve
Well, you won't do it PED but I will. As I have written before, both Misek and Abramsky are consistently biased in favor of RIM. RIM is Canada's largest company by market cap, so do you suppose that there could be a large incentive to build it up in any way possible? I am quite sure that if you look at institutional ownership you will see quite a messy trail for both Canacord and RBC and their partners.
In addition, RIM is deeply intertwined with various portions of the RBC business, and here are some examples:
http://press.rim.com/partner/release.jsp?id=575
http://www.rbcroyalbank.com/RBC:SY38HI71A8cAdlCULIQ/mobile/index.html
http://www.rbcroyalbank.com/RBC:SY38HI71A8cAdlCULIQ/mobile/index.html
Gee, if Apple used Citicorp or Morgan Stanley or Goldman Sachs to help capitalize its App Store, would those institutions be in an unbiased position to evaluate Apple as an investment?
Phil,
I'm glad you are taking this clown and the orhers to town on their BS calls. If we only had more writers take these guys to task, we would stop the BS calls and people wouldn't get their money stolen by these frauds.. Good job.
Actually not hard to believe RBC analysts don't favor Cananadian companies. RBC pounded the table on ATYT (ATI) and dissed NVDA (Nvidia) for years.
Well, who's still standing. It ain't ATI. ATI is in the process of the final death of AMD.
There should be a rating system for analysts. Everytime they correctly predict, their score should go up and everytime they wrongly predict, their score should go down. After all they should be accountable too. Investors must only look up to high scoring analysts. An independent organization must maintain these scores.
Who says he is not giving proper guidance? I made money by just doing the opposite of his advice. How many analysts can give predictable advices?
"When is the SEC going to investigate these analysts, who clearly have a vested interest in seeing certain stocks move in certain directions?"
You say that as if it's a bad thing. That's their job, ain't it?
A new record, 100% wrong. How shocking. It's a shame that analysts who are spoon feed with info like Mr. Abramsky is still with a job while the real workers are being lay off.
Mike took a swipe at Apple yesterday exclaiming how bad a $99 iPhone would be for Apple margins. So how can he possibly know what Apple is doing, and even if Apple comes out with a $99 iPhone, how can he know what it will consist of to determine margin? He can't. I smell sour grapes or something worse with his pump of RIMM and bash of Apple.
My guess is a $99 iPhone would be a iPod/iPhone combo, a completely different approach to an iPhone, for those that don't want a smartphone. With a subsidy in place I can easily see Apple maintaining their margin on this type phone. And I think this is what RIMM is scared of.
Mike is just playing the FUD game IMO
Good on you, P E-D! It's not that anyone who says bad things about Apple is necessarily wrong, but it is worth seeing whether the prognostications prove out, -in either direction-. I think the recent set of columns on analyst coverage of AAPL, including predictions before the last Quarterly results, have been good financial journalism.
There has been a recuring slant of analyst advice over the last 6 months. Down on Apple up on RIMM. I believe and cannot prove someone(s) have had some side motivation other than honest forecasting. Hopefully someone needs to investigae these levels of questionable advise which results in stock manipulation
When is the SEC going to investigate these analysts, who clearly have a vested interest in seeing certain stocks move in certain directions?
Fact is, the canadian Rim cannot survive without the perenial Buy1 Get1 blackberry giveaway deals. But no company can survive in perenially giving away its products.
RIM RIP.