[Corbu]

Chen hits milestone in turning BlackBerry into a software company

WATERLOO — BlackBerry is on the threshold of transitioning from a smartphone maker into a software company specializing in secure, mobile communications, chief executive officer John Chen said Thursday.

A key milestone in the transition and in Chen's turnaround strategy was reached Thursday when BlackBerry reported first-quarter financial results that included US$166 million in revenue from software and services. That is the most revenue from software and services in a single quarter in the company's history.

Software and services accounted for 39 per cent of revenue in the three months ending May 31.

In a roundtable interview with reporters at BlackBerry headquarters in Waterloo, Chen said the No. 1 priority for the company is increasing software and services revenue by 30 per cent in the current fiscal year.

The profit margin on software is 80 per cent while the profit margin on smartphones is only 10 per cent, he explained.

There has been some confusion this week about the degree of importance the company puts on returning the smartphone business to profitability. After the company's annual meeting on Wednesday, it was widely reported that Chen said that making the handset business profitable is the No. 1 priority.

He cleared that point up Thursday, stressing that the sale of software and services is the most important task facing BlackBerry, and will get the most attention.

"The software business growth is where we put a lot of emphasis on," he said.

BlackBerry invented the smartphone and dominated the market for more than a decade. The company's image seems to be welded to devices. So it's not surprising that the public, industry analysts and investors are so focused on whether BlackBerry will continue to make smartphones.

Chen said he is amused and somewhat tired of being asked how long the company will make phones.

"Everyone wants the answer to be (that) I get out of hardware," he said. "I am working as hard as I can to create value for the company. I believe I can make money in hardware. If I can't, I will admit the fact that I can't."

As he has said in the past, Chen repeated Thursday that the decision on whether to continue making handsets will be made in September.

He said he is confident BlackBerry will make money on its devices by the end of September with a continued focus on enterprise customers, governments and users in regulated industries.

"The last thing I am going to do is leave those customers high and dry, that is not going to happen," he said.

In the first quarter, the company sold about 500,000 devices at an average price of US$290 each, Chen said, which is about 100,000 smartphones fewer than the previous quarter and about 200,000 fewer than two quarters earlier.

BlackBerry previously said the company needs to sell about three million phones at an average of US$300 each to break even, though Chen indicated that may change as the software licensing business starts to contribute to revenue.

Chen said the Priv, the Android phone it launched fall, has proved unaffordable to most people, except for top-level executives.

The company plans to release two mid-range, Android-powered phones before its current fiscal year ends Feb. 28, 2017, he said. More information on the devices is expected next month, but Chen said one will only have a touch screen rather than BlackBerry's traditional keyboard.

The company is trying to reach the market in more innovative ways. It's currently hosting a pop-up shop in New York City, and Chen said he'd consider more of them around the world if the trial is successful.

"I really, really believe that we could make money ... out of our device business," he said during a conference call with analysts Thursday morning.

But he stressed that the company's future lies in capitalizing on its intellectual property.

In the past month, BlackBerry established a dedicated group to license its software innovations to other manufacturers of smartphones, tablets and smart televisions. Licensing the use of the intellectual property in BlackBerry smartphones will drive expansion of the business, not the sale of smartphones, he said.

"We become an IP house and we design phones," he said.

BlackBerry recorded a net loss in the quarter of US$670 million, reflecting an asset impairment charge of US$501 million, a goodwill impairment charge of US$57 million and a writedown of smartphone inventory of US$41 million. It posted a net loss of US$238 million in the first quarter a year ago.

First-quarter revenue came in at US$400 million in the three months ended May 31, down from US$464 million in the same period a year earlier.

Without the one-time adjustments, the company essentially broke even during the first quarter.

Chen said the company feels good about the six areas of focus that will drive sales of software and services — enterprise mobility management, secure messaging, the Internet of Things, embedded software in connected cars, cybersecurity services and licensing the company's intellectual property.

Next month, a new product called BlackBerry Radar will be launched on the company's Internet of Things platform for tracking cargo and freight in real time. It will include the company's security software and anti-theft protection.

Chen said BlackBerry has enough options with its portfolio of patents to build a robust company without making smartphones.

"I intend to become a design house," Chen said. "I have so much credibility and knowledge in how to build a good handset, but I don't have to build it. I need to design it, though. Most of the design comes from the software side of the equation."

[Corbu]

Radar:
BlackBerry's Radar, Internet of things meets trucking system, critical to turnaround | ZDNet

BlackBerry's Radar could be compelling evidence that the company can use its mobile, embedded systems and security knowhow to grow in new industries.

By Larry Dignan for Between the Lines | June 24, 2016 -- 10:04 GMT (03:04 PDT) | Topic: Internet of Things

BlackBerry has talked internet of things, beefed up its software business via acquisition, has an asset in QNX that is powerful in the auto industry, but hasn't created a product or service that's fresh and organic in the new era.

Could BlackBerry Radar, which is designed to track trailer assets in the trucking industry, be that product?

We all know the hardware business that made BlackBerry famous is in decline if not going to zero in the years ahead. Given that decline, BlackBerry wouldn't be crazy to eventually exit the device business entirely.

BlackBerry's transition to software near complete as Q1 hardware sales tank

That's why Radar--a big swing at the Internet of things market--could signal that the reinvention of BlackBerry is paying off. On BlackBerry's first quarter earnings conference call, CEO John Chen talked Radar and the software business. He also noted that Radar, unveiled in March, would be commercially available mid-July.

Radar allows trucking companies and logistics players to track location, temperature, humidity and cargo presence. BlackBerry is targeting North America at first, but could go global.

Chen said:

Customer and trucking and logistics will benefit from the higher utilization of assets, improved efficiencies, and enhanced return on investment. Of course, our platform is based on the BlackBerry-level security and there are also anti-theft features built in as well. To date, we have conducted two successful proof-of-concept trials and are launching it commercially in mid-July, which is obviously next month. Our initial target market is in North America, followed by Europe, and then we'll expand to the rest of the world.

Radar is currently in trials with three companies. TD Securities analyst Daniel Chan said on of those companies may be Wal-Mart. If Chan is correct, Radar would have an instant reference customer that operates at scale.

Chan noted:

Depending on the source of the statistics, there are anywhere between 3 million-12 million trailers currently in the U.S. alone. Of this amount, it is estimated that only 14-20% have telematics services attached to them, leaving an under-penetrated market for Radar. If Radar starts addressing the global trailers and shipping containers market, the addressable market would be much larger.

According to Chan, Radar's total addressable market is $2.1 billion in hardware and $1.7 billion in annual recurring. Should Wal-Mart be a Radar customer, other industries would follow.

In these industries, companies want an end-to-end integrated system since it doesn't make sense to cobble together one. BlackBerry's hardware is a standalone monitor that is installed on the door of a trailer. From there, the device connects to the mobile network.

The bigger picture here is that BlackBerry's Radar could be compelling evidence that the company can use its mobile, embedded systems and security knowhow to grow in new industries.

Trying to track down that TD Securities report... If anyone has access please post or PM.

From yesterday's EC, FTR:

Daniel Chan
I just wanted to talk about Radar for a little bit. You had it in trial for a few months now. Can you give us a sense of early customer feedback and how many customers you've signed up so far?
John Chen
We have not -- we did a trial with two and we are still currently on trial with three. Feedback's been very strong for the first two trials that was finished, and so and that will -- we will start shipping that in middle of July. So I don’t have the details of the entire pipeline but seems like that everything comes back has been [ph] very strong.
Daniel Chan
And have you guys built any Radar sales into your fiscal year 2017 assumptions?
John Chen
Not much.

[spiller]

Theory/hunch: BlackBerry is licencing their android features/apps to Samsung for the Note 7 launch, including a more advanced Hub. Samsung went with dual edge screen because of this. And someone buying Aug 9 calls when this phone launches Aug 2. Chen is confident he can say hardware is profitable by the Sept 20ish ER after phone unit sales are reported by samsung. Say $1 per device (this is the number Chen used on the CC yesterday and makes sense), and Samsung also brings this to their other devices as differentiator. That's a ton of revenue. Now...if Samsung has built their own 'FOCUS' then Chen mush have another OEM lined up to be so confident in hardware by September when it looks like the next phone won't launch until August.



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[Corbu]

Fingers crossed!

John Chen
It's like, you can use my hub and you might pay me a dollar a phone or whatever it might be or annual fee for using the hub, but you don't have the IP rights, to hub [ph] there or the underlying patent that supported the hub.

[jake simmons3]

I might be a little naive but doesn't a weak EU make north America markets look pretty attractive?

[Dunt Dunt Dunt]

1. I've heard about mid-priced device coming out soon. Would they also be mid-spec'd? You (BlackBerry) have already admitted to overpricing PRIV. But now if you release a mid-priced device and bump-down specs, then it'd fail (same as Priv) because then it'd be an "OVERPRICED" device among mid-spec'd devices. I hope that is being considered by your pricing team.

Please do NOT say that your pricing team is aware. Time and again, your pricing team has made pricing disasters. So, make sure you make them aware of these things. If the device is going to be mid-priced but also mid-spec'd then you are repeating the same mistake. $500 device should have flagship specs (comparable to OnePlus3, S7 etc)

2. You release devices after devices but spend close to ZERO on marketing (advertising) these products. Perhaps you do spend a size-able amount but you spread that amount all over the world and so each 'city' ends up receiving little to no marketing. You need to significantly increase advertising-spend in your major cities. Instead of spending $100M in 100 cities (meaning, $1M per city), perhaps you should spend $100M in 10 cities so $10M per city. 10x the previous amount.

Well now Chen is saying one of the devcies will be a Mid to High end....

BlackBerry's hardware division, just isn't in a position to do what you want. Phones will cost more due to them buying and reselling them, their higher overhead than say OnePlus and the extra cost associated with small production runs and special hardware requirements for security. And marketing will be hopfull what is needed to keep the name alive enough for the market that are now focused on. That isn't consumers.

BlackBerry's competition is BlackPhone.... not OnePlus, ZTE or any other low margin, low price Android OEM.

[Christophe Piquemal]

@Jake Simmons


Well no really. US dollar will be stronger.

[W Hoa]

Well now Chen is saying one of the devcies will be a Mid to High end....

I believe Chen said that the device with the keyboard would be more expensive than the one without. Not that he was building a mid to high end device.

[morganplus8]

I might be a little naive but doesn't a weak EU make north America markets look pretty attractive?

The EU is the largest trading "country" in the world and entry for North American companies into the EU is usually through the UK. Now we will see multiple companies pull out of the UK and try to locate near new markets without taking on too much risk. The UK will have an uphill battle to win over the EU for continued trade, what this all means is that we have a debt ridden society and require economic growth to support worldwide debt and that isn't happening if one of the pillars of strength falls behind projected growth. The world as a whole suffers as many companies play in all quarters of the world today.

My take was that this vote was the dumbest thing to happen to Cameron as we know that to make material changes in a business, you need far more than 50% of the vote to win change. This economic decision is no different than a typical business requiring 2/3's of the vote or even more. Now we have the results of cities in the UK wanting to stay and the rural areas wanting to leave. I'm not sure that should be the criteria for leaving the EU. My personal opinion of course!

Let's let this blow over and resume our rally in BBRY. The split will take 2 or more years and Cameron isn't leaving until October, let's get back to common sense investing this afternoon!

[randall2580]

I believe Chen said that the device with the keyboard would be more expensive than the one without. Not that he was building a mid to high end device.

There was one interview yesterday where he said "mid-range" and then corrected himself to "mid to high" I heard it too and took notice was the first time he said that.

[jake simmons3]

The EU is the largest trading "country" in the world and entry for North American companies into the EU is usually through the UK. Now we will see multiple companies pull out of the UK and try to locate near new markets without taking on too much risk. The UK will have an uphill battle to win over the EU for continued trade, what this all means is that we have a debt ridden society and require economic growth to support worldwide debt and that isn't happening if one of the pillars of strength falls behind projected growth. The world as a whole suffers as many companies play in all quarters of the world today.

My take was that this vote was the dumbest thing to happen to Cameron as we know that to make material changes in a business, you need far more than 50% of the vote to win change. This economic decision is no different than a typical business requiring 2/3's of the vote or even more. Now we have the results of cities in the UK wanting to stay and the rural areas wanting to leave. I'm not sure that should be the criteria for leaving the EU. My personal opinion of course!

Let's let this blow over and resume our rally in BBRY. The split will take 2 or more years and Cameron isn't leaving until October, let's get back to common sense investing this afternoon!

You bring up a good point about rural areas wanting to leave and the inner cities wanting to stay but this highlights the exact reason why they wanted out so bad. They believed the rural areas were being shafted and weren't benefiting from the EU what so ever and that they were paying for the inner cities to benefit from the EU. I don't agree with your 2/3 point but that's just a matter of opinion. This vote isn't the end, I now think we will see Scotland and Northern Ireland try to break free of the UK and also other countries will try to pull out of the EU. I might add that the refugee crisis was horribly handled by the EU and is a major reason for the BriExit

[jake simmons3]

@Jake Simmons


Well no really. US dollar will be stronger.

What i meant was that now that EU's future is unclear I see a lot of money leaving those markets because of the insecurity and uncertainty and putting it into a more stable market like the US. Just my 2 cents.

[Dunt Dunt Dunt]

I believe Chen said that the device with the keyboard would be more expensive than the one without. Not that he was building a mid to high end device.

Actually in the Bloomberg interview Chen stated the later released PKB would be the lower end of the two... which is not what I would have expected.

Don't remember where he said mid-high end phone. But it's clear from the Bloomberg there is a difference between them.

And Chen also stated that while the focus was on enterprise, consumers would be able to get them most anywhere. So the idea of cutting out the retail markup isn't going to happen, at least not for consumers.

[Superfly_FR]

Brexit : two thoughts.
1/ Compensation chambers ... if the EU central bank take them back, this will hurt.
2/ Immigration : now UK is left alone and their frontier is Dover (UK), not Calais (FR) ... "we" (FR) may not play the reservoir anymore.

Finally : it's at least 2 years before something can be decided UK side and at least the same before the papers are signed with EU ... if ever.

[bbjdog]

Can we please stay on topic! LMAO

I would prefer a Brexit picture of Corbu girlfriend! Lol

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[randall2580]

Will we see these next (stolen from a Tweet I read today) :

Grexit.
Departugal.
Italeave.
Fruckoff.
Czechout.
Oustria.
Finish.
Slovlong.
Latervia.
Byegium.
EU shrinks to Germlonely

Its Friday, thank goodness. In my neck of the woods we'll be passing the Yuenglings very soon!

[bbjdog]

I think you are getting the Euro soccer championship mixed with the current topic. LMOA

Cheers mate!

[EchuOkan1]

Sounds good. I stopped buying shares a while back, but have not sold any of them to hopefully break even at the end. =0)

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[kadakn01]

Update on short interest
As of 6/15/16 ------ 55.1M
As of 5/31/16 ------ 59.5M

Decrease of 4.4M

Posted on my Priv

[bspence87]

As today is our "national" holiday, I wonder if I would be allowed to post an OT picture taken here, in Mtl...

Cheers all!

Wow! Finally, something perky on such a somber day.
She's incredible! ! (<B.<B)

[Superfly_FR]

I refrained to look at the SP today and finally went there after the bell.
We did not-so-bad as I can see we opened straight to the final value, digged a bit lower but curved up to stay flat.
We took the Bxit but, that's it. I wish I had some � to ride ...
Have a great weekend gang, off the screen mostly, stay cool, safe and may the (bright) force be with you !
SF

[Superfly_FR]

[info]If you have issues regarding moderation, either soft (editing, merging and so on) or more straightforward, please use private message, as per our rules and guidelines. If you don't know who to ask; PM me , I'll make the follow-trough.
P.S: for soft-modding, you just have to look who edited your post at the bottom of it.
Thanks ![/info]

Additionally, please remember we have to remain S(afe) F(or) W(ork) and ... well, that's the way it is.

[BanffMoose]

Where are the social justice warriors when we need them?
BlackBerry discrimination!

Every time BlackBerry announces something that should make the stock rise, someone has to tank the entire market and take BlackBerry down with it!

Thanks UK, you're on my list! :rotfl LOL

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[Bacon Munchers]

[QUOTE=Corbu;12480829]Radar:
[url=http...[/QUOTE]



Thanks again Corbu.

Just a quick one guys. I will be Consulting for a client that has a fleet of trucks accross Canada and the US, and ventured accross this link while gathering a case:

http://www.qnx.com/news/pr_4185_1.html

Judas Priest! I didn't realize how little I knew about where QNX goes.
Really cool stuff. Check it out.

[DaSchwantz]

Get ready for a massive OT ...
Unless if you consider that's the first time I will publicly outclass my PRIV against BB10 (more to come, elsewhere in the forums).
Guys, this device makes unbelievable (unseen by me) pictures and videos if you give it a little attention (only playing with it for a short while).
Shall the next mid-range device offer the same level ... "Roar", I say.

So, for you (and please, do not distribute this link), loyal gang members, here's a little gift from a place in the Free World !

P.S: don't forget to switch HD on !
P.P.S : This video is mostly zoomed 80-100% (seated maybe 60 meters away fron the scene) and I played a bit with zoom, focus and brightness. Sort of torture test for a camera (hopefully not leading you to seasick !) - PLAY IT LOUD AND FULL SCREEN !!!

I love Neil Young live shows...did he do an acoustic set?

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