The Evening Read

Some evening reading material that I found interesting. Enjoy.

• Housing weakness: temporary or enduring? - CalculatedRisk
• Kinder Morgan: Trouble in the pipelines? - Barron's
• S&P 500 just shy of record closing high - WSJ
• Ford to add BlackBerry, drop Microsoft - WSJ

All major US indices showed strength today; however, they were unable to hold on to highs and sold off into the close. My call on OIH had been working since last week, and was a notable outperformer as energy stocks led today's action. I took half of my position in the Mar 47 calls off of the table. I hope you were able to participate in the success.

Game-changer for BBRY? Probably not.

Just how big is Ford's switch from Microsoft's Windows Embedded Automotive technology to BlackBerry's QNX software? I am really not sure, but I thought it might be interesting to take a look. BBRY shares responded well to the news, trading 7.5% higher on the day.

I have spent the last hour or so trying to get an idea of what Windows Embedded Automotive technology costs OEMs on a per vehicle basis to no avail. I did find a WEA development kit, retailing for $3,150 (here), but I think it is safe to say that manufacturers are not paying $3k/vehicle.

Let's get really crazy and say that it costs Ford $75 to install and license WEA on a car (or truck or SUV, etc.). Given an installed base of roughly 7m vehicles, that equates to $525m in sales to Microsoft in aggregate. That's a lot of dough.

Ford cited one of their reasons for switching to BlackBerry's QNX are the cheaper licensing fees (not to mention the fact that automotive manufacturers hold QNX in much higher regard). So, let us say that the cheaper QNX costs Ford $40 per vehicle to install and license. Ford sold more than 2.4m vehicles in 2013 - assuming half of 75% of them have Sync, that gets us to 1.8m vehicles. That's $72m in licensing fees to BBRY.

Given that BlackBerry did $11.07b in sales in FY 2013, this announcement is hardly a windfall for them. I originally intended this exercise to shed some positive light on the company; but, alas, sometimes you get to the bottom of the rabbit hole only to discover worms and dirt.

BBRY could use more than a drop in the bucket to change their outlook.

Tune in tomorrow for another coin flip.