Originally Posted by
kadakn01 Conf call notes with IR at BBRY (more to come over several days as there are many pages of notes to go thru!)
Info on Priv release dates - still targeting November or December, probably November as they want some of this revenue to show in the quarter. It will probably be the last effort BBRY makes on hardware, and chen will decide based on its success whether to invest elsewhere or continue with it. Breakeven on Android Priv is 5M devices (they are already at almost 4 -5M a year on BB10), half the breakeven of BB10 devices obviously due to lower OPEX, not sure if GrSecurity is being used. He said think of the Priv as a call option on the company.
Software breakdown - they don't is the simple answer however in response to concerns that there is no "organic" growth, ie. from software, ex Adhoc and GOOD, it will be in teens, so their is real growth in the underlying Software. Chen believes even if there is no longer value (as he said at the end of the call about EMM given away for free eventually) in BES to manage say email for a phone, they will use BES for many other uses like OTA for cars.
SAF revenue is all BIS, and as mentioned on the call will be replaced by Software revenue in the 4th qtr of 2016 (Dec 2015 - Feb 2016), to be fair the SAF revenue is so low at this point, it is not hard to replace it with SW!
12 to 13 year shelf life on patents, and they include international patent applications to get to the 44,000 that Chen always mentions
IPO of QNX or BBM would not work as both are integral part of IOT initiative, and don't have enough stand alone value to justify an IPO.
425M purchase price was EV, meaning it took into consideration the cash and debt that GOOD had and will take some time to fully integrate.
The reason the cash is not being used to do a larger share buyback nor any large type acquisitions (other than small add on's of say less than 50M) is that they have enough on their plate to integrate GOOD and Adhoc, and taking anything else on would severely limit their resources.
With respect to the shares, they will decide the best use of the timing, and as they authorized an additional 15M shares, (12M originally with 6M already purchased at average of $7.83 and 6M remaining) so a total of 27M or 21M left to purchase. They can start purchases as of this past tuesday, but again may use cash for other purposes if they think they can get a higher return, so no guarantee on how much or when.
An interesting note on the Cisco IP deal.
They were working on it for some time (over a year) and wanted Cisco to pay them a ongoing royalty payment (analysts prefer those for their modelling of revenues vs, the lumpy one time deals) , but cisco wanted to only do a upfront one time deal. Also, the deal gave BBRY access to ALL of Cisco's patents and cisco still paid them 70M, showing the value of BBRY patent portfolio as well as a broad, diverse use of their patents, not just for mobility like most assume. However, the reason Cisco was mentioned, is because it sends a message to other companies in a similar space (he gave an example of a company) that would see that deal and be compelled to do a similar deal with BBRY or potentially face action from BBRY. This is an indirect way of getting the message across without being a patent troll as chen says, and perhaps expect (my opinion) similar rationale for companies that may be mentioned next quarter. Other deals are coming and they have a specific IP person who was brought on to go after these deals (he was the one who got the Cisco and the other unnamed company)
They think their is much more value in the IP than they current book value states, and the analyst community is dramatically undervaluing the portfolio.
He made some personnel changes recently that were difficult, but an example that Chen will do everything to make BBRY successful. He does not talk to analysts as he is simply too busy (which the analysts don't like btw as they all ask to talk to him), he said he sleeps about 3 hours a night! He is not happy (used other language!) with the share price and takes it personally. This was emphasized several times!
The analyst community is too fixated on hardware and not giving credit for the software and also are pessimistic on BBRY's ability to grow organically. The last conf call where Chen fumbled on SW revenue did not help, and the shift to including IP revenue was seen by many to try to divert the lack of growth in BES. Bottom line it is a show me story!
More to come soon!