[Corbu]

BlackBerry’s Financial Results Continue to Impress

Rob Enderle

[Corbu]

More background from BofA

BofA/ML
Daniel Bartus
Research Analyst

BlackBerry

Five reasons we remain cautious

Reiterate Rating: UNDERPERFORM | PO: 8.50 USD | Price: 9.31 USD

1) Stock can’t hold the strength

We revisit our Underperform thesis (details on Pages 3-7) and highlight five reasons we see to remain cautious. First, Blackberry has beaten Street expectations each of the last seven quarters, yet the stock has declined 6% since the 1Q18 results reported in June 2017, vs the SP500 up 18%. In each case, the low quality of earnings has weighed on the stock following the initial positive reactions (see Exhibit 1). We expect similar trends this time as investors digest the numbers.

2) Tough comps for Licensing going forward

IP Licensing has been the main area of outperformance, up 46% YoY in 2019, while software sales declined 3%. We believe Licensing will face a more challenging environment going forward. In our view, the $286mn FY19 is likely the peak level, which should decline over time and stabilize closer to the $170mn annual recurring base.

3) Enterprise trends most important, yet especially weak

The most important segment, Enterprise, is also the weakest segment, down 14% YoY in FY19. Blackberry’s SaaS revenues and sticky government relationships are captured in the Enterprise Software segment (40% of sales), yet the declines point to lingering issues in the company’s turnaround efforts. The declines are also partly due to 606 accounting changes, yet we do not see such a negative 606 impact across our coverage.

4) Cylance likely dilutes model through FY21

Cylance, Blackberry’s new acquisition, is facing revenue growth deceleration, from 90% YoY in its FY18 to ~35% growth in 4Q19 per our estimate. Management expects Cylance to grow 25-30% in FY20 to ~$217mn, and we see a risk that Cylance remains dilutive to EPS well into FY21 given high costs and competition in endpoint security.

5) Valuation is a premium vs peers

On valuation, we compare Blackberry mainly to CBLK, SYMC, MOBL, BOX, and FEYE, with the peer group trading in a range of 2.1x-3.8x EV/Sales. We note Blackberry’s stock trades at a premium 4.2x our CY20E EV/S, adding to the risks, in our view.

Five risks that keep us Underperform

1) A lot of beats recently, but then stock falls

First, we highlight that in each of the Blackberry’s last eight quarterly reports, the stock has spiked on an initial headline beat across the board (with the exception of June 2017 when results were mixed). In each example, the stock spiked on the initial trading reaction and then fell either all pre-market, sometimes the same day, or over the following weeks. We do note some anomalies, such as January 2018 when a Baidu/QNX partnership helped the stock recover once again 13%+.

In our view, the negative sell-off following results is likely due to the weakness under the surface despite positive headlines. Another issue is that the quarterly outperformance has typically been versus exceptionally low expectations bars. For instance, throughout FY19 and again now in FY20, management has guided for a strong IP Licensing year yet anticipates that strength tends to be pushed out a few quarters, which sets up a consistent pattern of outperformance versus low Street IP Licensing expectations. This happened once again in 4Q19 when all of the $10mn revenue outperformance could be attributed to IP Licensing sales of $99mn versus Street expectations for $72mn in the quarter.

2) One-time Licensing drove the FY19 outperformance

In both FY18 and FY19, the standout segment for Blackberry was IP Licensing, and we see risk that this segment will decline from a FY19 peak. We attribute the segment’s success to Blackberry shifting the handset/hardware strategy to a brand licensing model and shifting the IP Licensing model to a third party, Teletry.

On a quarterly basis, Blackberry now receives a run-rate of $40-$45mn recurring licensing sales. We estimate that roughly half of this recurring base is from the brand licensing, with some from BBM licensing, and the other half is from ongoing payments from Teletry and smaller IP deals.

We believe that the majority of one-time payments on top of the recurring base are also from Teletry striking deals, primarily with smartphone vendors. While we view the outsourced strategy positively, we are concerned that the sales in the segment may decline from a peak level of $286mn in FY19 toward the recurring annual base of $170mn. In our view, it is better for Blackberry to opt for recurring IP deals vs one-time, and reset the licensing estimates at a more realistic ongoing base.

3) Enterprise closes out FY19 on a weaker note

While IP Licensing was the standout segment in both FY18 and FY19, the core business, Enterprise Software & Services, was the weakest area. Again in 4Q19, we note that the Enterprise segment underperformed our/Street estimates by a wide margin. The weakness was a surprise, in our view, given that Street estimates had not been revised up following the close of the Cylance acquisition on February 21, 2019.

If we exclude the $3mn revenue from Cylance in 4Q19, trends were even weaker, down 20% YoY and 7% QoQ in 4Q19. While ASC 606 accounting changes help explain some of the weakness, we note that the 7% QoQ decline is normalized for 606 and is particularly weak when considering the seasonal strength typical in Blackberry’s 4Q.

4) Cylance may be dilutive into FY21

We believe guidance for FY20 was also lackluster despite the incremental growth expected from Cylance. Management expects Cylance to grow 25-30% YoY in FY20 off of a base of $170mn in FY19. This implies roughly $217mn for Cylance revenues in FY20 at the midpoint of the guidance range. However, Cylance is also expected to increase the cost basis by $300mn, implying a dilutive impact of $83mn in FY20E.

Management expects Cylance to be accretive in FY21, but we see some risks, namely: 1) Cylance growth decelerated sharply from 90% YoY in the 12mo ended April 2018 to mid-30% in Blackberry’s 4Q19, per our estimate, 2) we see risk that the DELL partnership was significant for Cylance (over half of Cylance’s licensed seats are sold through OEM partners including DELL, per Gartner) and may be at risk given DELL’s new partnership with a competitor, and 3) endpoint security is one of the most intensely competitive areas in security, requiring a steady level of investment, in our view.

5) Valuation is a premium versus peers

On top of the risks and weakness under the surface, we flag that Blackberry’s stock trades at a premium to its closest peers, in our view. Table 6 shows the peer valuation average at 3.1x CY20E EV/Sales and the median at 3.3x. Per Bloomberg estimates, Blackberry’s stock trades at 3.9x, and we calculate 4.2x based on our estimates.

We believe the stock remains unattractive on a sum of the parts basis, as well. Especially when considering that IP and Brand Licensing may decline to at least $170mn over time, we believe the segment warrants a low sales multiple on CY20 estimates. QNX is the most volatile variable as the multiple is more dependent on momentum in the autonomous driving market. Our Bear multiple for Enterprise ex Cylance is mostly in line with MobileIron, our Cylance Bear multiple is in line with Carbon Black, and other BTS represents antenna technologies and some encryption services which are difficult to compare and value, in our view.

Price objective basis & risk / BlackBerry (BB)

Our $8.50 PO is based on roughly 3.7x EV/S on our CY20E software sales. This multiple is in line with the one accorded to similar low growth/challenged software/services companies and supported by our sum-of-parts valuation.

Upside risks to our price objective are: 1) Success of new product launches, 2) Restructuring efforts, asset sales, or transformative M&A, 3) large unexpected IP deals.

Downside risks to our PO are: 1) Slowdown in smartphone or enterprise software market due to macroeconomic weakness, 2) Margin pressure from SAF decline and low software growth, 3) Competitive risks from Apple, Google (Android), Samsung, VMware, Microsoft, and more, 4) Increased investment required to support new products, and 5) Security breach and reputational risk.

[Seadog83]

Well I was out of town so didn't have access to much info aside from a quick glance last sat after the earnings. Once again I was blown away, best earnings in years, finally thought we were over the hump, then once I got home this weekend, and had some time to digest it and look at the stock performance, again over the last week and read a few reports, I was thoroughly disgusted - not in the company which is more solid than ever, but the stock and reaction of the market, which admittedly BB has little to no control over.

What the hell does WS want? The company at each turn is better and better, finally growing YoY, profitable, finally put their cash to use, and then you get garbage like the above ML report looking for a grey cloud in a silver sky.

Cylance isn't immediately accrediative to the bottom line? So it's value is 0 according to them? What about MOBL, TWLO, SNAP, LYFT or a thousand and one other companies which aren't making a profit today, but are setting themselves up for great things down the road that have absurd values?

Licensing will drop to 170m from Chen's guidance of $270m? Why? Because. That's why. It's like they've also taken for rote that none of their current lawsuits will result in anything but lawyer costs, and nothing new is in the pipeline despite a world class IP team.

Why a ratio of 4.2? You value it like a pure enterprise management play like MOBL, despite the fact that the majority of revs come from other, high margin areas like software and licensing? The same areas which are growing most rapidly? Why not put the whole thing at a ratio of 20 given that that's where TWLO is, and they have similar components?

They only beat because of 1-time items? So the exact same thing you said in something like 15 of the last 20 quarters. Doesn't seem very 1-time to me.

Again, apologies for the rant, but I'm frustrated as hell with this stock, and as Corbu said the constantly moving goal posts of WS. It's like a company that according the ML can simply do no good. How about 3 years down the road when it's 2b in revs, profit of 500m, still growing at 20% and still at $10? I'm sure they'll say something along the lines of "The P/E of 10 for such a growing company indicates there are very serious troubles below the surface. Strong sell"

[Hazo]

Couldn't agree more, seadog83!

[W Hoa]

How about 3 years down the road when it's 2b in revs, profit of 500m, still growing at 20% and still at $10? I'm sure they'll say something along the lines of "The P/E of 10 for such a growing company indicates there are very serious troubles below the surface. Strong sell"

I'm pretty sure nobody would be listening at that point. But until then, it takes a while for the unfolding narrative to take hold.

[EchoTango]

Again, apologies for the rant, but I'm frustrated as hell with this stock, and as Corbu said the constantly moving goal posts of WS. It's like a company that according the ML can simply do no good. How about 3 years down the road when it's 2b in revs, profit of 500m, still growing at 20% and still at $10? I'm sure they'll say something along the lines of "The P/E of 10 for such a growing company indicates there are very serious troubles below the surface. Strong sell"

Like I've said many times.....join the que.

The bottom line for me (and I suspect for Wall Street) is all the wonderful plans announcements, acquisitions and earnings call optimism don't seem to be translating into the explosive growth everyone is expecting. I say "expecting" because that's what the management is signaling with every press announcement and new venture that this will have a major impact of earnings that never seems to materialize. Think of Good Technologies and what effect they have today ?

Now, don't mistake my observations for the typical reflexive bashing of the company management since the share meltdown over the handset debacle, but rather as a sober look at the current portfolio and its relative performance in recent quarters. We're slowly moving from slight EPS losses to slight gains in a methodical slow pace which I suspect is Chen's plan. I believe he wants to be known as the predictable turtle as opposed to the unpredictable hare. Wall Street loves hares but more importantly in BB's case the M&A market LOVES turtles.

In closing, I suspect we're seeing the box being carefully packaged, wrapped in bright paper and a nice big bow in the offing for someone with very deep pockets and a gleam in the eye.

[morganplus8]

Morgan,

I must thank you for taking the time to write such a detailed response and sharing your thoughts with all of us. There are so many angles to this. Let me share a few of my own views, fwtw.

As you probably know, I was referring to BB from the point of view of a long-term holder who (like others here) has stuck through thick and thin with this company and who has seen the goalposts constantly being moved back, especially in the last 2-3 years. Management sat on that cash for the longest time and we now have a better idea of what that investment holds for us down the next 2-3 years. I would have liked to be really impressed. I can't say I am. And, part of me thinks "We've seen that movie before...".

I do not see the SP moving up in a consistent fashion for the next 12-24 months. I do not see the market "turning around" when it comes to this company. It is now well-run, making a bit of money, it has repositioned itself, it has some growth prospects, etc. But, the message is still not getting across. Or, worse, it is and no one cares.

Heck, I purposely did not post the comments from the folks over at CNBC, last Friday, where they were still ridiculing BB as a dying phone making company, etc. Total and complete ignorance. But, BB must assume some of the blame for not having - still - managed to convey that message to the masses. Granted, it is probably doing some fine work with governments and the various verticals but I can't refrain from thinking that something else should be (have been) done. It's not as if they have not had the time to do so.

It could be that things are the way they ought to be. The market knows better and has decided how much this company is worth. It is I who was wrong, who believed that it could do better, that the growth prospects were more solid, that - for example - Radar would have yielded more solid results by now.

This is not a knock against JC or anyone else. I am sufficiently experienced, realistic and humble to know that I would not have been able to achieve half of what he has done. The fact that BB is still around is, in itself, quite a prowess and I tip my hat to anyone who has contributed to this turnaround.

Still, the facts remain. We are basically at the same level as we were 5 years ago. There does not seem to be any momentum growing. No one seems to have rushed in to buy shares after last Friday and the pattern is still there: solid trading on the day of the results and then back to the slow downward spiral... We seem to be destined to stay around 9.50 for the foreseeable future... No major analyst change and the most positive ones (TD) have no effect.

Are we collectively mistaken in assuming that this company has more solid growth prospects than it actually has? We now know of what is in the plans for Cylance over the next two years or so. We are told that Spark will be made available in September. Will Spark be another Radar? What else? Enterprise SW's guidance if for 13% growth, BTS is 16%, licensing was excellent (and, btw, where would we be without that vertical?) but we are being guided for a slight reduction in FY20. Any catalysts or game changers? I don't see any.

So, yes, I am frustrated. In the end, you are the one who has had the proper strategy for the longest time, Morgan. Well done! That covered call buying strategy is the only reasonable and pragmatic thing to do. I must confess to not having the knowledge and the experience to do this. Maybe it's about time for me to do my homework, actually learn something and get going along those lines.

It won't change my long-term view and my take on the past but it might make things more bearable. If ever you have any practical ideas as to where I should turn to learn about doing this, I would appreciate it. As for buying options, I have failed too many times already. That's out of the question for me anymore.

All the best,

Hi Corbu!

So sorry for not responding to your post here, I have been crazy busy, always happens this time of year. I would be happy to point you in the right direction regarding options strategies. I'll put something together soon and I'll try to make myself more available in the weeks ahead.

There are some great observations on this thread lately, I'm reading them, its just that I don't have the time to respond to them right now. The stock itself has backed all the way back to its 200-dma, found some solid support there with a nice reactive bounce yesterday.

Let's get something going here in the days ahead. Take care.

[Corbu]

Many thanks, Morgan!

No rush. Be well.

[morganplus8]

Thank you Morgan for educating the forum over all these years. In the past I've really just either traded on ERs and seldomly based on RSI, and even with just that I've not lost money on BB. I would like to give covered call writing a try but one thing I've been wondering is how to come up with the strike price?

Also do you also employ the same strategy with your other positions like SPHS/EYPT, or are they too "volatile" for that? (edit: I just looked up both stocks and saw the Bid column all empty under Calls, so I suppose that means no one is interested in buy calls for these two. Is that due to recent news that made them bearish? Or is that the way it is with small cap stocks?)

Thanks in advance...

So I'm going to take a quick run at this one as I think I can slash it down in record time! I'm extremely busy lately, this time of year people come out of the woodwork to ask me questions regarding estate settlements, taxation, trading etc., its crazy.

As for my call option writing strategies, no, I don't sell calls on small, highly leveraged stocks like SPHS, EYPT etc. Those are strictly for capital gains. All of the small cap trades fall under a "buy and hold" strategy, I review everything I can about the company such as news, earnings, etc., I check to be sure their story hasn't changed in any negative way and buy more. The money from Call Writing Programs go directly into those stocks. I couldn't tell you what my cost averages are in those as as I believe that its the development of the company that is far more important then the current price of the stock.

My option writing program stems from my longtime desire to own 3 or more very large positions in companies that I know will be around for many years to come. I then create a writing program for BB, ACB, ECA etc that generates repeatable revenue streams while allowing me to forego claiming those gains annually on my income taxes. I'm allowed to reduce my Adjusted Cost Basis of my initial investment by selling calls so I don't have to report those gains in any given year. So there is a reason why I don't sell the stock as it creates all kinds of problems for me each tax season.

As for determining strike prices, I make use of our simple market indicators to decide if the stock has gone far enough up to merit a call writing program. The things I look at atreRSI, Bollinger Bands, the news that drove it, the onside volume, a small collection of these kinds of indicators that many are using here. The first rule of thumb is to figure out if the stock gained enough not to **** me off, if I lose that position. If the TA indicates overbought, the stock is surprisingly up on any given day, and the charts are screaming "profit now" I'll then assess the downside possibilities to determine whether I want to sell slightly in-the-money strike priced calls. If I think there is more good news coming, I'll gamble and write out-of the-money calls. For instance, with BB, I'll write a slightly in-the-money call as the stock tends to over shoot its correction and dive a bit deeper into the red. In the case of ECA and ACB, I'll write out-of-the-money calls as they are volatile, but, news propels them higher. Take BB again, if the chart pointed to a sustained climb in the price of the stock, those calls would definitely be written out-of-the-money. News on ACB can come at anytime so they are always sold a buck higher then the current price and I choose my timeline of expiry date the same way by considering what news will be coming down the road.

I'll close by saying that if I get my stock called away, I'll buy them all back by writing naked puts. That way, if I don't get the block of stock assigned to me, I'll continue to write naked puts until I get the amount that I want.

For instance, when BB hit $ 14.50/shr/US last year, I sold out of the stock by writing in-the-money calls against my block, in addition, I shorted 130,000 shares flat out, and, I purchased the entire block back using a naked put option strategy. I understand that this is a lot to digest so I would be happy to break out each comment if you wish.

I'll close by saying that I rarely if ever buy puts or calls outright. I have done that on BB when it gets stupid cheap. Let me know if there is something in all of this that you are interested in. I do apologize for the delay in getting back to you.

[Corbu]

ot:

rarsen, morganplus8, rampagingpanda and 3 others like this.

[smithm565]

Not really worth reading, but these types of articles are what I wish BlackBerry would fight back against. He says they are committing fraud by shifting numbers around on their income statement and cash flow report. Says "This idea was discussed in more depth with members of my private investing community "

Surprise at the end, his disclosure states he is short BB.

https://seekingalpha.com/article/425...-paid-thin-air

Posted via CB10

[smithm565]

Goldman Sachs is ditching its homegrown email app Orbit in favor of those offered by Blackberry and Microsoft.

https://www.businessinsider.com/gold...software-robit

Posted via CB10

[Chuck Finley69]

Not really worth reading, but these types of articles are what I wish BlackBerry would fight back against. He says they are committing fraud by shifting numbers around on their income statement and cash flow report. Says "This idea was discussed in more depth with members of my private investing community "

Surprise at the end, his disclosure states he is short BB.

https://seekingalpha.com/article/425...-paid-thin-air

Posted via CB10

How do you seriously combat seekingalpha? That legitimizes something that most just ignore and take with a grain of salt.

[morganplus8]

How do you seriously combat seekingalpha? That legitimizes something that most just ignore and take with a grain of salt.

When it comes to Seeking/Fool we normally abstain from posting their material here. When we do, it usually comes with a disclaimer. Experienced investors/traders here ignore their "nonsense" for lack of a better word that I can actually publish on this site.

Having said all of that, they aren't much different than any of us giving our own, personal opinion. For me, its easier to ignore all of their comments, but, out of respect on this thread I'll read something that someone I know ... who produces good quality work consistently on this thread ... suggests is important.

I have no idea how far they reach or influence new investors, I'm sure its significant though, so there is a reason to try and curb their "nonsense" whenever I can when I see them referenced. The National Enquirer of investment I guess. GL

[morganplus8]

Let's look at a Covered Call Writing trade for BlackBerry today:

You buy the stock at $ 9.35/shr/US, and you are looking to sell a covered call against it (simultaneously) at a strike of $ 10 for the next 2 months. The premium can be had all day on this strike so you are going to receive $ .35/shr for that trade. Because it is for 2 months, the annualized return is 6 x $ .35/shr of roughly $ 2.00/shr for the next 12 months worth of call writing.

$ 2.00/$ 9.35/shr = an annualized return of 21% if the stock never leaves the original price that you paid for it. If the stock pops to $ 10.00 plus, you are likely to lose the position or have the stock called away from you. In this case, the return is = $ .35 + $ .65 ($10.00 - $9.35 paid to open the trade) Now your return is 10.6% for just 2 months of investment. If you annualize that trade you are looking at substantial returns on your investment. All of this is done at today's level of activity which means you are generating a return on a quiet market day, a day when the stock is barely moving at all and hence the premiums are contracted big time. So timing is important here, try to catch a day when the stock is up 5% or so to claim those huge premiums.

Hope this makes sense.

[rytwjyx]

Let's look at a Covered Call Writing trade for BlackBerry today:

You buy the stock at $ 9.35/shr/US, and you are looking to sell a covered call against it (simultaneously) at a strike of $ 10 for the next 2 months. The premium can be had all day on this strike so you are going to receive $ .35/shr for that trade. Because it is for 2 months, the annualized return is 6 x $ .35/shr of roughly $ 2.00/shr for the next 12 months worth of call writing.

$ 2.00/$ 9.35/shr = an annualized return of 21% if the stock never leaves the original price that you paid for it. If the stock pops to $ 10.00 plus, you are likely to lose the position or have the stock called away from you. In this case, the return is = $ .35 + $ .65 ($10.00 - $9.35 paid to open the trade) Now your return is 10.6% for just 2 months of investment. If you annualize that trade you are looking at substantial returns on your investment. All of this is done at today's level of activity which means you are generating a return on a quiet market day, a day when the stock is barely moving at all and hence the premiums are contracted big time. So timing is important here, try to catch a day when the stock is up 5% or so to claim those huge premiums.

Hope this makes sense.

Thank you sensei Morgan! Trying to remember what in-the-money, out-of-the-money, calls, puts, or a combination of them means, and what the expectation should be for each scenario when you mention it, definitely a lot to digest but it's slowly making sense to me

[W Hoa]

Hope this makes sense.

You've put it as clearly and concisely as anyone could hope to.

Isn't BlackBerry having an investors day tomorrow?

[Corbu]

You've put it as clearly and concisely as anyone could hope to.

Isn't BlackBerry having an investors day tomorrow?

Only thing I see on the horizon, W Hoa, is this:
Upcoming Events
Analyst Summit 2019
Date: Tuesday April 23, 2019

[smithm565]

I would think this announcement just made by the Pentagon has huge implications for BlackBerry moving forward. BlackBerry has been building their relationships with both Amazon & Microsoft, plus the addition of their DC office and existing security credentials in Government and Financials makes them at a minimum, a minor player behind the scenes in this deal. JEDI contract award to be announced in July.

With this, lawsuits, and next ER, they are setting up for an exciting 2nd half.


Pentagon Clears Path for $10 Billion JEDI Cloud-Computing Award

https://finance.yahoo.com/news/jedi-...162028784.html

Only two of the companies seeking the contract remain “within the competitive range” and “will participate further” in the contest, Defense Department spokeswoman Elissa Smith said in a statement Wednesday, without naming the companies. Amazon.com Inc. and Microsoft Corp. have been widely viewed as front-runners among at least four technology firms seeking the award, in part because they have obtained higher-level federal security clearances. Oracle Corp. and International Business Machines Corp. were also in the running.

Posted via CB10

[smithm565]

Pentagon Clears Path for $10 Billion JEDI Cloud-Computing Award

https://finance.yahoo.com/news/jedi-...162028784.html

Only two of the companies seeking the contract remain “within the competitive range” and “will participate further” in the contest, Defense Department spokeswoman Elissa Smith said in a statement Wednesday, without naming the companies. Amazon.com Inc. and Microsoft Corp. have been widely viewed as front-runners among at least four technology firms seeking the award, in part because they have obtained higher-level federal security clearances. Oracle Corp. and International Business Machines Corp. were also in the running.

Posted via CB10

I thought it was worth reposting this to give more specifics on the JEDI - BlackBerry - Cylance - AMZN - MSFT links:

https://investorplace.com/2018/12/bl...rnings-report/

BlackBerry’s Government Deals

As I noted in my November column, BlackBerry’s acquisition of Cylance, which specializes in artificial intelligence-driven cybersecurity solutions, “would enhance BlackBerry’s chances of landing government deals, (since) the government is a big fan of using AI to enhance cybersecurity.” Therefore, after the Cylance deal closes in a couple of months (BB indicated that it expects the deal to close shortly after the end of January), BlackBerry should win even more deals with the government, further boosting BlackBerry’s results and BlackBerry stock.

Last quarter, BlackBerry added an impressive array of U.S. government agencies to its client list. Among the agencies it added were: FEMA, the IRS, the TSA, the Air Force and the Marines.

The Cylance deal could also make BlackBerry better positioned to become a subcontractor on the Pentagon’s $10 billion JEDI cloud deal, since, as I pointed out last month, the Pentagon has already spent significant funds on AI-driven cybersecurity.

Meanwhile, BB is partnering with the two leading contenders for the deal, Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), and the Pentagon obviously trusts BlackBerry’s cybersecurity offerings, since it has already made multiple deals with the company.

Moreover, BB has a close connection to the Trump administration through the company’s partner, Rudy Giuliani. Of course, Giuliani was a key, early backer of President Trump’s during the 2016 campaign and is currently one of Trump’s lawyers for the probe being conducted by Special Counsel Robert Mueller. If BlackBerry does participate in the JEDI deal, BlackBerry’s results and BlackBerry stock should get a huge lift.

Posted via CB10

[smithm565]

...my last comment today on this issue, but one other scenario to think of, is that if BlackBerry is to play any role in the JEDI contract, would it not be the competitive advantage needed to set one of the two leading companies for this deal apart by purchasing BlackBerry?

Or

A JV between MSFT & AMZN?

Posted via CB10

[Bacon Munchers]

Let's look at a Covered Call Writing trade for BlackBerry today:

You buy the stock at $ 9.35/shr/US, and you are looking to sell a covered call against it (simultaneously) at a strike of $ 10 for the next 2 months. The premium can be had all day on this strike so you are going to receive $ .35/shr for that trade. Because it is for 2 months, the annualized return is 6 x $ .35/shr of roughly $ 2.00/shr for the next 12 months worth of call writing.

$ 2.00/$ 9.35/shr = an annualized return of 21% if the stock never leaves the original price that you paid for it. If the stock pops to $ 10.00 plus, you are likely to lose the position or have the stock called away from you. In this case, the return is = $ .35 + $ .65 ($10.00 - $9.35 paid to open the trade) Now your return is 10.6% for just 2 months of investment. If you annualize that trade you are looking at substantial returns on your investment. All of this is done at today's level of activity which means you are generating a return on a quiet market day, a day when the stock is barely moving at all and hence the premiums are contracted big time. So timing is important here, try to catch a day when the stock is up 5% or so to claim those huge premiums.

Hope this makes sense.

Err, ummm, uhhh,

What's say I just join your club, pay the dough, and let you handle that stuff?

[Corbu]

dusdal, rarsen, morganplus8 and 1 others like this.

[Dunt Dunt Dunt]

Again, apologies for the rant, but I'm frustrated as hell with this stock, and as Corbu said the constantly moving goal posts of WS. It's like a company that according the ML can simply do no good. How about 3 years down the road when it's 2b in revs, profit of 500m, still growing at 20% and still at $10? I'm sure they'll say something along the lines of "The P/E of 10 for such a growing company indicates there are very serious troubles below the surface. Strong sell"

How much of the frustration is self inflected...

BB was under $7 at the first of the year, seems like it has come a long way in a short time. I know it not where many really long holders want it to be (does seem like they are better off today than a year ago0.. But in the end... the numbers reflect the value that investors are willing to "bet" on TODAY and the short term.

Lot of things going on that could pop BlackBerry up to much higher numbers... so there is a lot to be excited about.

But the reality is BlackBerry is a nobody at this point. It's not a consumer facing company so fewer sites bother talking about it. Ten year ago even the local paper would report BlackBerry earnings every quarter. Now, it was hard to find BlackBerry's earnings being reported on out side of a few financial sites. BlackBerry just isn't on the radar right now.

One of the big things an IP win might bring... besides a pot of gold, is some attention.

I'm a lot more excited about BB future today, than I've been in the past.

[morganplus8]

Thank you sensei Morgan! Trying to remember what in-the-money, out-of-the-money, calls, puts, or a combination of them means, and what the expectation should be for each scenario when you mention it, definitely a lot to digest but it's slowly making sense to me

If the current price of the stock is above the strike price of the option, its said to be in-the-money, the opposite for the price of the stock being below the strike price of the call option that you are considering. For example, with BB at $ 9.35 the $ 9.00 calls are said to be in-the-money. The $ 10.00 calls are obviously out-of-the-money.

When you sell a call that is slightly in the money, you are betting that the stock price is too high or overbought in the period or duration of that call option. I forced the sale of my block of stock back at $ 14.50 when I sold in-the-money calls with a strike price at $ 14.00 for a very short-term duration.

Written call options cap the return that the holder/writer of the call will receive if the stock goes up. When you sell a $ 10.00 call option against your stock holding you have to be prepared to lose that stock or have it "called away" if upon the expiry date, the price of the stock is above your strike price for the option that you wrote. The opposite for Puts, the difference is, when you write a naked put, you will be assigned the stock by the holder of that option if it is in-the-money on expiry day. Options entitle their holders to the rights to your stock (in the case of call options) for the period of time that they are active. You give up the right to control the stock and its potential gains for its time duration when it goes in-the-money. Remember, over 90% of option owners lose money so the likelihood of you getting called away isn't that much of a risk.

More for you to digest!