MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Blackberry: The end is nigh

C. HUYGENS - Friday, August 30, 2013
Earlier this month, Huygens doubled down on his belief that Blackberry was doomed. The death knell is ringing, and it sounds like this. From Bloomberg, Aug 30, 2013, "Morgan Stanley (MS) is holding off on upgrading its employees to BlackBerry Ltd. (BB)’s newest smartphones and operating system because of concerns that the Canadian company may not back its platform long-term, according to two people with knowledge of the bank’s plans."

Blackberry, nee Research in Motion, is in the last stages of a full-blown reputational crisis. Such a crisis, as Huygens frequently declares, is the realization of reputation risk which is defined as the threat to enterprise value when myriad stakeholders perceive that corporate behavior violates their expectations. Morgan Stanley would expect Blackberry to support its platform long-term; it is now expecting that the company will be unable to do so.

As to last stages, as Huygens is formerly a deputy coroner of Los Angeles county, the situation is ad oculos.

Blackberry: No more children's games

C. HUYGENS - Wednesday, August 14, 2013
From time to time, Huygens has to turn his back on his alma mater, the great University of the great Chicago, and acknowledge that markets can be profoundly inefficient. Equity prices are often driven by emotion; reputational value metrics are usually driven by rational expectations of a diversity of stakeholders that by virtue of their heterogeneity, dampen the emotional noise.

Equity investor emotion manifests in frankly goofy stock prices. For example, writes Value Walk, “Netflix has had a hell of a run in 2013, up over 170% year-to-date on big earnings results and short squeezes...But that run for Netflix, Inc. (NASDAQ:NFLX) stock might end in tears, and soon.” Driving a stock price to 329 times earnings suggests that investors are acting on sentiment more than fundamentals.

Turning to Blackberry (BBRY), Huygens has long advocated laying out the cutlery. The reputational value metrics were unambiguous two years ago. Well BBRY had another stock burst after it renamed itself (adult version of peek-a-boo) but that's over now and directors are seriously talking like adults about selling off the assets. Here are the most recent Steel City Re reputational value metrics.

The current tally: current reputational value (RVM) volatility in the top quintile (88th percentile measuring in at a Consensus Trend above 11% - change is coming. Reputational ranking, the Reputation Premium, at the 19th percentile - low expectations (finally) after an irrationally optimistic run in the high 60's that fueled silly economic returns approaching 150%.




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