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Just closed the Nasdaq screen, prepare for dinner and let alone the stock until 2morrow.
Volume is pretty high, bottom was $9.83, would take a closing above $10 like a victory.
Cheers gang, it's beeeeeer thirsty already here !
SF
P.S: and if you want THE real news of the day ... enjoy ! Nile has somme goodies for ya !
+
http://www.rollingstone.com/music/pr...-time-20150305Last edited by Superfly_FR; 03-09-15 at 01:27 PM. Reason: "near" was too easy lol
03-09-15 01:03 PM - Hi Jake,Just sold all my call option for jan 2016 12 dollar strike oh and i bought jan 2017 12 dollar strike price calls
Just to test my knowledge, at $1.75 each (and let's say the current price is $10), at expiry the SP would have to be > $11.75 to be 'in the money', right? But you'll likely never wait that long to sell. If the SP rises to $13.50 you'd likely double your initial investment?
Cheers.03-09-15 02:01 PM - Seriously, how much are the watches? For $1K they better say apple and beats on them.OT Watching the WSJ's underwhelming report on the new apple watch. Prices seem reasonable though
That's fine though. Apple is a status symbol like Mercedes. It says that u have more money than brains.
Posted via CB1003-09-15 03:09 PM - Hi gang!
There was an excellent question posted over the weekend regarding the "Ascending Triangle" versus "Raising Wedge" for BBRY. The reason this is an excellent question is that it is difficult to tell which formation you are looking at until it is too late. And so you need to have some rules to guide you in this matter and JLagoon pointed out that up/down volume is a key factor in the differentiation of the two models.
Here is a 1 year 10 month chart on BBRY to help guide us when deciding what we have here:
![The BBRY Café. [Formerly: I support BBRY and I buy shares!]-bbry-march-9-2015.png](/attachments/bbry-f329/340022d1425929870t-bbry-caf-formerly-i-support-bbry-i-buy-shares-bbry-march-9-2015.png)
I included this long term look at BBRY because sometimes we are so close to the current level of the trade that we miss the big picture. What we agree on is the uptrend blue line touching the bottoms of each consecutive higher high. Both TA formations have this in common so we are asking is whether the upper line, the one that defines ascending triangles from raising wedges looks like. To understand what we are seeing we need to know some important details about each TA structure. The first line that JLagoon and I agree on is the horizontal line passing for months now at approximately $ 11.10/shr. The reason this line looks correct is becasue it is a trading line based on the stock itself less the noise of take-overs and buyouts and whatever else. All of the times the stock goes above this price it fails to confirm the trend and quickly falls back under $ 11.10/shr. And so, the volume increase/decrease tells us that we might be looking at an AT, and, the fact the the upper line is horz. tells us it is likely an AT too. The additional information is the volume trend line, the lowest brown line showing us that as the triangel matures, the volume is dropping below its average daily volume levels. We have that too, but something else is missing and that is the duration of the formation, the chart goes back well over 1 year now and will likely continue until major news strikes. A typical AT runs from 1 - 3 months making this AT formation suspect at best (RW durations are twice as long in many cases).
We ruled out a Raising Wedge (RW) because the (1) upper line is horizontal, and (2) we can see a slightly possible raising line in the upper thick brown line but that is just not what a resistance line looks like. (When there is only 3 trades over 16 months at that level, and then for only a monent in time, it isn't valid as a resistance line). So everything favours the AT but the length of the formation causes me to think there really isn't either formation here.
If you look back to 2013, we formed an Inverse Head and Shoulders (blue circles to the left, no jokes please) which tells us the downtrend has ended and we are now going higher from there. So when we look at 2014, sure enough, we have been moving higher all year. So the next thing to do is try to find a formation that tells us where the stock could be going. I used a parrallel hatched line in light brown to show you what I see happening. To me that well defined line is what is part of a trend line that is tracking the lower raising blue line and parrallel to it. When you join all of the highs (52 week) together, this channel looks like a winner. I believe we came off an Inverse Head & Shoulders formation and started a well defined rally of which we are still enjoying today. The after hours trade the last time the stock shot up was $ 13.25/shr, it is little surprise to me that $ 13.25/shr is right dead on the upper channel line. Based upon my chart pattern, I would predict that our low today will not exceed $ 9.80/shr and we can get to $ 13.75/shr anytime a strong rally occurs. I don't see a RW or a AT at all here, just some trading to resistance within a well defined channel. The problem with the AT theory is that it is so long in the tooth such that it losses that title be definition alone.
BBRY is famous for failed formations, there have been three perfect looking Head and Shoulder formations in the past couple of years and all of them fail on definition. A H&D is confirmed not because it has a head and shoulders (right and left) but on its move after the formation breaks. In each case, the H&D failed to move anywhere close to its projected distance, i.e., the stock should move to the price level calculated from the neckline to the top of the head. In our case, we see a H&D, it looks great but the stock only moves to 20% or less of its projected definition for that formation. The conclusion, for me, is that this stock is heavily manipulated to the point that is gives false TA all day long. The one formation that works though, is my channel, it hasn't failed and I hope it doesn't fail us now!03-09-15 03:09 PM - Sooo... How about a bit of reading?
Those of you who want to know more about Simona's report will find most of it here... I have not yet inserted the Exhibits.
And of course, this...Goldman Sachs / Equity Research
March 8, 2015
ACTION
Sell
BlackBerry Ltd. (BBRY)
Return Potential: (16%)
Downgrading to Sell as turnaround efforts reach a challenging phase
Source of opportunity
We downgrade BBRY to Sell with 16% downside to our $9, 12-month price target (vs 6% average coverage upside). BlackBerry shares are +60% since Mr. John Chen became CEO in Nov. 2013 and started its turnaround effort. While the quarterly revenue runrate is down over 30% since then, the opex runrate is down over 50% and hardware gross margins are back in positive territory, helping BBRY achieve cash flow breakeven exiting 2014, a quarter ahead of plan. In 2015, the turnaround efforts shift from cutting costs to driving revenues – a more challenging phase that we think will fall short of expectations. Rather than a return to profitability, we see widening losses in FY16/17.
Catalyst
We think the success of BlackBerry’s turnaround hinges on its ability to grow its Enterprise Mobility Management (EMM) software business, where competitors include Mobile Iron, Airwatch (part of VMware), and Good. BlackBerry has set a target of $500mn in Software segment revenues for FY16 (Feb), up from $250mn in FY15. We expect it to fall well short of that target and model revenues of $426mn, for two reasons. First, our surveys show very low buying intentions for BlackBerry’s EMM solution. Second, its target implies that it would leapfrog the market leaders in just one year, which we view as unlikely given the competitors’ much better traction (based on our survey). Meanwhile, we forecast below-consensus Service revenues (down 47% in FY16E). While we see significant upside in Hardware revenues, those are “empty calories” as they are not profitable. Thus, we see widening losses based on the shortfall in high-margin Software and Services revenues.
Valuation
We lower our 12m BBRY/BB.TO targets to US$9/C$11 from US$10/C$12 based on an 85%/15% blend of SOTP/M&A (was 70%/30%) on lower M&A probability.
Key risks
Stronger than expected traction with the EMM solution, better hardware profitability, multiple-rerating on IoT initiatives, or potential take-out.
Investment thesis
As BlackBerry’s turnaround shifts from cutting costs to driving revenues, we see much higher hurdles given stiff competition, and expect the stock to underperform as the company falls short of profitability targets and expectations. We have three key points:
1. Software-driven turnaround likely to disappoint – BlackBerry has guided for $500mn in Software revenues in FY16 (Feb), up from $250mn in FY15, as it ramps a new Enterprise Mobile Management business. We expect it to fall short as its target assumes that it can leap frog market leaders Airwatch, Mobile Iron and Good– contrary to our customer surveys. We model $426mn in Software revenues.
2. Expect losses to widen in 2016, prompting more restructuring – We expect widening losses and below-consensus EPS as the legacy high-margin Service revenue falls faster than consensus expectations, while the new Software business grows slower than expected/guided. We model ($0.26) in FY16 EPS vs. consensus of ($0.12), worse than our estimate of ($0.19) in FY15E.
3. Expect sizeable miss in February quarter – While our thesis is primarily driven by our below-consensus view of Software and Services in FY16/17, we also expect a sizeable (13%) near-term revenue miss in the February quarter on weak hardware sales due to a delayed rollout of the Classic. However, we expect that to prove temporary, and expect Hardware sales to drive revenue upside to consensus estimates for FY16/17 on higher ASPs, though not contribute much to EPS given lack of profitability.
Putting together our below-consensus view of Software and Services (where all the profits are) and our above-consensus view of Hardware (which is not profitable), we expect widening losses in FY16/17 despite higher revenues (Exhibit 1). We see 16% downside to our $9 12-month price target, based on an 85%/15% blend of sum-of-the-parts valuation and M&A. We lower our M&A weight from 30% to 15% (and departmental M&A rank from 1 to 2) as we now see lower likelihood of acquisition.
What could make us more positive
To get more positive on BlackBerry shares, we would need to see one or more of the following: (1) Stronger traction of BES12 by enterprises, either due to market share gains and customer adds or rapid upgrades to premium services and higher ARPU. (2) Better profitability on the Hardware business as the company moves towards an outsourced manufacturing and distribution business model. For example, BlackBerry moved some of its manufacturing to Foxconn in 2014, which allowed it to have a variable cost model and take reduced inventory risk. In addition, it increased the use of online sales channels such as its own website, Amazon, and Alibaba. (3) Traction with new business models, such licensing the patent portfolio, achieving significant QNX revenues in the automotive sector, meaningfully monetizing BBM, and/or developing a successful IoT platform.
Software-driven turnaround likely to disappoint in 2015
BlackBerry has guided for $500mn in software revenues in FY16 (Feb), up from $250mn in FY15, as it ramps its BES12 solution to compete in the Enterprise Mobile Management (EMM) market against competitors such as Airwatch (part of VMware), Mobile Iron and Good. The $250mn in Software revenues in FY15 is comprised of its legacy Blackberry Enterprise Server (BES) software licenses (which are declining), legacy technical support (also declining), as well as its QNX licenses in the automotive sector, which are growing. In addition, BlackBerry’s December 2014 acquisition of private German company Secusmart (for encrypted voice) adds about mid-teens millions of annual revenues. With the base Software business declining over the last 3 years, even assuming growth in QNX and Secusmart in FY16, we estimate that the vast majority of the incremental $250mn in targeted revenues for FY16 needs to be generated through sales of the BES12 solution.
While we view BlackBerry’s solution as fairly competitive from a technology perspective, we believe its implied target of $250mn in incremental revenues is likely unachievable, as it would far exceed the total estimated revenues of market leaders Mobile Iron ($167mn) and AirWatch ($146mn), despite coming to market years later. We are modeling $136mn in BES12 revenues for BlackBerry in CY15E, which would drive downside to consensus estimates, yet may still prove aggressive (Exhibit 3).
The unit economics make the math challenging – BlackBerry has signed 6.8mn licensees under its EZ Pass program, which essentially allowed companies to convert prior BES users, or third party EMM Licenses, to BES12 licenses for free. That program ended in December 2014, and EZ Pass licensees now have to decide if they want to upgrade to the Gold package ($60 per year for the license subscription plus $12 for maintenance); otherwise, they would need to pay $8/year for Silver maintenance.
To get to its $500mn goal for FY16 (or $250mn in incremental sales), BlackBerry would need to convert at least 3mn of its EZ Pass licensees to the Gold package (assuming they are converted on Day 1 of the fiscal year, or proportionately more if they are converted later in the year). Our estimates assume that BlackBerry gets to 8mn subscribers by the end of FY16 at a quarterly ARPU of $11, which implies a mix of around 40% Gold and 60% Silver licensees. Even so, given a ramp throughout the year, that only translates to $217mn in EMM revenues for BlackBerry in FY16 (and $126mn in CY15, given the back-end loaded nature of the ramp). As of the GS Technology Conference in mid-February, BlackBerry did not have much concrete visibility into reaching its software revenue target, as EZ Pass licensees have until July 1 to deploy BES12 in order to retain the licenses.
However, as we show below, customer demand for the BES 12 platform appears low based on three separate surveys with IT executives, value added resellers, and office supply purchasing managers.
GS IT Survey (Dec 2014)
In our December 2014 IT Survey, only 1% of respondents said they plan to deploy the BES12 and BlackBerry Classic, while another 10% said they plan to evaluate BES12.
GS Software VAR Survey (Jan 2015)
In our software team’s value added reseller (VAR) survey, BlackBerry was shown as losing momentum in MDM in 2015 by the majority of respondents, with none of the VARs seeing it as gaining momentum. Mobile Iron and VMware’s Airwatch were seen as gaining the most momentum, followed by Citrix XenMobile.
GS Retail and IT Hardware Office Supplies survey (November 2014)
In our retail and hardware teams’ office supplies survey, only 7% of purchasing managers cited BlackBerry as their mobile technology going forward, down from 17% in 2012. Meanwhile, the iPhone and Android smartphones have gained very strong traction.
Sustainable profitability likely to prove elusive
BlackBerry was able to achieve positive FCF in the November 2014 quarter for the first time in two years, and a quarter ahead of schedule, as a result of aggressive opex cuts (down 52% yoy) and improving the cost structure of its hardware business (e.g. outsourcing manufacturing to Foxconn with a variable cost model).
However, we forecast that the company will return to negative FCF and will see widening losses as early as the August 2016 (F2Q of FY16) quarter, as a result of rapid declines in its high-margin Services business (GSe down 47% in FY16) and a slower than expected ramp in its Software business (GSe $426mn in FY16 vs. company target of $500mn). Our Services forecast assumes that the BlackBerry subscriber base (that pays service access fees) declines by 40% in FY16, an acceleration of the 34% decline in FY15, as a result of the upgrade to BB10 devices such as the Classic; recall that unlike the legacy BB7 (and prior) devices, BB10 devices do not pay service access fees. We are modeling the ARPU declines accelerating to 17% in FY16 (vs. 11% in FY15E and 18% in FY14), as they continue to get pressured by increased price concessions and a mix shift to emerging markets, as well as the non-repeat of delinquent Service recoveries in Argentina ($15mn in F2Q15) and Venezuela ($30mn in F1Q15).
Curiously, the more success BlackBerry sees this year with the ramp of the BlackBerry Classic, the worse it will be from a cash flow perspective, as any user who converts from an older BB7 device to the Classic stops paying the Service fees and needs to be won back again as a BES12 Software customer.
Valuation: Lowering price target to $9 from $10
We lower our 12-month price target to $9 from $10 as we lower our M&A rank from 1 to 2, implying a medium (15-30%) probability vs prior high (30-50%) probability, and our corresponding weight in our price target from 30% to 15%.
Our price target methodology is now based 85% on a $9 sum-of-the-parts (SOTP) asset valuation (unchanged) and 15% M&A value of $11 using a 0.9X EV/S (unchanged). This approach assumes that BlackBerry’s turnaround ultimately proves unsuccessful. Our SOTP asset valuation assumes 1) projected cash ($3.5/share), 2) patents ($3.1), 3) BBM ($1.4), and 4) QNX ($0.9). Our M&A value of $11/ share is now weighted at 15% vs 30% previously, lowering our weighted 12-month price target to $9 from $10 as we remove the incremental premium. We describe our departmental M&A framework in more detail below.
We see a reduced probably of M&A for several reasons: 1) After explicitly putting the company up for sale in 2013, the company is now prioritizing a turnaround over strategic alternatives, 2) BBRY shares are up around 80% since the 2013 lows while revenues are down more than 50%, thus making a takeout less likely (BBRY is now trading at 1.1X LTM EV/S, compared to HP’s acquisition of Palm at 0.9X and Google’s acquisition of Motorola Mobility at 1.1X), and 3) in response to press speculation (WSJ) that Samsung was interested in buying BlackBerry in January 2015, managements from both companies have come out and denied these allegations. In addition, while BlackBerry and Samsung have partnered on delivering KNOX security functions, Samsung also partners with BlackBerry’s competitors, such as MobileIron and Good Technology.
Upside scenario yields only $10 per share valuation
We also present for illustrative purposes an alternative SOTP scenario if BlackBerry were to succeed and deliver on its $500mn Software target (we currently model $426mn in FY16). In this alternative scenario, we value Blackberry’s operating businesses under the assumption of a more successful company transition, which we segment into Hardware, Software, and Services. Even in that upside scenario, we estimate a $10 per share SOTP valuation for the company. We value the operating businesses (hardware and software) using relative valuation and add the DCF from the Services business and the net cash on the balance sheet in the prior quarter (plus expected tax refunds).
We value the Hardware business based on the trough valuations of other smartphone vendors that had struggled in the past, including HTC, Motorola Mobility, Nokia, and Palm. We value the Software business based on competitors including Citrix and Mobile Iron.
Our M&A Framework
Across our coverage universe, we examine stocks using an M&A framework, considering both qualitative factors (exposure to key markets/products, asset mix) and quantitative factors (IRR and theoretical returns following a buyout, using our standardized departmental LBO model) to incorporate the potential that certain companies could be acquired at a premium to current share prices.
We then assign a M&A score as a means of ranking companies under coverage from 1 to 4, with 1 representing high (30%-50%) probability of M&A activity, 2 representing medium (15%-30%) probability, 3 representing low (10%-15%) probability and 4 representing minimal to no probability (0%-10%). For companies ranked 1 or 2, in line with our standard departmental guidelines we incorporate an M&A component into our target price.
Sentiment appears overly complacent
With the shares up over 80% since the 2013 lows, short interest has declined significantly. Also, we assume that some portion of the shares that are short are for hedging the $1.25bn convert, making the “real” underlying short interest less than the 17% of total shares outstanding. While the stock price and sentiment have justifiably improved during the successful phase 1 of the turnaround (cost-cutting and shoring up the balance sheet), we don’t think the stock reflects the much higher challenges associated with phase 2 of the turnaround (gaining share in a highly competitive market).
Cheers and thanks!Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.03-09-15 07:11 PM
![The BBRY Café. [Formerly: I support BBRY and I buy shares!]-ouchwatch.jpg](/attachments/bbry-f329/340008d1425926081-bbry-caf-formerly-i-support-bbry-i-buy-shares-ouchwatch.jpg)
![The BBRY Café. [Formerly: I support BBRY and I buy shares!]-bbry-march-9-2015.png](/attachments/bbry-f329/340022d1425929870-bbry-caf-formerly-i-support-bbry-i-buy-shares-bbry-march-9-2015.png)
The BBRY Café. [Formerly: I support BBRY and I buy shares!]
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