[sidhuk]

[Munx]

To be honest I don’t follow your reasoning.

The company is calling for a $54M decline in service revenue in Q4.

The only revenue category that can substantially offset this decrease is hardware. I say this because software revenue was flat in Q3, and I am assuming it will be flat in Q4 (again based on Chen statements regarding software ramp time being a couple of quarters out).

Then if hardware sales increase to the tune of $50M, I believe the revenue figure will be near unchanged, or down by only $4M to be precise.

I derived the $720M figure as follows: It is equal to the Q3 revenue ($793), less the company guided $54M service less, some allowance for quarterly guidance variance ($20M). This puts us at a floor revenue floor of $720M. Anything below this and we know that hardware sales further contracted in the Q4, which may not be a problem if cash flow and earnings are still near break even. It also happens to align with the Wells Fargo figure today ($721M) but hey who cares.

[Munx]

a couple of points:

Passport is manufactured in Mexico, so has nothing to do with Foxcon.

Chen definitely stated that out of the 200k initial pre orders, only a small amount of them were counted in the sales figure for Q3 as most of them had not sold through to the end customers.

To me it sounds as though around 150k of these may not have been counted.

People need to understand that there is something called Earnings Management. Shareholders like to see long term, steady growth; this is what Chen is doing. He already knows what the next 3 quarters will look like.

so for q3 he can see if he includes the passport sales he not only shows cashflow positive, but also shows a profit. he doesn't need to tick both boxes.

it is better to defer some of this income to the next quarter when he knows he will lose more revs from SAF decline and BES12 won't be earning yet.

In finance if you have a stellar quarter you don't report everything. you look at the next quarter and see whether you can show growth, if not shave something from this and add it to the next. you build quarters with steady QoQ growth, that is what shareholders are rewarding.

As for the people that are worried about the revs dropping, this should be expected! The old business model is dieing. That isn't the problem, the problem is whether they can replace this with the new revenue.

The 3.1 billion cash is part of the answer here. they need this as a fail safe whilst the new rev streams become established over the next year. they are hoping to subsidise the loss temporarily with handset sales, but if they don't catch on they need a cushion.

Assume the handsets don't catch on and they are selling 0.5 mil per quarter. they can still survive for a long time. if they start burning even 200 or 300 mill per quarter they will still be around for years.

I personally believe in that time BES12 will gain traction and replace a large chunk of the SAF loss. handset sales will stabilise. IOT will start to become more relevant. and they will be able to monetise part of BBM and the patent portfolio.

This is the investment thesis.

Posted via CB10

Well said and these are among some of the reasons I am long BBRY.

[BACK-2-BLACK]

a couple of points:

Passport is manufactured in Mexico, so has nothing to do with Foxcon.

Chen definitely stated that out of the 200k initial pre orders, only a small amount of them were counted in the sales figure for Q3 as most of them had not sold through to the end customers.

To me it sounds as though around 150k of these may not have been counted.

People need to understand that there is something called Earnings Management. Shareholders like to see long term, steady growth; this is what Chen is doing. He already knows what the next 3 quarters will look like.

so for q3 he can see if he includes the passport sales he not only shows cashflow positive, but also shows a profit. he doesn't need to tick both boxes.

it is better to defer some of this income to the next quarter when he knows he will lose more revs from SAF decline and BES12 won't be earning yet.

In finance if you have a stellar quarter you don't report everything. you look at the next quarter and see whether you can show growth, if not shave something from this and add it to the next. you build quarters with steady QoQ growth, that is what shareholders are rewarding.

As for the people that are worried about the revs dropping, this should be expected! The old business model is dieing. That isn't the problem, the problem is whether they can replace this with the new revenue.

The 3.1 billion cash is part of the answer here. they need this as a fail safe whilst the new rev streams become established over the next year. they are hoping to subsidise the loss temporarily with handset sales, but if they don't catch on they need a cushion.

Assume the handsets don't catch on and they are selling 0.5 mil per quarter. they can still survive for a long time. if they start burning even 200 or 300 mill per quarter they will still be around for years.

I personally believe in that time BES12 will gain traction and replace a large chunk of the SAF loss. handset sales will stabilise. IOT will start to become more relevant. and they will be able to monetise part of BBM and the patent portfolio.

This is the investment thesis.

Posted via CB10

also what was nice to see/hear, JC had mentioned in an interview just prior to the last ER that the company invested over $1-1.5 billion in the past year he was there (Movirtu, Secursmart, Nanthealth come to mind).... and they still maintained 3.1 billion cash.

Do we expect the cash to increase in the next quarter since we haven't heard about any major investments recently despite the lower revenues that are expected?

[dusdal]

Not attempting to side step or mislead anyone. Here is how I see things:

Service revenue decline of $54M (company guidance).
Q4 revenue �challenged�, and revenues expected to bottom sometime in coming quarters (paraphrased company statements � see EDGAR filings).
Majority of Q3 Passport sales to be recognized in future quarters (Chen statement).
Large inventory cleaning in Q3 (Chen statement).
Software revenue flat lined in Q3 (company filings).
Software revenue not expected to ramp for two quarters (Chen statement).

Based on the above, one can conclude the following:

Q4 revenue will indeed be lower (conjecture based on company guidance).
Old inventory cleared, so Q4 and forward HW ASP should actually increase (conjecture).

Q4 revenue lower despite majority of high ASP Q3 Passport sales and some Classic sales being recognized in Q4. Ergo Passport sales are weak. (conjecture and logical conclusion).

With software revenue being flat, the delta in top line revenue is simply the difference between service decline and hardware revenue variance (math).

If revenue comes in below $720M, then we know hardware sales declined further in Q4 and I think this could have negative SP implications. Then again, if they are cash flow even the market may give us a pass (all opinion).

I agree with all of this.

The only point I would make is "Passport sales are weak" carries little meaning without a reference point or objective figure included.


Posted via CB10

[bbjdog]

Chen confirmed on Q3 CC that Classic is Foxconn...

Lets keep in our minds that most of the Classic technology is Blackberry's! The margins for Foxconn should be limited. The Z3 is a total different playing game, I would thing Z3 Foxconn takes high margins.

Blackberry will continue using old system to build there unique phones (one per year.) That's my opinion only.

[bbjdog]

Look at those numbers! quarter after quarter it gets better. Thanks Sidhuk.

[dusdal]

For reference.

So I think the top of the the SAF guidance was 15%? Which is more like $55 Mln

For software alone to make that up it would have to double as it only brought in $54 last quarter. Tough to see this being realistic even with the program ending.

- How many paying licenses would we need to see for the two months in this quarter to get there? How many do we realistically expect to start paying in Q4?

Seems like it will have to come from hardware if we're going to have a top line higher than $738 Mln

Posted via CB10

[Munx]

For reference.

So I think the top of the the SAF guidance was 15%? Which is more like $55 Mln

For software alone to make that up it would have to double as it only brought in $54 last quarter. Tough to see this being realistic even with the program ending.

- How many paying licenses would we need to see for the two months in this quarter to get there? How many do we realistically expect to start paying in Q4?

Seems like it will have to come from hardware if we're going to have a top line higher than $738 Mln

Posted via CB10

Exactly.

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[Soumaila Somtore]

How about this for some fresh air. Pardon me I know it old news but I can't keep my eye away.
Stocknomics Share
BlackBerry Ltd QNX Making Strides At CES 2015
Posted By: Aman JainPosted date: January 07, 2015 10:30:57 AMIn: Technology50 Comments
BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) QNX seems to be dominating the buzz at the Consumer Electronics Show (CES) 2015. A couple of days back, the Infotainment wing of BlackBerry announced that it has deployed its system in more than 50 million vehicles, and now, it has bagged several new deals during CES 2015.

BlackBerry QNX

BlackBerry QNX making life easier for drivers
One such deal came from iHeartRadio, which has announced a slew of automotive and In-Home Entertainment Integrations, one of which is with BlackBerry QNX. According to a press release from QNX software, it unveiled a technology concept car that is fitted with the iHeartRadio Drive Anywhere Radio.

Drivers can keep listening their favorite radio station even when they move beyond the signal range with the help of this software. When a car is integrated with the iHeartRadio station, the QNX-based Infotainment system will automatically switch to the digital iHeartRadio station allowing the driver to stay focused on the road.

Deals with LG, Volkswagen
Additionally, QNX software will also provide LG Electronics Inc. (KRX:066570) (OTCMKTS:LGEAF) Electronics with software platforms for the next generation automotive systems. Both QNX and LG have been working on telematics programs for quite some time. However, under this particular deal, QNX will offer its CAR platform (Neutrino operating system and others) for infotainment to LG Electronics.

Won-Yong Hwang, Director and Head of AVN development department, LG Electronics� VC Company, said that QNX Software has been a trusted supplier for over a decade, offering flexible software solutions that allow LG to offer millions of high-quality systems across the auto industry.

BlackBerry QNX Software Systems also announced a deal with Volkswagen to provide Infotainment systems. Recently, the popular infotainment system has been fitted into the 2015 models of Volkswagen Touareg, Passat, Polo, Golf, and Golf GTI models. Alf Pollex, Head of Connected Car and Infotainment, Volkswagen AG said, �At Volkswagen, we believe deeply in delivering the highest quality driving experience, regardless of the cost, size, and features of the vehicle.� Pollex added that the flexible architecture of QNX platform dovetails well with Volkswagen�s approach, allowing them to offer a full range of Infotainment systems, from premium level to mass volume.

Given everything it�s got going for it, it seems likely that BlackBerry QNX will sign few more deals at CES in the next few days.

[bspence87]

The only revenue category that can substantially offset this decrease is hardware. I say this because software revenue was flat in Q3, and I am assuming it will be flat in Q4 (again based on Chen statements regarding software ramp time being a couple of quarters out).

That's not true. BlackBerry offered a 10% discount for companies that convert their EZ-PASS licenses to a paid one by December 17. You could see a few million converts from that.

They have also started BBM monetization, as well as all of the paid add-ons to BES12. Who knows how much QNX is making, but I bet they're already starting to see revenues from Ford.

Then there is the partnership with Samsung. They might be getting frontloaded some of that money.

I'm sure I forgot a few avenues, but you (well, anyone else willing to listen) get the point.


Posted via CB10

[morganplus8]

To be honest I don’t follow your reasoning.

The company is calling for a $54M decline in service revenue in Q4.

The only revenue category that can substantially offset this decrease is hardware. I say this because software revenue was flat in Q3, and I am assuming it will be flat in Q4 (again based on Chen statements regarding software ramp time being a couple of quarters out).

Then if hardware sales increase to the tune of $50M, I believe the revenue figure will be near unchanged, or down by only $4M to be precise.

I derived the $720M figure as follows: It is equal to the Q3 revenue ($793), less the company guided $54M service less, some allowance for quarterly guidance variance ($20M). This puts us at a floor revenue floor of $720M. Anything below this and we know that hardware sales further contracted in the Q4, which may not be a problem if cash flow and earnings are still near break even. It also happens to align with the Wells Fargo figure today ($721M) but hey who cares.

Oh yeah, that old QGV allowance, I completely forgot to include $ 20 MM miscellaneous contingency funds for whatever. Me bad.

You are being called out for claiming the following:

"Quote Originally Posted by Munx View Post
The number of $50-60M comes from the company. This is the 15% service revenue loss that they will not be able to overcome with hardware sales in Q4. The company's exact statement regarding Q4 revenue challenges can be found in their EDGAR filing which should be mandatory reading for all investors. GL."
Posted via CB10"

There is no way you can claim that BB can't have solid passport sales, or strong enough hardware sales in general to approach Q3 gross revenue numbers, let alone claim services can't be replaced at all. Please read your claim over again and tell me how they cannot over come the loss in services.

I still maintain that the variables are so complex moving away from bulk BB 10 legacy phones to Passports and Classics that no one is able to determine whether passport sales are weak or not (Funny thing though, Chen thinks Passport sales are very good). It's all relative to prior figures that don't exist. So it all boils down to your claim that BB can't make up services losses at all.

[CDM76]

OT: Recently looking to adopt a dog and came across this. HAD to share.....




Courtesy of the Alberta Animal Rescue Society Facebook page. AARCS.ca

Posted via CB10

[chrysaurora]

the sale price is $599 in us and $699 in canada after $100 discount.
BlackBerry Smartphones & Accessories ? Buy Unlocked Phones, Cases, Chargers, Batteries, Bluetooth Accessories & More

Yes. But that's not how much BlackBerry gets. Although it's ShopBlackBerry, the store is operated by Digital River or something. There is their cut in there. Same for Amazon - they take a cut.

When BlackBerry sells to carriers - BlackBerry sells it for much lower (probably $400) and incurs additional cost of packaging it for carriers, locking it for specific carriers etc.

So, ASP is no more than $400 on a Passport. Plus, factor in a small percentage for customer returns, defects etc.

That's my reasoning.


Posted via CB10

[sati01]

I think hardware sales could be particularly weak next quarter, because:

1.Most of the written down inventory was cleared out in Q3. For Q4 sales mostly depend on Passport, Classic and Z3. Chen didn't show much enthusiasm about the z3 in the E.C., so probably It's mostly Passport and Classic.
2.Enterprise demand for the Classic could take several months to ramp up.
3.There could be some weakness in consumer interest according to internet stats.

The position of the Passport in the Amazon's bestseller list fell fast.
Amazon Best Sellers: Best Unlocked Cell Phones

Google trends shows how often a term is searched in Google.
The Passport got huge interest at launch, but It quickly declined. Now the interest is under the Z10 and very close to the Q10, devices launched almost 2 years ago that didn't sell well.
The Classic got less interest at launch, and now is even lower than the Passport.



This is the traffic of this site, crackberry.com. Crackberry is the most popular BlackBerry fan site, the content is mostly about BB10. So as the image shows, the interest in BB10 could be declining fast despite the release of the new phones.



But I don't think hardware revenue is relevant, as long as they don't lose a lot of money.

[bbjdog]

I think hardware sales could be particularly weak next quarter, because:

1.Most of the written down inventory was cleared out in Q3. For Q4 sales mostly depend on Passport, Classic and Z3. Chen didn't show much enthusiasm about the z3 in the E.C., so probably It's mostly Passport and Classic.
2.Enterprise demand for the Classic could take several months to ramp up.
3.There could be some weakness in consumer interest according to internet stats.

The position of the Passport in the Amazon's bestseller list fell fast.
Amazon Best Sellers: Best Unlocked Cell Phones

Google trends shows how often a term is searched in Google.
The Passport got huge interest at launch, but It quickly declined. Now the interest is under the Z10 and very close to the Q10, devices launched almost 2 years ago that didn't sell well.
The Classic got less interest at launch, and now is even lower than the Passport.



This is the traffic of this site, crackberry.com. Crackberry is the most popular BlackBerry fan site, the content is mostly about BB10. So as the image shows, the interest in BB10 could be declining fast despite the release of the new phones.



But I don't think hardware revenue is relevant, as long as they don't lose a lot of money.

Good argument, but you can not measure BlackBerry that way. It's hard to find out how many phones are in the market place by looking up analytic information. Nor can we find the interest that consumer have. BlackBerry is a hard safe to crack. DOD can order 20,000 phones and we will not know anything about it, unless it's made public. I for example, never use the Internet on my phone, my apps work only if all permission is blocked. So analytic information don't work with me and corporations.

Posted via CB10

[StormieTwo]

BB10 4 ME

[KenFletch]

Yes. But that's not how much BlackBerry gets. Although it's ShopBlackBerry, the store is operated by Digital River or something. There is their cut in there. Same for Amazon - they take a cut.

When BlackBerry sells to carriers - BlackBerry sells it for much lower (probably $400) and incurs additional cost of packaging it for carriers, locking it for specific carriers etc.

So, ASP is no more than $400 on a Passport. Plus, factor in a small percentage for customer returns, defects etc.

That's my reasoning.


Posted via CB10

Except ASP is ASP to the end user. All production and sales costs are on the other side of the ledger.

I still have the same concern though. What is available to sell?

Chen is no dummy and he picked the 10M/yr. Number

Guessing that he was expecting less than 1M passports but he guessed low. Will they catch up to demand?

Also he e,expected Classic to sell many more than Passport.? 2-3M perhaps 4

BBOS and the first 4 BB10 phones barely wort:h vounting

Z3, still out there. Buy now less than Passport

So Passport 300,000/q @ 500. 150,000,000 (might be low)
Classic. 600,000/q @ 400. 240,000,000(same)
Z3. 100,000/q @ 200. 20,000,000
Old stuff. 100,000. 150. 15,000,000

More than $400M in sales, perhaps more. Pretty good. Hardware would be 55% of income. Higher than last quarter!

Ussume margins og 40+ for possport,old bbos and Z3, 25-30 for Classic and near 100% for old bb10 since there were written down

Adds more than 150M to bottom line. Not bad but that is less than 1M in sales. Very far from it

Need more product!!!

Posted with my flash Passport

[Glenn Biddle]

Passport top rated phone on amazon. That has to bode well in the long term.

Posted via CB10

[bspence87]

- How many paying licenses would we need to see for the two months in this quarter to get there? How many do we realistically expect to start paying in Q4?

Well considering there were 10million EZ-PASS adopters with only a month until expiry, I would say a good number. I don't see any business wanting to switch over their MDM solution just to have it cut off in a couple of months' time. Switching solutions is expensive when you consider the downtime and learning curve.

For all we know, they could have already been subscribed by the last ER. They didn't break down any software numbers either.

For anyone unprepared for the license expiry, they can't just have their systems shut off, so they will pay the licensing fee just to keep it on until they figure out what they want to do.

Additionally, how many of those EZ-PASS adopters were trial cases? The CEO puts five of his staff on for testing purposes, with intent to switch over the rest of his staff if they like it. We could potentially see MORE than 10million paid subscriptions by end of Q4. Not that I think that is likely, just that the pool is potentially larger than 10million.


As a side note, how many Classics are coupled with EZ-PASS adoption conversions? A lot of variables for which a few of you are assuming big fat 0s



Posted via CB10

[cjcampbell]

Jebus... The talk here today is like it's the day before the ER. Give it some time. What we know is that the VAST majority of the Passports shipped have not realized revenue. It seems we are still on the sell through model. Outside of that, let it be. Let's see what happens over the next little while. I don't think it's a coincidence that we have the next hardware being announced just prior to the next ER. Anyone else see this pattern yet with Chen?

[sati01]

Good argument, but you can not measures BlackBerry that way. It's hard to find out how many phones are in the market place by looking up analytic information. Nor can we find the interest that consumer have. BlackBerry is a hard safe to crack. DOD can order 20,000 phones and we will not know anything about it, unless it's made public. I for example, never use the Internet on my phone, my apps work only if all permission is blocked. So analytic information don't work with me and corporations.

Posted via CB10

I agree, but those big enterprise orders are unlikely to happen this quarter because the tech investment process is bureaucratic. It's a new product, so you probably want to wait a few months until the bugs and security flaws are ironed. Then you have to do a small deployment to test the waters, detect problems early, see how the users respond to the new product. Probably if the institution is buying so many BB10 phones is also implementing BES12, which is a lot of learning and testing by itself.

So, I think the first few months most of the demand should come from the consumer channel, from consumers and small companies, and that makes relevant those stats that should correlated with the demand in the consumer channel.

[leafs123]

http://n4bb.com/legendary-investor-n...kberry-shares/

[chrysaurora]

Jebus... The talk here today is like it's the day before the ER. Give it some time. What we know is that the VAST majority of the Passports shipped have not realized revenue. It seems we are still on the sell through model. Outside of that, let it be. Let's see what happens over the next little while. I don't think it's a coincidence that we have the next hardware being announced just prior to the next ER. Anyone else see this pattern yet with Chen?

Thorsten tried to do the same. Releasing new hardware partway through the quarter. Z10, Q10, Z30, Q5 all part way through quarter.

What Heins did wrong was he produced too many of each device though. Million+ z10. Chen has been smart. He produces enough to meet first round of orders; doesn't over product at all.

Posted via CB10

[bbjdog]

I agree, but those big enterprise orders are unlikely to happen this quarter because the tech investment process is bureaucratic. It's a new product, so you probably want to wait a few months until the bugs and security flaws are ironed. Then you have to do a small deployment to test the waters, detect problems early, see how the users respond to the new product. Probably if the institution is buying so many BB10 phones is also implementing BES12, which is a lot of learning and testing by itself.

So, I think the first few months most of the demand should come from the consumer channel, from consumers and small companies, and that makes relevant those stats that should correlated with the demand in the consumer channel.

I agree with you on the whole process, but BB10 is not new and the bugs are almost out, but with new programs comes new bugs, but the core is still the same. Also all those licenses that corporations have been test driving, equal to a major upgrade. So saying that, the whole month of January could see a lot of hardware buying. I truly don't know what the termination of the EZPASS meant, for example everyone or just to new licenses. These companies that have been test driving the BES10 and BES12 can have a big impact on the bottom line(hardware and services) . Unless we have hard evidence, we can only speculate and wait for Dr. Chen to perform his wonderful work.

OT:
Hardware Revenue decline had a few millions attributed to Foxconn deal (not sure about the amount) . But we can notice that amount in savings.

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