[cgk]

They should have been selling unlocked direct years ago. Good move.

Posted via CB10

It is but I suspect it is part of what is often called 'shaping the narrative' - the carrier network support is going to start collapsing (we have already seen it with T-mobile), because sales numbers across so many regions are dismal, so they are doing this now so that if and when it completely fades, instead of them retreating online they can say "we have been selling directly for a while, this is nothing new". Then once inventory has been run down they pull the plug.

[heymaggie]

Does that mean that carrier relationships are breaking down? Is this the way that the Z30 is going to be "launched"? I remember that the Pre 3 never officially got a launch by a US carrier so people just picked them up unlocked.

[cgk]

Does that mean that carrier relationships are breaking down? Is this the way that the Z30 is going to be "launched"? I remember that the Pre 3 never officially got a launch by a US carrier so people just picked them up unlocked.

Carrier support is a combination of a certain number of things - the two most important are a) volume of sales and b) Co-funding marketing dollars from the OEM for things like incentives for sales people, POS displays and the like. Spilt across multiple regions, sales are terrible and not ramping - so carriers don't expect volume and the marketing dollars simply don't seem to be there. That is why we saw T-mobile move to direct ship and we will see other carriers do the same. It's also why the UK launch of the flagship phone consisted of 30 people in a small room - the z30 has been pushed out to die.

[Etios]

Does that mean that carrier relationships are breaking down? Is this the way that the Z30 is going to be "launched"? I remember that the Pre 3 never officially got a launch by a US carrier so people just picked them up unlocked.

T-mobile has already put Blackberry on direct-ship only, soon this will be followed by other carriers too. Apart from that carriers will return unsold inventory back to BBRY and those devices and other inventory will be put on Firesale via BBRY website once Fairfax gets control of the inventory.

[cgk]

T-mobile has already put Blackberry on direct-ship only, soon this will be followed by other carriers too. Apart from that carriers will return unsold inventory back to BBRY and those devices and other inventory will be put on Firesale via BBRY website once Fairfax gets control of the inventory.

If you spilt the sales between known regions and across two OSes, it's not hard to work out that BBRY must be selling through to consumers sub-100,000 in some regions, you then spilt that pie against maybe three or four or five carriers and it starts to become a waste of time for carriers.

[Komoto]

I don't know why they ever bothered going for consumer market.

I personally think it was a long shot at best, waste of money and took focus off enterprise which is what they should have been focusing on.

To me it almost seems as though the people that want a BlackBerry know what they want. It is a different segment of the market. Sometimes they affect friends and family around them and that's about it.

If we could rewind to bb10 launch and not invest any extra marketing dollars I wouldnt be surprised if sales figures were similar.

Posted via CB10

[the_sleuth]

The estimated values for BBRY assets have been all over the place from professional analysts, journalists, pundits, and layman on forums. I am not a CBV (Chartered Business Valuators, yes there is such a designation in Canada). So I won't even try to go there after yesterday's results. From the balance sheet, the current tangible book value is $9.54 / share (excluding goodwill).

Here are my two cents on the possible scenarios:

1) LOI becomes a firm offer. From what I read, three possible scenarios here:

i) $3 Billion debt is financed then LOI becomes firm offer of $9 / share and, according to LOI, there is $0.50 / share penalty if BOD accepts another offer (or $258 million greenmail to Fairfax consortium). Then BOD will table the offer to shareholders for vote.

ii) Fairfax consortium only able to obtain $2 Billion financing, then its bankers (BMO Capital Markets and BAC Merrill Lynch) will provide short-term financing such as a bridge loan, for which BBRY cash will be used to repay once shareholders approve $9 / share offer.

iii) More prudent course, if $3 billion cannot be fully financed, would be for Fairfax consortium to lower the offer price and not touch BBRY's cash (as it will be needed for restructuring into smaller firm). At what price? It depends on how much is the short fall. If shortfall is $1 billion, then perhaps in $8 / share range for shareholders to vote on bid offer.

2) Rival bid is tendered to BBRY's BOD. From the original LOI and the dismal Q2 results, one can see BOD's bargaining power is low. By accepting LOI at $9 / share, the BOD have shown their hand. There are two scenarios there:

i) Rival bid tendered prior to Fairfax consortium's bid offer: As to what price? It would have to be high enough to squash a counter offer. Your guess is as good as mine here. Since people enjoy technical analysis here, perhaps, 50-day moving average of $9.81 / share or 40-week moving average of $12.66 / share. Again your guess is as good as mine here.

One caveat on rival bid: People have mentioned MSFT, IBM, GOOG or Samsung. Regardless as to whom the foreign bidder is, each foreign rival bid would have to go down the rabbit hole called Foreign Investment Review rules in Canada (Investment Canada Act). This act is tricky because no matter what pundits will tell you of the rules, the assessment is political. Just ask Potash Corp. shareholders and BHP Billiton. In 2010, this offer was rejected by Canadian federal government and if you look at the decline of Potash Corp.'s share price, its shareholders are cursing the federal and Saskatchewan government for political meddling in a business transaction.

As reported in Canadian news websites, there is a reason BB execs have been lobbying the Canadian federal government to relax the foreign investment rules. Foreign bidders are probably weary of going down that rabbit hole as the outcome is political and unpredictable.

3) If shareholders don't accept the above bids, then BBRY could go it alone. This is the far riskier option. There is some probability to this scenario. If any bid is rejected by shareholders, then BBRY will drop to about $6 range / share. My broker, RBC Dominion, has BBRY target price of $5 / share (probably to reflect the worst case scenario). But with $2.6 billion in cash, BBRY could swim perhaps for 12 to 24 months more until it right sizes itself for profitability.

So those are all of the possible scenarios that I see. Sorry I could not be of much help as to what price a rival bid might come in at folks. As I mentioned before the whole process is fraught with risk.

Sleuth

Let's assume that there is another bidder. What do you think they is the most could offer based on the underlying assets of bbry? Assuming no synergistic benefits.

Also assuming there is a rumor within the next 6 weeks of another bidder, who do you think it maybe? Maybe PE firm?

[heymaggie]

With regard to the carriers, a common theme between the Palm and Blackberry was that both were propped up, for a while, as potential iPhone killers. Remember that AT&T was a lot smaller than Verizon when the iPhone was launched exclusively on their network. As soon as it was clear that they weren't going to do that then the carriers turned a cold shoulder. Palm was all set to get a big launch on Verizon after Sprint but Verizon decided to go with the Droid and it went all downhill from there. Now we hear that Verizon looked at Blackberry at the same time.

[Komoto]

Sleuth,

That is a good summary, goes private, bidder comes in for buyout or no buyout and go it alone.
I would personally vote to go it alone, but I don't think that is what the big boys plans were from the start.
Posted via CB10

[ADGrant]

Is it BlackBerry assuming the debt or the suitors looking to buy? I'm unsure as to why the credit rating of the target comes into play as opposed to the hunter.

Blackberry will be assuming the debt. The way leveraged buyouts work is the buyer borrows against a company's own assets to purchase if from the shareholders. This can be good for the shareholders but it's seldom good for the employees.

[silversun10]

Blackberry will be assuming the debt. The way leveraged buyouts work is the buyer borrows against a company's own assets to purchase if from the shareholders. This can be good for the shareholders but it's seldom good for the employees.

especially good for Prem's FF if he can get the $9 deal beat out by another bid and if he can collect the break fee, absolutely no incentive for him to try to lower the bid.

[anon(4086547)]

Interesting what was that lobbying over foreign-takeover rules by BB just two weeks before FF bid? Maybe there is another potential bidder after all?

[cgk]

Interesting what was that lobbying over foreign-takeover rules by BB just two weeks before FF bid? Maybe there is another potential bidder after all?

I would think that was pre-emptive - in case a deal comes in - to make sure it could go through.

[Shanerredflag]

It appears crystal clear (to me anyway) that BB's priority should be to partner with an Asian manufacturer...The hardware is what's killing them...we need to off load those costs...quick!

Posted via CB10

[cjcampbell]

It appears crystal clear (to me anyway) that BB's priority should be to partner with an Asian manufacturer...The hardware is what's killing them...we need to off load those costs...quick!

Posted via CB10

But keep a small facility, the one in Waterloo, for the top to bottom security requirements of some of their clients

[slickvguy]

One thing I haven't heard discussed is the possibility of the Federal government guaranteeing a portion of the loans required to take BBRY private. Not equity - just a backstop. Since they really do prefer BBRY remaining Canadian, want to keep the remaining jobs, and have security concerns. Only as a last resort.

[Kid Vibe]

Booked my flight to TOKYO! Only thing that will keep my mind off my loss... Unless I get a job or interview by then, I'll be away for 10 days (end of October). Will keep everyone updated! Woo.

[Superfly_FR]

T-mobile has already put Blackberry on direct-ship only, soon this will be followed by other carriers too. Apart from that carriers will return unsold inventory back to BBRY and those devices and other inventory will be put on Firesale via BBRY website once Fairfax gets control of the inventory.

I'd better see them using it for massive Enterprise incentives ...
[Armchair CEO]
Should they be smart, they'd provisioned (part of) the "loss" as a marketing expense ...
[/Armchair CEO]

[Superfly_FR]

But keep a small facility, the one in Waterloo, for the top to bottom security requirements of some of their clients

Yup, they need their 100% pure BB juice ...

[kfh227]

Will everyone that first posted here after the earnings warning leave. Thanks.

Posted via CB10

[kfh227]

Interesting what was that lobbying over foreign-takeover rules by BB just two weeks before FF bid? Maybe there is another potential bidder after all?

I agree that courting of many companies has occurred. I'd assume at least one saw this as an issue needing resolution as a prerequisites to an offer. Not that an offer will happen post lobbying but without it no offer would come.

I might buy short term $8 calls if the share price remains depressed. Preferring to do November or December calls.

Posted via CB10

[Superfly_FR]

Will everyone that first posted here after the earnings warning leave. Thanks.

Posted via CB10

Let's welcome everybody
Let's leave the mods make the cleanup

[Superfly_FR]

I agree that courting of many companies has occurred. I'd assume at least one saw this as an issue needing resolution as a prerequisites to an offer. Not that an offer will happen post lobbying but without it no offer would come.

I might buy short term $8 calls if the share price remains depressed. Preferring to do November or December calls.

Posted via CB10

(rinse and repeat, still my choice) How far can they go with MSFT ?

[Superfly_FR]

Alright, time to go to bed.
Thoughts for the night :

Sweet dreams, all !

[Shanerredflag]

Will everyone that first posted here after the earnings warning leave. Thanks.

Posted via CB10

Palatable difference isn't there...and no, it's not because of the share price.

Posted via CB10