So Apple sells nine million of their clever little devices in the first three days and upgrades its sales and profit targets for the fourth quarter accordingly. In the same week, the previously world-conquering Blackberry confirms the failure of its new Z10 smart phone, and the sale to Fairfax – at a price of $4.7bn – somewhat less than the $50bn it was valued at five years ago – an expensive fall from grace indeed.
Similarly during September, Microsoft agreed to buy Nokia’s mobile phone operations for $7.2bn – a business that was once worth $150bn and boasted a 40% share of the handheld mobile market.
So, as investors, what do we learn from these successes and failures? Well obviously, make sure that you pick the winners! But this is easier said than done in the fast-changing technology world, as we can see from last week’s news.
Also, from a company’s perspective taking a wrong turn in the technology road, or misreading your competitors’ actions, can be fatal. Blackberry certainly didn’t appreciate what a game-changer the iPhone would be when Steve Jobs stepped upon that stage a mere six years ago.
But ‘twas always thus. Can today’s teenagers, chatting to their pals on Facebook, remember Bebo, once valued at $850m and then sold by AOL for a reported $10m? Or do US dog owners going to the pet shop remember Pets.com, once valued at $325m, but with us no more?
So caveat emptor. And be certain that someone, somewhere is tapping away on a computer, designing something that will build their fortune, while destroying the capitalisation of one of today’s winners.
