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"The Company expects operating expenses to increase in the second quarter of fiscal 2017 compared to the first quarter of fiscal
2018, as the recovery of legal expenses in connection with the Qualcomm arbitration award will not recur."06-26-17 09:39 PMLike 3 - OK guys...
So, as promised, here is a summary of the information we were able to gather earlier today.
Because of the format, it was not possible to get all of your specific questions answered. Apologies for that. However, what I suggest is you go through those notes and formulate a new series of complimentary questions if you see fit. We will then attempt to have those answered.
How's that for service?
Here you go...
Most questions they got were around revenue, Margin and Opex.
Regarding revenue, while it was down year over year, it was really non gaap vs. gaap, as they said on call, GAAP was 12% growth and NON GAAP was a decline and a fair amount of that decline was moving customers from former perpetual licensees on GOOD technology that had not yet been amortized to a recurring model because they like the suite of products. However, the billing was up double digit in Q4 and just below double digit in Q1, so that business is quite healthy.
Regarding margins (67%), do they still believe they can get over 70% for the year. The answer is YES, as the device revenue is going away and the SW margins at 80%. SAF has product cost with it, hence lower SAF means higher SW margins going forward.
Regarding OPEX, people liked the decline quarter to quarter of 32M; 16M was a swing from legal costs going from 14M to negative 2M in Q1 that just ended (not likely to continue), but there will be an uptick from here in the high 150M range, as they hire more and for related expenses.
Negative cash flow of -72m, the payables were down 52m, clearing up some of the device pieces, and they did a better job of collecting revenue in the prior Q, hence the 27M they booked in professional services. In Q2, they see that number becoming smaller and moving into positive direction for the second half of the year, and they are still guiding for full year positive cash flow excluding the QCOM money.
Fedex: they expect to have the entire company by year end of 2017 or so. They replaced internal products.
RADAR: additional deals are coming. Of the 4 or 5 they are testing they are moving to full customers and they are signing up more. However this is where they need additional sales support to get more deals.
Share buyback: is essentially to placate shareholders, and from the call it seemed clear, that it will be a half-baked effort. They wouldn't clarify where the stock price would have to be to buy more or less shares. They gave a long winded answer to allocate capital where they can add value. We think it will be towards an acquisition to drive returns.
QNX: they have sufficient resources and sales to grow, as well as EMM with acquisition of GOOD, as they have hired extensively there. With respect to RADAR, they have not. However this was due to following:
- people (shareholders, etc.) have asked them if there really is enough of a market there?
- the RADAR team is too small to do both recruiting and sales. Their goal is to be number one in the industry
Type of potential acquisition: would be RADAR-related to help fuel growth as while the adoption rate is slow, this will move the needle in ways that hiring another dozen salespeople will not. We continue to speculate that it could be a company that has an installed customer base, like IDSY or similar, however this is a personal guess and nothing that has been confirmed or even discussed by anyone at BBRY.
Royalties from HW: result from meeting minimum requirements, but moving forward in the 2nd half it could be a larger contributor as it will become earned royalty and thereafter will be significant.
QNX having the ability to support telematics, ADAS, hypervisor related to security, Ford will make BBRY the dominant player in their vehicle lineup and they hope to have a European company (not German from what we have been able to infer).
QNX: their presence in so many tier 1 will move the needle and allow them to capture and maintain #1 status.
QNX: they will see growth this year followed by years of growth, and an uptick as well in the growth rate.
R&D: downtrend was a result of the consolidation of EMM historical acquisitions onto one platform, GOOD and BES onto one platform. Nothing to do with not investing in RADAR and QNX.
An engineer by nature, John has always spent more on engineering expense as a percent of the revenue they get: "if you don't have product you don't have anything to do"
M&A: can they get a good price on an acquisition today? If they bought something that added top line growth and contribution to move RADAR very quickly; they won't spend 7x revenue to get that though.
Thanks to those who need to be thanked.06-26-17 11:34 PMLike 29 -
- Hello Corbu Thank you so much for being so efficient and this great summary. You are a great asset to the company! With my question R&D love JC reponse engineer by nature! Fantastic to see that innovative spirit.
Thanks again06-26-17 11:52 PMLike 7 -
- Morning all from Spain
https://twitter.com/ACInvestorBlog/s...76986670202880
Let's Rock N Roll
Have a good one today!06-27-17 02:48 AMLike 0 - OK guys...
So, as promised, here is a summary of the information we were able to gather earlier today.
Because of the format, it was not possible to get all of your specific questions answered. Apologies for that. However, what I suggest is you go through those notes and formulate a new series of complimentary questions if you see fit. We will then attempt to have those answered.
How's that for service?
Here you go...
Most questions they got were around revenue, Margin and Opex.
Regarding revenue, while it was down year over year, it was really non gaap vs. gaap, as they said on call, GAAP was 12% growth and NON GAAP was a decline and a fair amount of that decline was moving customers from former perpetual licensees on GOOD technology that had not yet been amortized to a recurring model because they like the suite of products. However, the billing was up double digit in Q4 and just below double digit in Q1, so that business is quite healthy.
Regarding margins (67%), do they still believe they can get over 70% for the year. The answer is YES, as the device revenue is going away and the SW margins at 80%. SAF has product cost with it, hence lower SAF means higher SW margins going forward.
Regarding OPEX, people liked the decline quarter to quarter of 32M; 16M was a swing from legal costs going from 14M to negative 2M in Q1 that just ended (not likely to continue), but there will be an uptick from here in the high 150M range, as they hire more and for related expenses.
Negative cash flow of -72m, the payables were down 52m, clearing up some of the device pieces, and they did a better job of collecting revenue in the prior Q, hence the 27M they booked in professional services. In Q2, they see that number becoming smaller and moving into positive direction for the second half of the year, and they are still guiding for full year positive cash flow excluding the QCOM money.
Fedex: they expect to have the entire company by year end of 2017 or so. They replaced internal products.
RADAR: additional deals are coming. Of the 4 or 5 they are testing they are moving to full customers and they are signing up more. However this is where they need additional sales support to get more deals.
Share buyback: is essentially to placate shareholders, and from the call it seemed clear, that it will be a half-baked effort. They wouldn't clarify where the stock price would have to be to buy more or less shares. They gave a long winded answer to allocate capital where they can add value. We think it will be towards an acquisition to drive returns.
QNX: they have sufficient resources and sales to grow, as well as EMM with acquisition of GOOD, as they have hired extensively there. With respect to RADAR, they have not. However this was due to following:
- people (shareholders, etc.) have asked them if there really is enough of a market there?
- the RADAR team is too small to do both recruiting and sales. Their goal is to be number one in the industry
Type of potential acquisition: would be RADAR-related to help fuel growth as while the adoption rate is slow, this will move the needle in ways that hiring another dozen salespeople will not. We continue to speculate that it could be a company that has an installed customer base, like IDSY or similar, however this is a personal guess and nothing that has been confirmed or even discussed by anyone at BBRY.
Royalties from HW: result from meeting minimum requirements, but moving forward in the 2nd half it could be a larger contributor as it will become earned royalty and thereafter will be significant.
QNX having the ability to support telematics, ADAS, hypervisor related to security, Ford will make BBRY the dominant player in their vehicle lineup and they hope to have a European company (not German from what we have been able to infer).
QNX: their presence in so many tier 1 will move the needle and allow them to capture and maintain #1 status.
QNX: they will see growth this year followed by years of growth, and an uptick as well in the growth rate.
R&D: downtrend was a result of the consolidation of EMM historical acquisitions onto one platform, GOOD and BES onto one platform. Nothing to do with not investing in RADAR and QNX.
An engineer by nature, John has always spent more on engineering expense as a percent of the revenue they get: "if you don't have product you don't have anything to do"
M&A: can they get a good price on an acquisition today? If they bought something that added top line growth and contribution to move RADAR very quickly; they won't spend 7x revenue to get that though.
Thanks to those who need to be thanked.
1. QNX: During the Q 4 ER JC said that he was in talks with German automakers. Since you wrote that the possible next Ford like deal with an European auotmaker will not be with a German automaker, is it correct to assume that the talks with ther German automakers have ended? That would be really sad, because getting VW, BMW or Mercedes on board like Ford would be huge boost for QNX.
2. QNX: Is it an option for BlackBerry to give automakers using QNX and OTA the infotainment package for free? That would help tremendously in the fight against the "free" AGL infotainment solution.
3. RADAR: IDSY would also be my guess for a good strategic fit, since they have (as far as I now) already WalMart as a customer and with a current market cap of $ 90 million it seems also affordable
4. BBM consumer: what are the revenue expectations from BBM consumer for fiscal 2018 and 2019?
5. BBM consumer: is there an IPO planned for the company and if so would BlackBerry get shares for bringing it the BBM IP assets or would it keep the current licensing model?
Thank you very much!06-27-17 03:19 AMLike 3 - I think the best part if the FedEx deal, is that then you hopefully have their competition, UPS etc get it as well to remain competitive06-27-17 06:09 AMLike 9
- And thanks to BlackBerry and QNX:
Ford Motor Company (NYSE: F) finally has something to crow about on the quality front. The Blue Oval's namesake tied for fourth (and second among non-luxury brands) in the latest edition of J.D. Power's Initial Quality Study. The Ford brand didn't just beat both of its old Detroit rivals. It also outscored all of the Japanese brands -- including vaunted Toyota (NYSE: TM) .
It's the best showing for Ford in the 31-year history of the report.....
The Blue Oval has come a long way. What has changed for Ford? A lot of things, but perhaps the most consequential change was Ford's decision to scrap its troubled MyFord Touch touchscreen system in favor of an all-new and much more robust system, called SYNC 3.
Ford gave up on the aging Microsoft operating system that had powered MyFord Touch in favor of a much more robust operating system from QNX, a subsidiary of BlackBerry06-27-17 07:05 AMLike 9 - From the Security files:
Report: 2.5 million people fell victim to ransomware last year, up 11% from 2016 - TechRepublic
"Mobile ransomware, in particular, continues to be a concern, with 218,625 mobile Trojan-Ransomware installation packages detected in the first quarter of 2017 alone—3.5 times more than the previous quarter, the report found. However, the total number of users targeted by mobile ransomware fell by 4.6% between this year and last year, the report noted." "Despite a small reprieve, the mobile threat landscape is still arousing anxiety, as criminals target nations with developed financial and payment infrastructures," according to a press release announcing the report. "Developed markets not only have a higher level of income, but also more advanced and widely used mobile and e-payment systems that can be easily compromised."
https://www.nomoreransom.org/06-27-17 07:13 AMLike 10 -
Posted via CB1006-27-17 07:36 AMLike 5 - OT:
Many firms hit by global cyber-attacks - BBC News
Wish such problems would correlate with an increase in BBRY sp...06-27-17 09:21 AMLike 6 - Have you guys read this: https://seekingalpha.com/article/408...disappointment
The article postulates that QNX + Radar only grew by $1M last fiscal. Any idea if that is accurate?06-27-17 01:20 PMLike 0 - I like SkyBitz over IDSY. Investors are at the end of their 5 year cycle. Would definitely be a negotiation.
Posted via CB10morganplus8 likes this.06-27-17 01:46 PMLike 1 - This posted on Yahoo by Raju
remember still there are 3 open lawsuits from BlackBerry.
1. Blackberry-Nokia : 1.3 billion ? + ongoing royalties
2. Blackberry-BLU : 700 million ? + ongoing royalties
3. Blackberry - Avaya : 2.5 billion ? (this might not bring money to blackberry as Avaya is in bad position. )
I haven't verified them but it would be a nice addition to cash.
Posted via CB1006-27-17 02:08 PMLike 9 -
Special thanks to Corbu, excellent reading there, even if its not always what we want to hear. The FedX contract sounds even better then first blush.
In "other news" I didn't want the stock below $ 10.16/shr which is its 50-dma so let's pump that one up for the close (not looking good for that close). Thanks again everyone!Last edited by morganplus8; 06-27-17 at 02:55 PM.
06-27-17 02:44 PMLike 11 - Seems like our friend has been working overtime, lately...
Morgan Stanley
James E Faucette
June 27, 2017 07:47 PM GMT
BlackBerry Ltd
Waiting for the Light to Turn
Stock Rating Industry View Price Target
Equal-weight Cautious $10.00
Achievement of FY18 software revenue targets will need to come from a variety of sources, as individual drivers of growth are either too early, too small or lacking enough momentum on their own.
Targets look achievable by combining all drivers into software. BlackBerry set out a goal of 13-15% software growth (non-GAAP), to be non-GAAP profitable for the full year and cash flow positive. BlackBerry expects software and services growth to be driven by four factors: 1) unified employee management (e.g. enterprise software and associated professional services), 2) embedded software (e.g. QNX / autos), 3) IoT (e.g. RADAR), 4) technology licensing (e.g. monetization of IP). Given the movement of professional services and hardware licensing into the software & services category, this can mean that underlying software does not need to grow at double digit amounts to achieve targets. We currently estimate "Enterprise Software & Services" to be about flat Y/Y on a non-GAAP basis (as impact of Good deferred revenue rolls off), and for growth to be driven by "Licensing, IP and other" and "Blackberry Technology Solutions."
Auto is biggest opportunity for growth, but content growth numbers would seem difficult to achieve in typical investor time frame. BlackBerry sees significant growth coming from autos in coming years as cars become more connected and the need to secure, track and manage these essentially large mobile devices grows. Their QNX platform today has led the market in enabling "infotainment", but there are other opportunities in telematics, safety, cybersecurity, over-the-air transport and portal management (contributing upwards of 4-5x the content as today). However, similar to mobile devices and EMM platforms, auto companies will increasingly expect much of this to be included (e.g. ASP will not be 4-5x) or will develop much of it themselves. Additionally, given auto technology is trying for an end goal of total automation, the timeline to incremental add-ons could be slow until other priorities are achieved (e.g. automated cars a 2020+ event). While near-term opportunities like Radar (IoT platform) could generate near-term rev (though the company cautioned FY19 much bigger year for than FY18), we think sizeable QNX growth is a longer-term event and remain on the sidelines.
Adjusting estimates as transition away from legacy hardware revenue continues. We lower our FQ2 and full year revenue estimates to reflect lower device sales (and device licensing contribution). We have reflected a smaller share count from the impact of the 31mm share repurchase announced Friday (~6% outstanding float). Revenue declines is offset by continued expense management and expectations for improved gross margins, resulting in Q2 and FY18 rev. / EPS of $217mm / ($0.02) and $889 / ($0.01) from $255mm / $0.00 and $994mm / ($0.02) respectively.
Remain EW with $10PT. Remain EW as balanced QNX view built in. We value the total BlackBerry software business at 3.5-4.0x FY19 revenue (in line with software peers). Our estimates assume QNX's connected car and ADAS platform achieves 7-8% light vehicle penetration on expanding dollar content, which is below the bull case but could also prove optimistic should efforts by auto OEMs and other technology providers result in pricing pressure and share gains that fail to materialize.06-27-17 03:10 PMLike 6 -
- Nice posts, very interesting. ! We could see IDSY go out at 3.5 x revenues but its too bad we can't find out the metrics for SkyBitz. It might make sense for Chen to look at all companies in the space as he has the funds to buy revenues and reduce costs in every case. Wouldn't it be great to hear we control that market too? He'll have to decide if he wants to compete by taking market share away over time, or whether it makes more sense to take the assets, people and structure and make it BlackBerry right up front.
Special thanks to Corbu, excellent reading there, even if its not always what we want to hear. The FedX contract sounds even better then first blush.
In "other news" I didn't want the stock below $ 10.16/shr which is its 50-dma so let's pump that one up for the close (not looking good for that close). Thanks again everyone!
OmniTRACS
SkyBitz
Orbcomm ORBC (too big to swallow)
Spireon
Wikipedia has a good description of SkyBitz and Orbcomm.
Posted via CB1006-27-17 03:54 PMLike 9 - Sorry Morgan, Blackberry had to fallow the market and take a nose dive. Lol
Corbu you are working to hard! I will give you an extra long weekend for you to recover. Lol06-27-17 06:24 PMLike 7 - Thanks mate!
I shall rest once we are all where we want and deserve to be with this stock.
Apologies for the fact that some answers may not have been to your liking, Morgan. Which I perfectly understand. Let's hope things turn out well nonetheless!
I'll take this opportunity to thank everyone here who contributes to our collective effort. I am but a small cog in this whole thing. It is quite remarkable what can be accomplished when we pool our ressources and thoughts.Last edited by Corbu; 06-27-17 at 07:05 PM.
06-27-17 06:32 PMLike 12
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