[_dimi_]

Them doing so many deals in Indonesia is a smart move imho. We all know the demographics and/or installed user base over there, but this has been on my mind today:

We know SAF revenue is currently 91 million USD per quarter. I believe most of the SAF revenue are BIS activation fees (consumer) as opposed to BES licenses (enterprise). If that's not true - then how big would the challenge really be for BlackBerry to eventually have this revenue from BES5/6 flowing through to their new products (BES12/Good suite)? I mean, why would customers still be using BES5/6 servers today if they don't need the top notch security in future products? In other words, why would they not go for BlackBerry's current offering

But as I said, I think the SAF revenue are mostly BIS activation fees coming from consumers in Indonesia (+/- 60 million), South Africa and Nigeria. We all know that it will fall to zero sooner rather than later because carriers are pushing their clients to other cheap solutions in these emerging markets (3G, 4G,...). However, it seems BlackBerry is now partnering with Indonesia's biggest carrier - who will definitely have an incentive to sell many BlackBerry devices built by themselves. Now, I'm not claiming that they'll use their NOC for BlackBerry branded Android devices and set up another SAF revenue scheme, but how smart a move would it be to gradually replace high-margins SAF fees with high-margin royalty payments?

Fingers crossed.

Posted via CB10

[DaSchwantz]

Them doing so many deals in Indonesia is a smart move imho. We all know the demographics and/or installed user base over there, but this has been on my mind today:

We know SAF revenue is currently 91 million USD per quarter. I believe most of the SAF revenue are BIS activation fees (consumer) as opposed to BES licenses (enterprise). If that's not true - then how big would the challenge really be for BlackBerry to eventually have this revenue from BES5/6 flowing through to their new products (BES12/Good suite)? I mean, why would customers still be using BES5/6 servers today if they don't need the top notch security in future products? In other words, why would they not go for BlackBerry's current offering

But as I said, I think the SAF revenue are mostly BIS activation fees coming from consumers in Indonesia (+/- 60 million), South Africa and Nigeria. We all know that it will fall to zero sooner rather than later because carriers are pushing their clients to other cheap solutions in these emerging markets (3G, 4G,...). However, it seems BlackBerry is now partnering with Indonesia's biggest carrier - who will definitely have an incentive to sell many BlackBerry devices built by themselves. Now, I'm not claiming that they'll use their NOC for BlackBerry branded Android devices and set up another SAF revenue scheme, but how smart a move would it be to gradually replace high-margins SAF fees with high-margin royalty payments?

Fingers crossed.

Posted via CB10

That's exactly what Chen is trying to do, but the problem is that BIS fees are recurring whereas most of the phone royalties will be one-time. That's why they also have to leverage BBM and other software subscriptions to round it out. To be honest, these kind of deals will accelerate the SAF declines, so it's important to have something to replace it with. This past quarter only saw SAF declines of 14% q over q but they said they are modeling a 20% drop going forward. In other words, I think they're going to do more of these kinds of deals in the markets where BlackBerry is still popular.

Posted via CB10

[Corbu]

OT:
Apple and Deloitte Form ?Enterprise Next? Service Geared to Businesses - WSJ

[Corbu]

JC on Bloomberg
BlackBerry's Chen: Not End of Era But Start of New One - Bloomberg

John Chen, BlackBerry's chief executive officer, discusses the company's decision to stop making its iconic smartphones and focus on its software business. He speaks with Bloomberg's Emily Chang on "Bloomberg West."

Good interview.

[masterful]

OT:
Apple and Deloitte Form ?Enterprise Next? Service Geared to Businesses - WSJ

They are really desperate... not long ago they team up with IBM and who is next on their list?

Posted via my BlackBerry PRIV

[Corbu]

Bloomberg / Audio:
https://assets.bwbx.io/av/users/iqjW...10V0cEQ/v2.mp3

Friom 1:50

Bloomberg’s Butler on Blackberry: Shrinking to Grow (Audio)
Hays and Pimm Fox. GUEST: John Butler, Senior Telecoms Analyst for Bloomberg Intelligence, on Blackberry pulling out of the smartphone market, as sales miss estimates.

[Corbu]

?What took you so long??: BlackBerry CEO explains exit from hardware business, future as software company | Financial Post

WATERLOO, Ont. — BlackBerry Ltd. finally admitted defeat in the handset business it once dominated after it yet again failed to make money on paltry smartphone sales.

CEO John Chen kept his word to give up on hardware if he couldn’t make it profitable by September with the Wednesday announcement that BlackBerry will stop internal hardware development by the end of its fiscal year and double down on its new identity as a software company that specializes in mobile security.

The shift, long clamoured for by investors and analysts who balked as BlackBerry’s world market share shrunk below one per cent from a peak of 20 per cent, marks the end of smartphones made by the Waterloo, Ont. company that started a global phenomenon as the first to put email in peoples’ pockets nearly two decades ago.

The division lost $8 million on sales of 400,000 devices in the three months ending Aug. 31, failing to break even. Chen has known this day would come for about a year after gauging the lukewarm reaction to the Priv, the last device fully designed by BlackBerry, he said in a roundtable discussion with reporters after releasing the latest financial results.

“The right question ought to be, ‘What took you so long?’” Chen said. “But you’ve got to realize I had to establish the business model and the market on the software side before I cut off what we were doing.”

Chen believes he’s done just that, pointing to deals with the U.S. Army and fleet tracking systems for Caravan Transport Group Inc.While the software division reported a profit of $29 million this quarter, down from $37 million last period, Chen brushed it off as the result of one-time revenue last quarter.

“The turnaround is done, the company is safe. Now I need to grow the company,” he said.

The market agreed by bumping BlackBerry’s stock price up about 4.6 per cent on the TSX and about 5.7 per cent on the NASDAQ, even though the company reported a quarterly loss of $372 million or 71 cents per share. Excluding one-time items, BlackBerry said it broke even, beating analysts’ expectations of an adjusted loss of 5 cents per share. Based on debt refinancing, BlackBerry raised its annual adjusted earnings outlook to between break-even and a 5-cent loss, up from a forecasted 15-cent loss.

The departure from hardware will save an estimated $100 million to $150 million per quarter in inventory and manufacturing costs and free up resources, including engineers, to work on software related to enterprise mobility management, fleet tracking and connected cars, Chen said. Less than 100 people will lose their jobs in the repair and warranty divisions, he said.

Yet he’s adamant he’s still in the device business and is not giving up on the brand once addictive enough to spawn the term CrackBerry and secure enough to be used by the president of the United States.

There will still be smartphones carrying the BlackBerry brand, as the company will license its brand and software to companies that want to design, manufacture and distribute devices. (It has a veto if the resulting device doesn’t meet its standards, Chen said.)

It has already inked one deal with a telecom joint venture in Indonesia, BB Merah Putih, is in late stage discussions with a Chinese company and is pursuing several deals in India. Chen would not reveal exactly how much, but he expects royalty revenue to start coming in around Chinese New Year if the device is distributed on schedule (although that’s out of BlackBerry’s control).

It’s not clear if, or how soon, any of these devices will be sold in the Canadian market. But Chen predicts a larger market shift to focus on software as margins evaporate in smartphone manufacturing.

“If I’m not a market leader and I’m trying to play the margin game that requires volume it’s almost suicidal,” he said. ““It’s really more about the smart of the smartphone, not about the phone of the smartphone.”

As recently as July when BlackBerry launched the DTEK50, an Android-powered smartphone (tweaked from an existing design) billed as the “world’s most secure,” Chen said security conscious customers should have a BlackBerry device for highest end-to-end security. But he backed away from those statements, stating the software will one day enable an Android to provide as much security as a BB10 device.

“You go to your own parliament here and count the number of iPhones,” he said. “The market has spoken and I’m just listening.”

[BanffMoose]

We know SAF revenue is currently 91 million USD per quarter. I believe most of the SAF revenue are BIS activation fees (consumer) as opposed to BES licenses (enterprise). If that's not true - then how big would the challenge really be for BlackBerry to eventually have this revenue from BES5/6 flowing through to their new products (BES12/Good suite)? I mean, why would customers still be using BES5/6 servers today if they don't need the top notch security in future products? In other words, why would they not go for BlackBerry's current offering

SAF revenue can't be transferred to new products because no other phone/device OEM or EMM software provider charges similar fees to use their product or service. SAF's time has come and gone. I'm thankful BlackBerry had the revenue stream though. The tail on that was rather incredible given what transpired.

But as I said, I think the SAF revenue are mostly BIS activation fees coming from consumers in Indonesia (+/- 60 million), South Africa and Nigeria. We all know that it will fall to zero sooner rather than later because carriers are pushing their clients to other cheap solutions in these emerging markets (3G, 4G,...). However, it seems BlackBerry is now partnering with Indonesia's biggest carrier - who will definitely have an incentive to sell many BlackBerry devices built by themselves. Now, I'm not claiming that they'll use their NOC for BlackBerry branded Android devices and set up another SAF revenue scheme, but how smart a move would it be to gradually replace high-margins SAF fees with high-margin royalty payments

As those markets move to 4G, the need for the special, low cost BlackBerry data plans will go away and so will the remaining SAF revenue. I believe the new SAF replacements will be the Movirtu virtual SIM plans and WorkLife. Cross your fingers and hope the Movirtu plans prove popular in Hong Kong (and Indonesia?). If a licensee can make a dual SIM phone that works with multiple carriers AND the carriers offer Movirtu, BB may have a big winner on its hands.

[iamagod]

Question to ask:

I remember people saying that all hardware manufacturers use each others IP so they can't really sue without being countered. With the exit from hardware, does that mean BB can now pursue IP litigation against vendors that use their tech?

Posted via the CrackBerry App for Android

[Corbu]

MORGAN STANLEY & CO. LLC

James E Faucette

Stock Rating: Equal-weight
Industry View: Cautious
Price Target: $7.00

BlackBerry Ltd

Staying One Step Ahead

BBRY reported upside to earnings Wed despite a shortfall in software and device rev expectations. We have increased our EPS estimates $0.10 to account for FQ2's beat and debt restructuring. Unclear whether changes to hardware model will bring opex reductions even if BS efficiency improves.

Royalty based hardware business doesn't change business outlook for now. As alluded to on the 1Q17 earnings call, BlackBerry has been looking for a way to convert their hardware business (Mobility Solutions segment) to a license model. One of the first steps towards this model was the formation of the joint venture BB Merah Putih, where BB Merah Putih will source, distribute and promote BBRY branded devices in Indonesia in return for a license fee paid to BlackBerry. The arrangement with BB Merah Putih calls for a flat fee to be paid to BBRY per phone, but in talks with other manufacturers, it may change to a % of total sale or tiered pricing model. We would expect revenue to decline faster than expected under this model as Blackberry will no longer recognize the cost of the entire phone. In the short term, this should give the company more working capital flexibility, but we are not building in any opex savings today. While the hardware segment had $35mm of opex allocated to it this quarter (~17% total), the company may choose to reallocate some of those resources (and may still need many of them to work on the Android integration).

Software targets look aggressive, particularly as more revenue becomes recurring. BlackBerry expects to be able to grow their Software / Messaging business 30% this year. This implies ~12-13% 2H/1H growth in FY17. Given that 81% of revenue was recurring this quarter, this implies that non-recurring revenue probably needs to come close to doubling in the second half (our definition of non-recurring is ex-acquired deferred revenue recognition and ex-IP licensing - see Exhibit 1). We think this will be a challenge to do, but perhaps the company is anticipating an uptick in perpetual license purchases at the end of the year. While the BlackBerry Radar deal signed with Caravan is a good win, we estimate that it only contributes $0.5mm in FY17 ($0.2 - 0.3mm of that recurring).

Refresher on debt restructuring. BlackBerry redeemed their $1.25bn 6% convert in September at a 106.7% premium. They reissued a $605mm 3.75% convert in its place (terms and 2020 expiration date remained the same - no longer redeemable before maturity). This move should save them approximately $50mm a year in interest expense (something they paid ~$83mm in redemption premium to do). This redemption should increase earnings by ~$0.025 a quarter.

Revising estimates lower on top line, higher on bottom line. BlackBerry reported 2Q17 revenue / EPS of $352mm / ($0.00), better than our estimate of $393mm / ($0.05). Our 3Q17 and FY17 revenue / EPS estimates are now $322mm / ($0.02) and $1.38bn / ($0.05) from $384mm / ($0.06) and $1.58bn / ($0.17) respectively. Our revenue estimates decline on lower than expected device sales as the royalty model gets introduced, partially offset by better than expected software growth. We would note that we do not yet know how large the license ASPs are under the new device revenue model, but have lowered our ASPs significantly on a per device basis in the next few quarters in attempt to estimate. Given gross margins on hardware were low, to the degree that we have misestimated this, accompanying gross margin changes should mute EPS impact (e.g. if overestimated revenue, gross margins are too low and need to increase and vice versa). While our EPS estimates have increased due to opex cuts made thus far in the year and the debt restructuring, we have not yet made changes to opex on account of the new hardware model as it is unclear how much of the existing opex would need to remain for software integration (as much of hardware development had already moved to an ODM model in the last year).

Remain EW and a $7PT. Our $7 PT is 3.5x our FY18e software revenue forecast. Management continues to preserve its net cash position of ~$2.00 per share through cost cuts. Announcement that the company is changing their hardware model could help reduce costs and increase balance sheet flexibility, but most of this had already been done with the ODM arrangements struck in the last year. We continue to believe the company will need to make acquisitions to achieve double digit software growth rates in the long term.

[Corbu]

Bank of America / Merrill Lynch

BlackBerry

Exiting hardware; margins improve but trends remain negative
Reiterate Rating: UNDERPERFORM | PO: 6.00 USD | Price: 8.33 USD Equity | 28 September 2016

Weak 2Q results and mixed FY17 outlook; exiting hardware

Blackberry’s revenues continue to drop, down 28% YoY in 2Q, to $352mn versus Street estimates for $390mn. Weakness in the quarter was once again driven by deteriorating handset trends and service access fee (SAF) declines. The one bright spot is Non-GAAP gross margin at 62% versus Street estimates for 53%, helped by lower hardware costs and onetime items. Management announced its CFO transition, and laid out plans to now outsource all hardware development (partnering with an Indonesian JV). Nevertheless, exiting the hardware business and the inevitable SAF declines put roughly 55% of Blackberry’s revenues at greater risk. We view the hardware exit as a positive for margins, but expect headwinds to continue to pressure revenues down roughly 26% YoY in FY18. We adjust our model accordingly, lowering our revenue expectations but increasing gross margins; we reiterate our Underperform rating and $6 PO.

What we like: full transition to software, margins

Handset shipments dropped 54% YoY to under 400k in 2Q, and hardware revenues now contribute 30% of total revenues versus 41% in 2Q16. Hardware-related cost cuts and the lower mix of handsets vs software helped improve total gross margins over 2000bps YoY to 62%. We view the transition to software/licensing positively, and management announced its intentions to fully abandon all internal hardware development. Still, we note that the majority of hardware development had already been outsourced, with the recent DTEK50 device being essentially a rebranded TCL Idol 4. Margins should benefit, but we see limited revenue opportunities from Blackberry’s hardware licensing model going forward.

What we don’t like: negative cash flow, comps, valuation

2Q17 marked the second consecutive quarter of negative cash flow, and we view management’s FY17 guidance as mixed, with the loss per share outlook improving but FY17 FCF view slightly more negative. Importantly, software revenues grew 111% YoY (not comparable) but declined 6% QoQ. 2H17 presents more difficult software comps (inclusion of acquisitions, i.e., Good, Athoc, etc.) and we see some risk to the 30% FY17 YoY software revenue guidance. The hardware exit also now highlights a full valuation, in our opinion, with the stock currently trading at roughly 4.6x our CY17 EV/software revenue.

[_dimi_]

From a CNN article:

"Chen and Capelli also worked together at Pyramid Technology in the mid-1900s, a company that was sold to Siemens under their watch."

LOL.. that was in 1991 btw

http://money.cnn.com/2016/09/28/tech...nes/index.html

Posted via CB10

[CDM76]

From a CNN article:

"Chen and Capelli also worked together at Pyramid Technology in the mid-1900s, a company that was sold to Siemens under their watch."

LOL.. that was in 1991 btw

http://money.cnn.com/2016/09/28/tech...nes/index.html

Posted via CB10

Nice find

Posted via the CrackBerry App on DTek50

[Corbu]

France's Troph�es de la S�curit�..

Blog - AtHoc - Networked Crisis Communication
AtHoc Crisis Communications Software Wins Cybersecurity Award

[world traveler and former ceo]

Morgan Stanley, Credit Suisse ....MM's with huge SHORT positions predictably doing everything to hold onto their vested interests... and manipulate the markets in their favor. it's Up to CEO Chen to counter this with new announcements ASAP, and in the days and months ahead, and to fact check these market manipulators at every instance and to do everything to counter their propaganda....

... 50+ million Nasdak shorts and 25+million TSE shorts, represented by some long standing MMs will not be capitulating without a fight...

Posted via CB10

[bbjdog]

From my TD alerts

Bbry:

Alert Details
16 earning estimates have been revised up and the consensus estimate has increased from -0.18 to -0.007 for 2018. To research this company view in WebBroker.

BB.TO:

Alert Details
15 earning estimates have been revised up and the consensus estimate has increased from -0.17 to 0.002 for 2018. To research this company view in WebBroker.

[Corbu]

BlackBerry: Look Forward to 2019, When the Past Will Be Past, Says Macquarie - Tech Trader Daily - Barrons.com

[sidhuk]

OT.
Interesting trading tools.
http://www.techinsider.io/robinhood-...trading-2016-9
https://www.robinhood.com/
Posted Via blackberry passport.

[bbjdog]

Update

BBRY

Alert Details
19 earning estimates have been revised up and the consensus estimate has increased from -0.18 to 0.01 for 2018. To research this company view in WebBroker.

BB.TO

Alert Details
17 earning estimates have been revised up and the consensus estimate has increased from -0.17 to 0.015 for 2018. To research this company view in WebBroker.

[morganplus8]

Here's my rant for today:



So why aren't we collapsing under the weight of two analysts reports today? Surely they are right, BBRY is only worth $ 6.00 and $ 7.00 per share 12 months from now? The stock is holding up nicely, it has dropped back on a slightly over-bought run yesterday, on much lighter volume, trending well above the gap made yesterday and much higher than the 12 month targets set out by that clown James Faucette and BBRY short position holder, B of A.

This chart shows us that the stock really doesn't want to give up the rally that it started weeks ago, RSI is back down, it is within its channel formation and a really positive close this week would be over $ 8.20/shr. So let's see how this plays out here.

My guess is that some savvy investors, who are actually buying the stock, think that you should add in cash to your analysis, that you should add in BBM to your analysis, that you should add in growth of more than 6% for software in FY18, that you should add in the sum of all assets to the value proposition of BB, and so on ............... other targets are higher based upon more details of course. So is anyone surprised that the stock is higher than their analysis? I didn't think so.

[morganplus8]

Let's look at one of those analysis by others:



This TD Bank analysis by Chan tells a different story. Why can he not see what the other two clowns see?

No one is talking about how highly profitable software is RIGHT NOW, BBM is also highly profitable too, HW will make money in FY18 as well, and of course, we have John Chen deciding if the IP program is truly worth going after, or is it better to sell off $ 1.5 - $ 2.5 B bucks worth of assets while retaining patent coverage for BlackBerry phones down the road. No, we are talking about a flat software business, (nothing like MOBL problems of course) and the "possibility of Radar doing something in the future" to get to $ 10.00/shr/US. My point has been, and still is, that now that hardware isn't the problem it once was perceived as, this company is a buyout candidate more than ever as long as analysts fail to see its true value. Just my own opinion of course.

[TGIS]

Looks like we're in for another one of BBRY's famous gain-erasing drops for no reason.

[_dimi_]

Must read:

http://www.iam-media.com/blog/Detail...8-ebf3b858e92e

Posted via CB10

[cjcampbell]

Looks like we're in for another one of BBRY's famous gain-erasing drops for no reason.

No reason? BBRY, more often than not, follows the overall market. Today, DB is causing havoc and causing a wide spread dip. Couple that with the less than optimistic analyst positions and BBRY won't unhinge from the broader market move down.

Posted via CB10

[_dimi_]

Hi Morgan

Would you like to see them go after Sierra Wireless? It would mostly add (lots of) hardware revenue, but think of the expertise in IoT they would gain? Sierra Wireless might be better at selling the OTA solution to car manufacturers along with the chips they're already providing to them, or convince logistics companies to install Radar along with their proprietary cloud solutions,... Sierra Wireless seems like a well-managed company that handles its costs well, so it could remain a stand-alone under BlackBerry.

Today I found out that Rightware (QNX partner) actually built the infotainment system for Karma Automotive that now supports QNX over-the-air updates. Rightware also did this for the Mercedes car that they showed off at CES.

I'm sure it's a cost-thing. But if BlackBerry can perhaps buy a few partners whom are turning their code into something beautiful (visually), who have the IoT expertise and who are already turning a profit, perhaps they can sell more QNX too?

Posted via CB10