[La Emperor]

And that person (AH) is a regular contributor at SA. Constantly bashes BB, hates them with a passion. Comments in most of the BB written articles during the time when Chen took over.

A disgruntled ex employee perhaps?

[smithm565]

Meanwhile, way down in the comments section:

Andreas Hopf:
This is good!

Soon, this disgrace of a company can re-name itself once again: BleakBerry.

Francine Mckenna:
Thank you!

Ms. Mckenna is, of course, author of the piece, who is clearly pleased one of her readers taunted the subject company.

I'm all for hard hitting journalism, but this is merely a hit piece and as far as I'm concerned, this is the smoking gun.


Attachment 444981

Interesting how this web seems to connect itself. Quick Google search of "Andreas Hopf" quickly shows they are a seeking alpha writer, specifically negative articles on Tesla (a definite short seller target). Also links to Francine McKenna & Clara Linnane on a financial journalist site called muckrack.com

https://muckrack.com/andreas-hopf

[EchoTango]

Interesting how this web seems to connect itself. Quick Google search of "Andreas Hopf" quickly shows they are a seeking alpha writer, specifically negative articles on Tesla (a definite short seller target). Also links to Francine McKenna & Clara Linnane on a financial journalist site called muckrack.com

https://muckrack.com/andreas-hopf

All this means is that she is a negative side commentator which means she will always be right 50% of the time and in Blackberry's sad case, most of the time. This is what journalism has come to. The truth is just a passing breeze in the night.

I can't fault the market for punishing the stock because the whole point is to make money, something Blackberry seems to have forgotten how to do. All the design wins, product futures, certifications and industry thought leadership is worthless if you can't turn it into a reasonable return. Chen is quick to gleefully point to a 78% overall margin but can't seem to translate that into earnings. I guess it fell off the back of the truck.

Again, if there's no earnings, what's the point ?

[smithm565]

...and MW updates their article again

Another MW update, to keep it lead story & add:
"BlackBerry early Thursday issued a press release in which they reiterated that they believe that their financial disclosures comply with U.S. securities laws “that apply to us as a Canadian foreign private issuer.”

However, SEC rules are quite clear that foreign private issuers must comply with the same rules as U.S. issuers, as the guidelines above indicate, in particular as regards prominence."

[smithm565]

All this means is that she is a negative side commentator which means she will always be right 50% of the time and in Blackberry's sad case, most of the time. This is what journalism has come to. The truth is just a passing breeze in the night.

I can't fault the market for punishing the stock

If there was legitimate selling from investors concerned with BlackBerry's performance, or even legitimate short selling, that is ok. When there is possible collusion between short sellers/funds/market makers, who utilize financial media & journalists to twist sentiment to their timed trading, just to drive the stock down, it is illegal. Problem is that reporting and oversight on these relationships and this trading is quite lax. In Naked Short selling, they do not borrow legitimate shares to sell & later replace, they just essentially sell non-existent shares (counterfeit) to overwhelm buyers and artificially take the price down. This drop pulls in real sellers, who get nervous, adding to the selling.

This type of trading activity was well documented in several court cases occurring before the 2008 crash.

Also, the uptick rule was eliminated in US in 2007, which essentially said to complete a short sale trade, you had to do it following an uptick trade, which prevented quickly pushing a stock lower. Which, if you look at the 2-day chart on BlackBerry is exactly what happened at the market open.

A figure I saw showed that 21% of yesterday's volume were short sales.

[Seadog83]

It happens time and time again and without rationale or logic. Which is why I go with the RSI. It works time and time again. No guarantees that it will continue.

A good sign for BB is the report from Faucette. If you're familiar with his take on BB you have to take note of his latest. From Faucette it is extraordinarily positive from a guy who doesn't hesitate to draw attention to the negatives. Maybe Chen's verbal upside to Faucette's head yesterday had a good result.

Yeah exactly, "It works, except when it doesn't". Other times it just languishes after a fall until the time factor raises RSI and wash rinse repeat.

More than anything I'm just frustrated with myself how I could be so bloody wrong on a stock, while the fundamentals just keep getting better and better, the share price gets decimated worse and worse. And not just me, even the most bearish of analysts have price targets well above where we are and have been recently.

Meanwhile numerous other companies with considerably worse metrics (negative PE, lower growth), are being rewarded hand over fist.

I too was surprisingly upbeat about Faucette's report as well. Good to know that I wasn't alone in thinking it seemed a break from the course. Anyways long and strong.

[Dunt Dunt Dunt]

Yeah exactly, "It works, except when it doesn't". Other times it just languishes after a fall until the time factor raises RSI and wash rinse repeat.

More than anything I'm just frustrated with myself how I could be so bloody wrong on a stock, while the fundamentals just keep getting better and better, the share price gets decimated worse and worse. And not just me, even the most bearish of analysts have price targets well above where we are and have been recently.

Meanwhile numerous other companies with considerably worse metrics (negative PE, lower growth), are being rewarded hand over fist.

I too was surprisingly upbeat about Faucette's report as well. Good to know that I wasn't alone in thinking it seemed a break from the course. Anyways long and strong.

I think what some here overlook is those fundamentals - there are two sides to things and if you only look at what BlackBerry management is saying, you only have half the information. I do think BlackBerry has a lot of potential, but I don't discount that they have a lot of competition from much larger companies with much deeper pockets.

If Microsoft, VMware or IBM had bought Cylance.... I'm sure they would have gotten better valuation from that purchase as they'd have been seen as in a position to fully get the most out of it. Tiny BlackBerry with their track record is going to have to prove what they can do...

Tin Foil stuff can explain the stock being depressed... it doesn't explain the business fundamentally not doing much.

[La Emperor]

Dunt,

QNX platform seems to be doing well in the connected vehicles, etc and will do so as well in the autonomous vehicle of the future. The current revenue though is minuscule but will continue to improve. Cylance will be integrated in the QNX platform and should be ready next year.

None of the 3 companies you mentioned will give them that opportunity in the explosive car market. No matter how deep their pocket is. Only with BB.

There is value in that opportunity.

[W Hoa]

QNX platform seems to be doing well in the connected vehicles, etc and will do so as well in the autonomous vehicle of the future. The current revenue though is minuscule but will continue to improve. Cylance will be integrated in the QNX platform and should be ready next year.

It's worth remembering that the vehicles which will be using QNX and assorted BlackBerry offerings will, potentially, be under licence for a number of years. Car manufactures are very well aware that they will be earning income from telematics, infotainment systems, ota updates and vehicle security for many years after the vehicle has left the assembly line. Auto manufacturers are more and more referring to themselves as mobility companies.

BlackBerry could very well enjoy income from the 150 million, and climbing, vehicles it is licenced to for quite some time. It, of course, depends on the type of licencing BlackBerry is able to negotiate.

[b121]

This is worth unpacking. The piece takes umbrage with non-GAAP revenues specifically. It has been customary for acquisitive tech companies in particular to use non-GAAP revenues because of a rule in purchase accounting that requires re-valuing the acquired company's deferred revenues. It's debatable, but if honestly explained, I think it's on-balance more helpful. Remember that GAAP (and international accounting rules in general) will always take the most conservative path.

That's a lot of mumbo jumbo, so I'll try to simplify.

Cylance has deferred revenues. When I purchase a subscription from Cylance, I typically pay upfront. Let's say $10 a month is the going rate, so I will pay $120 upfront on Jan. 1st for a whole year's subscription.

Cylance cannot recognize that $120 as revenue in January. Instead, they have to recognize it ratably. $10 in Jan, $10 in Feb, etc. Meanwhile, they already banked the $120 I paid. So to balance the balance sheet, the $120 asset is deferred revenue on the liability side.

When Cylance reports Q1 results, they will include my $30 as revenues, and deferred revenue will decrease correspondingly by $30.

Now, when BlackBerry purchases Cylance, the rule is all that deferred revenue gets revalued pretty much down to $0. Why? Call it a quirk of GAAP that requires all business combinations to revalue the balance sheet. And since Cylance is a software company, the "cost" (liability) of delivering the product is pretty close to zero.

Anyway, as a result, when BlackBerry reports Q2 results, my share of the $30 is no longer recognized according to GAAP.

That's what BlackBerry is adding back, my $30, that makes it non-GAAP. They're basically saying, look, if we assume Cylance was still operating independently, they would have still recognized the $30 as revenues. The initial $120 paid is still in the bank. Nothing economically speaking has changed.

Most importantly: I'm still a customer! And if I am a happy customer, I will renew my subscription next year. And that will refill the deferred revenue bucket with another $120, after which BlackBerry will be totally GAAP compliant to report my $30 each quarter.

We saw this when they acquired Good/Athoc/Watchdox in 2015. They added back deferred revenues but that number steadily decreased quarter after quarter as it got "earned in" and new deferred revenues became "GAAP compliant".

Each investor gets to make his/her decision on whether or not this is fishy. To me, in BlackBerry's case, it's not. If BlackBerry reported only GAAP numbers, the revenue line would actually be artificially depressed. As an investor, I would be helped by knowing how much, which will allow me to decide whether adding back the deferred revenues makes sense in my own model.

MarketWatch is a decent publication, but it's geared towards retail traders who tend to trade based on earnings headline beats/misses, so I understand why they'd put out this piece. But this issue has been around as long as the SaaS business model has, and the tone/tilt (especially the title, accusing BB of violating SEC rules, jeebus) does a disservice to people interested in the underlying mechanics of accounting.

For more background, here's a good Journal of Accountancy article: https://www.journalofaccountancy.com...quisition.html

Thank you very much for this insight! 👍👍

[b121]

Any questions for BB Management?

Per usual, a friend of this thread will be having a conversation with BB Management on Monday. Please post your questions between now and Monday 8 AM. No guarantee they'll be answered but it's worth a try...

Cheers,

I'm not sure we'll get an answer, but I'm curious under what circumstances Chen would consider buying back some of the outstanding shares. If they don't need the cash and believe the company is under valued....

[Corbu]

If anyone has access to what is probably another hit piece by the G&F, feel free to post...

[Rice Dawg]

If anyone has access to what is probably another hit piece by the G&F, feel free to post...

A much more fact-based article, IMO. This non-GAAP issue deserves a level-headed discussion, so I'm actually not that upset about the McKenna hit piece if it can precipitate better understanding.

Namely, what is super shady non-GAAP practice is accelerating revenue recognition rather than adding back purchase accounting write-offs. An example of accelerating revenue recognition would be taking my $120 that I paid upfront for that Cylance annual subscription and calling all $120 of it revenue in Q1 instead of just $30 if recognized ratably.

Ms. McKenna in her MW piece brought up the SEC investigation of Symantec as a parallel, but in fact, Symantec was busted for the exact aforementioned accelerated revenue recognition practice, not for adding back purchase accounting write-offs: https://www.zdnet.com/article/symant...ed-as-revenue/

In Q4 2018, a customer transaction was incorrectly recognized as $13 million in revenue during the open period, of which $12 million now needs to be deferred.

Last but not least, the G&M piece mentioned that the SEC actually dug into Good back in 2017 and BB sent over 670,000 pages to the SEC. Case was closed Jan 2018.

Full excerpt:

BlackBerry Ltd. said Thursday its quarterly financial announcements comply with U.S. securities laws, responding to a news article that said the company was violating rules that govern the presentation of earnings and revenue figures.

MarketWatch, in an article headlined, BlackBerry Violates SEC Rules with Use of Non-standard Metrics, said the company highlighted a “non-GAAP revenue” number, “a metric the regulator does not allow.” This, MarketWatch said, “put[s] the company at risk of an enforcement action from the U.S. Securities and Exchange Commission.”

The SEC has detailed rules on measures that do not conform to generally accepted accounting principles, or GAAP. The SEC has the power to bring enforcement actions against companies that violate them. Canadian securities regulators, concerned about the widespread use of the measures, are trying to turn their guidelines on non-GAAP into regulations, which would give them similar enforcement power.

BlackBerry issued a news release Thursday that said, “The information in our financial disclosures complies with U.S. securities laws that apply to us as a Canadian foreign private issuer, including all rules regarding the use of non-GAAP measures. We believe the non-GAAP information, together with our GAAP information, provides shareholders with valuable information regarding our financial performance.”

Blackberry has used the measures for some time, and the SEC has queried the company in the past on its revenue-recognition practices. The Globe and Mail reported in December, 2016, that the SEC’s accountants had written letters to Blackberry the previous June about the ways it recognized patent revenue. The SEC concluded its dialogue with BlackBerry on that issue that year, and the SEC has not released any further correspondence with BlackBerry.

Starting in late 2015, BlackBerry began promoting the use of “non-GAAP revenue” as it integrated Good Technology, a software company it acquired that year. Good Technology had what’s called “deferred revenue,” when it collected cash from a customer for a piece of software, but had future obligations, such as maintenance or upgrades. That meant some of the revenue had to be recognized later, when the obligations were met.

According to Veritas Investment Research, which wrote a report on the matter at the time, after BlackBerry used acquisition accounting, it had to end the future recognition of Good Technology’s deferred revenue. BlackBerry’s “non-GAAP revenue” added back those deferred sales that Good Technology would have been recognizing, had it still been a stand-alone company.

The SEC has provided guidance that outlines examples of “potentially misleading” non-GAAP measures “that could violate” regulations. One example: “presenting non-GAAP revenue that accelerates revenue recognition as though the revenue was earned sooner than for GAAP purposes.” BlackBerry’s non-GAAP revenue isn’t technically “accelerated,” however, since it never would have been recognized in the first place.

Wednesday’s earnings release said GAAP revenue was US$247-million, but non-GAAP revenue was US$20-million higher, at US$267-million. The difference, the company said, was from “software deferred revenue acquired but not recognized due to business combination accounting rules.”

Probes Reporter, a Minnesota research firm that uses U.S. Freedom of Information laws to request SEC records and evaluate the responses, said BlackBerry was subpoenaed by the SEC in 2017 in an investigation of Good Technology. According to documents the SEC provided to Probes Reporter, the San Francisco office of the SEC opened In the Matter of Good Technology Corp. on March 1, 2017. While Good Technology had been a private company, it had filed a registration statement for its stock in 2014, which made it subject to SEC jurisdiction.

After BlackBerry acquired Good Technology, BlackBerry had to respond to the SEC queries. BlackBerry made seven requests to the SEC for confidential treatment for a total of 670,111 pages of records from July, 2016, to August, 2017. SEC documents provided to Probes Reporter show the regulator closed the case Jan. 30, 2018.

The Globe highlighted BlackBerry in September, 2016, stories on a Veritas report on the increasing use of non-GAAP metrics in Canada. How BlackBerry Instantly Turned a $670-million Loss into Break-even Performance” showed how the company excluded 10 different expenses across 13 areas of the income statement when calculating “non-GAAP net income."

[Corbu]

Thanks, Rice Dawg!

[Dunt Dunt Dunt]

It's worth remembering that the vehicles which will be using QNX and assorted BlackBerry offerings will, potentially, be under licence for a number of years. Car manufactures are very well aware that they will be earning income from telematics, infotainment systems, ota updates and vehicle security for many years after the vehicle has left the assembly line. Auto manufacturers are more and more referring to themselves as mobility companies.

BlackBerry could very well enjoy income from the 150 million, and climbing, vehicles it is licenced to for quite some time. It, of course, depends on the type of licencing BlackBerry is able to negotiate.

That's kinda always been part of the licensing... problem is in most cases QNX is just the building block that the car manufacture build out their own system on. For BlackBerry to get a bigger chunk of those long term dollars, they need to be providing the whole system...

And sadly... how many years are car manufactures providing updates? My mind it ought to be ten years, but in truth it's a fraction of that right now.

Don't get me wrong I think QNX is one of the better parts of BlackBerry and that it will grow and grow. But I don't see it suddenly becoming worth billions...

BlackBerry's Spark program is something to watch, especially now that Cylance is being added.... but it's a big jump from watching it, and wanting to invest in it. As we have no idea if it will amount to anything. Anymore than when Thor first talked about QNX Momentics and IoT back in the summer of 2012.... that sounded promising too.

[W Hoa]

For BlackBerry to get a bigger chunk of those long term dollars, they need to be providing the whole system...

And sadly... how many years are car manufactures providing updates? My mind it ought to be ten years, but in truth it's a fraction of that right now.

Car manufacturers are currently providing 3-5 years of their basic on car systems for 'free'. After that time period it will require a subscription which will carry on for as long as the owner wants. These subscriptions are not cheap, ranging into hundreds of dollars a year.

GMC OnStar, for example, offers a 'basic' plan for 'free' on new purchases. You can add options from the get go for $200 to $350 per year. After the 'free' period ends I have no idea what the service will cost.

Their is serious money to be had with these automotive 'mobility' offerings. If BlackBerry can continue with its current 43% market share and secure even a small fraction of the subscription fees over many years and potentially hundreds of millions of vehicles they will have a really nice recurring revenue stream.

Have a look at OnStar pricing structure to get an idea of the potential.

OnStar Guidance Plan Info & Price | GM Authority

[La Emperor]

News: Another partnership with Microsoft and..

https://www.newswire.ca/news-release...833806263.html

[Dunt Dunt Dunt]

Car manufacturers are currently providing 3-5 years of their basic on car systems for 'free'. After that time period it will require a subscription which will carry on for as long as the owner wants. These subscriptions are not cheap, ranging into hundreds of dollars a year.

GMC OnStar, for example, offers a 'basic' plan for 'free' on new purchases. You can add options from the get go for $200 to $350 per year. After the 'free' period ends I have no idea what the service will cost.

Their is serious money to be had with these automotive 'mobility' offerings. If BlackBerry can continue with its current 43% market share and secure even a small fraction of the subscription fees over many years and potentially hundreds of millions of vehicles they will have a really nice recurring revenue stream.

Have a look at OnStar pricing structure to get an idea of the potential.

OnStar Guidance Plan Info & Price | GM Authority

And does an update of OnStar navigation and services have "anything" to do with the core OS, which is where QNX lives, in most the systems that utilize QNX?

That's the thing, most these updates are to the UI... not the core operating systems. If there is an core update, it's usually a fix and not one that is chargeable. And if an OEM offer updates for free for five years... how much do you think they are paying QNX or AGL for the base code? I think what you see in QNX Auto revenue, is what you are going to see... with some modest growth.

Now EoT/IoT and Spark... that might be where QNX will become a new player. Or not.... we just don't know, till BlackBerry PROVES the have a product they can sell.

There is no doubt that today, BlackBerry is a buy... but the upside of a return, is will it be $10 a share... not will it be $20 a share. I don't rule out $20 a share in the coming years, if revenues start growing.

[Corbu]

La Emperor likes this.

[La Emperor]

And does an update of OnStar navigation and services have "anything" to do with the core OS, which is where QNX lives, in most the systems that utilize QNX?

That's the thing, most these updates are to the UI... not the core operating systems. If there is an core update, it's usually a fix and not one that is chargeable. And if an OEM offer updates for free for five years... how much do you think they are paying QNX or AGL for the base code? I think what you see in QNX Auto revenue, is what you are going to see... with some modest growth.

Now EoT/IoT and Spark... that might be where QNX will become a new player. Or not.... we just don't know, till BlackBerry PROVES the have a product they can sell.

There is no doubt that today, BlackBerry is a buy... but the upside of a return, is will it be $10 a share... not will it be $20 a share. I don't rule out $20 a share in the coming years, if revenues start growing.

I agree with you as BB get a tiny amount $3 ? per license on core installation. The growth in the future will come initially from the use of core plus hypervisor as ECU's gets consolidated to reduce complexity. Check VW recent announcement. I have another tidbit on VW but i'll get back to it later.

QNX Hypervisor, targeted for medical devices, industrial automation systems, and automotive applications such as car infotainment systems, advanced driver assistance systems (ADAS), and digital instrument clusters. was first announced in 2015. I read somewhere that it takes 3 to 4 years ( please correct me if I'm wrong ) of testing before you see new technology in the market. I cannot remember where I read it but it maybe when Ford switched from MS to QNX.

For the rest of 2019 and 2020 we may start seeing the effect of Hypervisor. So even if we get a paltry $2 more for the use of Hypervisor, between the running rate of 30 million cars per year, plus the Baidu push in China, plus the recent LG announcements, we may start getting a sizable revenue uptick. Along with the launch of Spark ,the extra services you and WHOA spoke of earlier like updates may generate even more revenue stream. But that's probably further down the road.

Now back to VW, how many of you remember that BB sold it's R&D division in Germany to VW back in 2014. At the very least those 200 engineers that were taken by VW were QNX indoctrinated.

https://business.financialpost.com/t...itability-goal

The recent VW announcement also stated that a new OS, "vw.os" is on its way to consolidate their car systems and further reduce complexity. I could not fathom that they will build their own os from scratch, apply and receive all the safety certifications , without the public knowing it. And VW boldly stated that the os will be running on their battery powered cars next year. I'll paste a snippet from the news.

"VW CEO Herbert Diess has mapped out a "massive expansion" in software and digital investments, and the automaker earlier this year started the rollout of the industry’s biggest automotive cloud with strategic partner Microsoft.

The first vehicle based on vw.os will be the ID3 battery-powered compact hatchback, which will arrive in European dealerships next year. From 2025, all new models will use the the system, VW said. "

Anyway, I've said enough. I hope I've expressed my opinion clearly without creating confusion. I'm not a particularly good writer.

[Corbu]

Perfectly clear, La! Thanks!

[Sigewif]

This is perhaps a bit of a random observation, but I want to bring it up because I have purchased Cylance antivirus software for our PCs. There are ads on the radio for all kinds of security related products, from identity theft protection, to encrypted back up, to antivirus software. The ads target businesses as well as individual consumers. How about some advertising for BlackBerry Cylance? Is it being promoted? It is a consumer facing product, after all. I found out about it because I follow BlackBerry. Even the most precious metals are worth nothing if they are undiscovered in the ground.

[Hazo]

Just in...

https://finance.yahoo.com/news/black...140244395.html

[Dunt Dunt Dunt]

I found out about it because I follow BlackBerry.

I suspect most here did as well...

https://www.av-test.org/en/

I think it's too new and hasn't been submitted for independent testing enough... It's too early for normal marketing, and a consumer wouldn't be able to find any comparison info on it. Think I found only five or six reviews on it... not sure any of them would make me buy it over a better rated AV.

I think for now it's mostly still a enterprise product. But I've seen lots of good comments on Spiceworks about it.

[Corbu]

This is perhaps a bit of a random observation, but I want to bring it up because I have purchased Cylance antivirus software for our PCs.

If you can, Sigewif, I wouldn't mind hearing your feedback on their product once you
have had the opportunity to test it out. Or from anyone else who has.

Thanks in advance!