The key to unlocking most filings, isn’t so much what they tell you, but what’s missing. If you look at the numbers that they do give you from different perspectives, you can often get a rough outline of the ones that aren’t there.
With this in mind, I decided to dig deeper into Research in Motion’s latest 6K filing, to see if I could find clues to some of the questions that RIM left unanswered when they acquired Dash Navigation. Rim’s purchase of Dash has always been shrouded in a cloud of mystery. Normally, acquisitions make front page news (or at least the front of Techmeme), but Dash and Rim both kept quiet for nearly two weeks, until Boy Genius saw details leaked in an industry publication. Even in their most recent 6k filing, Rim doesn’t mention Dash by name once.
What Rim does mention though, are some hard numbers that can help to fill in the blanks.
In the filing they tell us the following
-During the 1st quarter they purchased two companies. A company named Certicom and “a company, whose proprietary software will be incorporated into the Company’s software.”
-The two businesses cost RIM $124.4 million
-Out of the $124.4 million, $111 million was spent on Certicom
-They also spent $4 million in financing costs as part of the transactions
-Even though they only spent $124.4 million, they actually had to redeem short term investments of $136.4 million in order to complete the transactions.
-Part of the cost of the Certicom transaction was reduced by the $10.9 million in cash that they picked up as part of the transaction.
Since RIM admits to only making 2 acquisitions during the quarter, it is relatively easy to determine the purchase price of the company.
$124.4 million – $111 = $13.4 million
$13.4 million – $4 million = $9.4 million
In order to make sure that we take into account any cash that Dash may have had, you have to look at the difference between what RIM actually paid for both companies and what it actually cost them.
$136.4 – $124.4 = $12 million
Since Certicom had $10.9 million, it would suggest that Dash was left with a mere $1.1 million when they were acquired.
$9.4 – $1.1 = a purchase price of $8.3 million
When you consider that Dash raised $71 million in three rounds of financings, it’s easy to understand why they wanted to keep quiet about an 88% loss for their VC investors.
What is a little surprising though, is how good of a deal RIM seems to have gotten out of the transaction. One of the more interesting figures that caught my eye was an entry for a $26 million dollar tax credit picked up in “one” of their acquisitions. That’s right folks, by buying Dash for $8.3 million, Rim will get a $26 million haircut on their taxes. They actually had to book over $8 million in revenue during the quarter to reflect the immediate gain on their investment. The tax loss alone represents a 300% (overnight) return on the acquisition. No wonder RIM doesn’t want to talk about it, Dash seems to be more of an accounting adjustment then an actual play at their technology.
While I can understand why Dash and Rim wouldn’t necessarily celebrate this transaction, lets hope that they are being honest with us about implementing Dash’s technology into their products. Allowing consumers to share information, in order to better understanding real time traffic could really help to push GPS technology ahead. It would be a shame to see Dash’s legacy relegated to an unnamed footnote in a business filing.
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For my first Ask Davis question of the year, I turned to an anonymous Google surfer from Fort Wayne Indiana who asks Can Netflix tell if a movie has been copied?
Dear anonymous Google surfer from Fort Wayne Indiana. Thank you for choosing the Digital Connection for all of your movie ripping needs. I suppose a better question to ask may be whether or not it’s legal or ethical to copy movies from Netflix, but I’m not here to judge, so here is the answer that you are looking for: it depends.
Netflix has two different movie delivery mechanisms. The first is the traditional DVD by mail. Pretty much all DVDs use a copy protection known as CSS. It was designed by the fat cat studios to limit access to your media, but was cracked several years ago by an underground hero known as DVD Jon. Since then, there have been a number of rouge software companies who have built dvd decryption programs, but their legality lies somewhere in the grey area. Last year, Real Networks tried to launch a program that would legally allow you to make back up copies of DVDs that you owned, but a judge granted a temporary injunction against them, after the big wig studios argued that people might use the program to make copies of discs that they didn’t own, but had rented through Netflix
Now I know that you wouldn’t do anything like that, but to get back to your theoretical question of whether or not Netflix would be able to tell if you did use one of these programs, the answer is no. Because the DVD decryption programs don’t write anything to the disc, there would be no way for Netflix to know that you had sneaked a copy. Netflix does monitor usage behavior so its possible that they might suspend or slow down your account if you abused their service, but by and large they depend on people playing by the rules.
When it comes to the movies that you find on their watch instantly feature, technically there is a way that you can copy them, but it’s a bit more tricky. If you stream rip the watch instantly files, you’ll be able to download a copy of the film to your hard drive, but you need a back ground in tech in order to figure it all out. Perhaps even more importantly when it comes to your question, Netflix can tell when you’ve downloaded a movie instead of streaming it. I don’t think that they lower the hammer on people who do this periodically, but there have been reports of them taking action against heavy users of this hack.
At the end of the day, you may be able to copy a movie from Netflix without getting caught, but my own question is why would anyone want to? The great thing about Netflix is that you can always request to see a movie again without any extra cost. Trying to save money by ripping a bunch of titles in a month may sound like a good idea, but if you’re going to walk that close to the line, you may as well go Bit Torrent. There may have been a time in my life where this sounded like a more appealing idea, but I don’t mind paying $18 a month for all you can eat, virus free film bonanza. I hope that this helps to answer your question and look forward to finding out what else my readers are interested in.