View Poll Results: Did you buy shares ?

Voters
1110. You may not vote on this poll
  • Yes, I'm acting now !

    694 62.52%
  • No

    416 37.48%
  1. slipstream89's Avatar
    I can't remember who posted a chart but I remember them saying that there has been a pattern with a big drop then a nice rally and it has happened twice already and they were waiting recently for the same pattern, this may have just met that expectation. I'll dig up the chart when I have time this week but flying out to Saskatoon now! cheer up all, only temporary. If we survived those 15% gain/loss days we can survive this BS
    03-09-15 01:56 PM
  2. Superfly_FR's Avatar
    Just closed the Nasdaq screen, prepare for dinner and let alone the stock until 2morrow.
    Volume is pretty high, bottom was $9.83, would take a closing above $10 like a victory.

    Cheers gang, it's beeeeeer thirsty already here !
    SF

    P.S: and if you want THE real news of the day ... enjoy ! Nile has somme goodies for ya !

    +
    http://www.rollingstone.com/music/pr...-time-20150305
    Last edited by Superfly_FR; 03-09-15 at 02:27 PM. Reason: "near" was too easy lol
    03-09-15 02:03 PM
  3. W Hoa's Avatar
    OT Watching the WSJ's underwhelming report on the new apple watch. Prices seem reasonable though

    The BBRY Café.  [Formerly: I support BBRY and I buy shares]-ouchwatch.jpg
    q649, 3MIKE and CDM76 like this.
    03-09-15 02:36 PM
  4. Corbu's Avatar
    As SF just gave us a CHIC look back in time, allow me another...

    For those of you who wonder what Simona was saying just about two years ago?

    When she thought this:

    Goldman Sachs analyst Simona Jankowski has a buy signal on BlackBerry with a target of $19.
    Goldman: BlackBerry 10 to sell 2 million to 3 million units per quarter for the rest of this year

    Mind you, they had conducted a most impressively scientific "retail checks at nearly 40 stores"...
    03-09-15 02:40 PM
  5. Superfly_FR's Avatar
    03-09-15 02:42 PM
  6. q649's Avatar
    Just sold all my call option for jan 2016 12 dollar strike oh and i bought jan 2017 12 dollar strike price calls
    Hi Jake,

    Just to test my knowledge, at $1.75 each (and let's say the current price is $10), at expiry the SP would have to be > $11.75 to be 'in the money', right? But you'll likely never wait that long to sell. If the SP rises to $13.50 you'd likely double your initial investment?

    Cheers.
    03-09-15 03:01 PM
  7. q649's Avatar
    OT Watching the WSJ's underwhelming report on the new apple watch. Prices seem reasonable though
    The $10k model is a steal!

    Actually I like the look of the upcoming Huawei watch much more.
    Shanerredflag likes this.
    03-09-15 03:03 PM
  8. jake simmons3's Avatar
    Hi Jake,

    Just to test my knowledge, at $1.75 each (and let's say the current price is $10), at expiry the SP would have to be > $11.75 to be 'in the money', right? But you'll likely never wait that long to sell. If the SP rises to $13.50 you'd likely double your initial investment?

    Cheers.
    You would be correct. I will not be holding these until maturity but likely will sell when BBRY has reversed the rev decline and is valued as a growth company. I see myself holding them until end of Jan next year depending on certain things. If we have another spike that is caused by a rumor or news that isn't adding rev to the bottom line then i might sell right there and then.
    q649 likes this.
    03-09-15 03:06 PM
  9. Corbu's Avatar
    03-09-15 03:26 PM
  10. world traveler and former ceo's Avatar
    "Leap" of faith lol.
    Prem vs GS?... I'll take Prem..
    ... just bought another $100k of bbry.to to....

    LONG... and patient ftw..... GS and MS.. . You can have MOBL..

    Let's revisit in two years....

    Posted via CB10
    03-09-15 03:42 PM
  11. bbjdog's Avatar
    Reading material gang!

    Are BlackBerrys critics overlooking a potential upside? (RTGAM)

    PETER MISEK

    BlackBerrys battle to transform itself into a software and services play goes under the microscope on March 27 when it reports its fourth-quarter and annual results. Of key interest to investors should be a milestone that BlackBerry passed two-thirds of the way through the quarter, on Feb. 1: Thats when the roughly 7.5 million subscribers (according to market reports) of the BlackBerry Enterprise Server (BES) had to start paying for BlackBerrys mobile device management (MDM) service and support the companys business in enabling large organizations to centrally manage the fleets of smartphones used by their employees.

    If, say, 90 per cent of those 7.5 million users started paying (which we are hearing most enterprises are prepared to do), we can assume that software revenue is going to be considerably higher. BlackBerry guidance has indicated that revenue should exceed over $500-million (U.S.) on an annualized basis in the next quarter or two. But what if no one in the market believed that or if the number exceeded that?

    We see over 90 million shares short and a sizable group that continues to believe BlackBerry has no future. While I wont speculate on that either way, its illuminating to point out that BlackBerry software and services are about to become far more prominent in the coming earnings release.

    Where once the number of handsets sold dictated whether the Street was bullish or bearish, that issue has become largely a sideshow as Apple and Google (or more specifically, smartphone makers using Googles Android operating system) have won the smartphone wars.

    But what happens when security matters so much that nothing but BlackBerry will do? First, some examples: When the Edward Snowden leaks revealed that the U.S. was spying on Germany, Angela Merkel and the Bundestag all switched back to BlackBerry. When Sony was hacked, where did they turn? BlackBerry. I have tried BES on my iPhone and I thought it was the best solution on the market for e-mail and secure communication. (IBM, Mobile Iron and Airwatch are also in the market with similar solutions.)

    My suspicion is that BlackBerry could hit 10 million or more subscribers with this ultra-secure service. Frankly, if I was a Fortune 500 chief technology officer or chief information officer and I wasnt using BlackBerry, or one of its competitors, I would take a look at what happened to the executives at Target. Security is no longer just nice to have, its an imperative businesses can fail because of breaches.

    What about other parts of BlackBerrys business? We are hearing that as carriers start selling the companys Passport and Classic handsets, the company stops earning lucrative monthly service fees it used to earn from its older handsets, and so ultimately that revenue stream will dwindle to nothing. We are also hearing that supplies of the Passport and Classic are lean. So while there appears to be good demand, BlackBerry is loath to make the same mistake and overbuild, causing huge risks to the going concern of the business. As such, device sales could be light.

    BlackBerry may also surprise the market in the amount of cash it generates. The company pays considerable royalty fees every quarter for using others patents, and our understanding is that the royalty rates are graduated, depending on how many units are sold. If, for example, BlackBerry sells 10 million units in a quarter, it pays a certain royalty rate say $100-million but if sales drop below that level, the rate would drop to something like $25-million. These fees are all calculated retroactively. In the second quarter, royalties amounted to roughly $837-million, but fell to $388-million the following quarter. I think they could fall even further this quarter, enabling the company to hold on to more of its cash.

    Finally, as it relates to apps, its safe to say that the app store wars werent kind to BlackBerry. But the company now offers the Amazon version of the Android App Store. I can report it works very well Ive downloaded and used apps on my BlackBerry device. It looks and feels like an Amazon Android experience, with the number of apps being multiples of what the company historically offered.

    While I dont cover BlackBerry as a side-sell analyst any more, as a user and a tech industry observer it appears to me that BlackBerrys critics are missing the potential upside for the company. At the very least, BlackBerry under John Chen and CFO James Yersh is a very different company a software-focused company. One that should have emerged years ago.

    Disclosure: I have no position in BlackBerry.​
    _dimi_, La Emperor, Corbu and 22 others like this.
    03-09-15 03:43 PM
  12. bbjdog's Avatar
    So what is the error percentage on GS estimate of 426 million on software revenue? I'm glad to see the team close to the 500 million they targeted! Now I know that they are close to the projected amount. Nice work BlackBerry!
    03-09-15 03:53 PM
  13. kfh227's Avatar
    Just sold all my call option for jan 2016 12 dollar strike oh and i bought jan 2017 12 dollar strike price calls
    What are those going for?

    Posted via CB10
    03-09-15 04:07 PM
  14. kfh227's Avatar
    OT Watching the WSJ's underwhelming report on the new apple watch. Prices seem reasonable though

    Click image for larger version. 

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    Seriously, how much are the watches? For $1K they better say apple and beats on them.

    That's fine though. Apple is a status symbol like Mercedes. It says that u have more money than brains.
    Posted via CB10
    03-09-15 04:09 PM
  15. morganplus8's Avatar
    Hi gang!

    There was an excellent question posted over the weekend regarding the "Ascending Triangle" versus "Raising Wedge" for BBRY. The reason this is an excellent question is that it is difficult to tell which formation you are looking at until it is too late. And so you need to have some rules to guide you in this matter and JLagoon pointed out that up/down volume is a key factor in the differentiation of the two models.

    Here is a 1 year 10 month chart on BBRY to help guide us when deciding what we have here:

    The BBRY Café.  [Formerly: I support BBRY and I buy shares]-bbry-march-9-2015.png

    I included this long term look at BBRY because sometimes we are so close to the current level of the trade that we miss the big picture. What we agree on is the uptrend blue line touching the bottoms of each consecutive higher high. Both TA formations have this in common so we are asking is whether the upper line, the one that defines ascending triangles from raising wedges looks like. To understand what we are seeing we need to know some important details about each TA structure. The first line that JLagoon and I agree on is the horizontal line passing for months now at approximately $ 11.10/shr. The reason this line looks correct is becasue it is a trading line based on the stock itself less the noise of take-overs and buyouts and whatever else. All of the times the stock goes above this price it fails to confirm the trend and quickly falls back under $ 11.10/shr. And so, the volume increase/decrease tells us that we might be looking at an AT, and, the fact the the upper line is horz. tells us it is likely an AT too. The additional information is the volume trend line, the lowest brown line showing us that as the triangel matures, the volume is dropping below its average daily volume levels. We have that too, but something else is missing and that is the duration of the formation, the chart goes back well over 1 year now and will likely continue until major news strikes. A typical AT runs from 1 - 3 months making this AT formation suspect at best (RW durations are twice as long in many cases).

    We ruled out a Raising Wedge (RW) because the (1) upper line is horizontal, and (2) we can see a slightly possible raising line in the upper thick brown line but that is just not what a resistance line looks like. (When there is only 3 trades over 16 months at that level, and then for only a monent in time, it isn't valid as a resistance line). So everything favours the AT but the length of the formation causes me to think there really isn't either formation here.

    If you look back to 2013, we formed an Inverse Head and Shoulders (blue circles to the left, no jokes please) which tells us the downtrend has ended and we are now going higher from there. So when we look at 2014, sure enough, we have been moving higher all year. So the next thing to do is try to find a formation that tells us where the stock could be going. I used a parrallel hatched line in light brown to show you what I see happening. To me that well defined line is what is part of a trend line that is tracking the lower raising blue line and parrallel to it. When you join all of the highs (52 week) together, this channel looks like a winner. I believe we came off an Inverse Head & Shoulders formation and started a well defined rally of which we are still enjoying today. The after hours trade the last time the stock shot up was $ 13.25/shr, it is little surprise to me that $ 13.25/shr is right dead on the upper channel line. Based upon my chart pattern, I would predict that our low today will not exceed $ 9.80/shr and we can get to $ 13.75/shr anytime a strong rally occurs. I don't see a RW or a AT at all here, just some trading to resistance within a well defined channel. The problem with the AT theory is that it is so long in the tooth such that it losses that title be definition alone.

    BBRY is famous for failed formations, there have been three perfect looking Head and Shoulder formations in the past couple of years and all of them fail on definition. A H&D is confirmed not because it has a head and shoulders (right and left) but on its move after the formation breaks. In each case, the H&D failed to move anywhere close to its projected distance, i.e., the stock should move to the price level calculated from the neckline to the top of the head. In our case, we see a H&D, it looks great but the stock only moves to 20% or less of its projected definition for that formation. The conclusion, for me, is that this stock is heavily manipulated to the point that is gives false TA all day long. The one formation that works though, is my channel, it hasn't failed and I hope it doesn't fail us now!
    03-09-15 04:09 PM
  16. morganplus8's Avatar
    To all of the CB members who have private messaged me in the past, I do apologize for not answering your messages. I haven't had enough free time to address them all but that doesn't mean that I want to ignore you. I mentioned that due to health reasons, I had to stop accepting "friends" and that I would restrict messages as well. I'm still not quite ready to open the flood gates here but I will address some of them soon. Once again, don't take it personally, I just haven't been able to move into a full-time status at this site.
    03-09-15 04:59 PM
  17. spiller's Avatar
    Just sold all my call option for jan 2016 12 dollar strike oh and i bought jan 2017 12 dollar strike price calls
    Good move. Maybe I should do that for my Jan 2016's too. I'll look at the premium delta tomorrow
    03-09-15 06:31 PM
  18. Superfly_FR's Avatar
    Morgan I for everybody here - I'm sure - say : health first.
    So please, stand low speed and keep your energy for yourself.

    I don't want to supervise too much nor play the nurse but, gang, it's one very good reason to stand focused 100% BBRY and not hassle one of our most engaged and value-added contributor with other stocks. And this time, I include HALO. Sorry in advance, but I'll pick you up occasionally about this. Not to mention PMs, of course.

    Count as much positive vibes than you count likes below (please don't thank this post).

    The gang.
    03-09-15 06:56 PM
  19. BanffMoose's Avatar
    Reading material gang!

    Are BlackBerrys critics overlooking a potential upside? (RTGAM)

    PETER MISEK

    <<SNIP>>

    While I dont cover BlackBerry as a side-sell analyst any more, as a user and a tech industry observer it appears to me that BlackBerrys critics are missing the potential upside for the company. At the very least, BlackBerry under John Chen and CFO James Yersh is a very different company a software-focused company. One that should have emerged years ago.
    WHAT! He changes from bear to bull and then stops analyzing BlackBerry? Guess we can't have an analyst doing that now can we? There is a natural order that must be maintained at BBRY shareholder cost of course.

    LOL


    Posted via CB10
    03-09-15 07:17 PM
  20. Soumaila Somtore's Avatar
    Well said (Also please don't thank or like this post)
    Morgan I for everybody here - I'm sure - say : health first.
    So please, stand low speed and keep your energy for yourself.

    I don't want to supervise too much nor play the nurse but, gang, it's one very good reason to stand focused 100% BBRY and not hassle one of our most engaged and value-added contributor with other stocks. And this time, I include HALO. Sorry in advance, but I'll pick you up occasionally about this. Not to mention PMs, of course.

    Count as much positive vibes than you count likes below (please don't thank this post).

    The gang.
    early2bed likes this.
    03-09-15 07:20 PM
  21. DaSchwantz's Avatar
    I've been buying up y'all's Jan 2016s, btw.

    Posted via CB10
    03-09-15 07:39 PM
  22. DREXcb's Avatar
    Morgan, focus on your health and enjoy the distraction of BBRY.

    Posted from my PassPort
    03-09-15 07:55 PM
  23. Than Tran1's Avatar
    Just add 6000 shares today.
    03-09-15 08:05 PM
  24. Corbu's Avatar
    Sooo... How about a bit of reading?

    Those of you who want to know more about Simona's report will find most of it here... I have not yet inserted the Exhibits.

    Goldman Sachs / Equity Research

    March 8, 2015

    ACTION

    Sell

    BlackBerry Ltd. (BBRY)

    Return Potential: (16%)


    Downgrading to Sell as turnaround efforts reach a challenging phase

    Source of opportunity
    We downgrade BBRY to Sell with 16% downside to our $9, 12-month price target (vs 6% average coverage upside). BlackBerry shares are +60% since Mr. John Chen became CEO in Nov. 2013 and started its turnaround effort. While the quarterly revenue runrate is down over 30% since then, the opex runrate is down over 50% and hardware gross margins are back in positive territory, helping BBRY achieve cash flow breakeven exiting 2014, a quarter ahead of plan. In 2015, the turnaround efforts shift from cutting costs to driving revenues – a more challenging phase that we think will fall short of expectations. Rather than a return to profitability, we see widening losses in FY16/17.

    Catalyst
    We think the success of BlackBerry’s turnaround hinges on its ability to grow its Enterprise Mobility Management (EMM) software business, where competitors include Mobile Iron, Airwatch (part of VMware), and Good. BlackBerry has set a target of $500mn in Software segment revenues for FY16 (Feb), up from $250mn in FY15. We expect it to fall well short of that target and model revenues of $426mn, for two reasons. First, our surveys show very low buying intentions for BlackBerry’s EMM solution. Second, its target implies that it would leapfrog the market leaders in just one year, which we view as unlikely given the competitors’ much better traction (based on our survey). Meanwhile, we forecast below-consensus Service revenues (down 47% in FY16E). While we see significant upside in Hardware revenues, those are “empty calories” as they are not profitable. Thus, we see widening losses based on the shortfall in high-margin Software and Services revenues.

    Valuation
    We lower our 12m BBRY/BB.TO targets to US$9/C$11 from US$10/C$12 based on an 85%/15% blend of SOTP/M&A (was 70%/30%) on lower M&A probability.

    Key risks
    Stronger than expected traction with the EMM solution, better hardware profitability, multiple-rerating on IoT initiatives, or potential take-out.

    Investment thesis

    As BlackBerry’s turnaround shifts from cutting costs to driving revenues, we see much higher hurdles given stiff competition, and expect the stock to underperform as the company falls short of profitability targets and expectations. We have three key points:

    1. Software-driven turnaround likely to disappoint – BlackBerry has guided for $500mn in Software revenues in FY16 (Feb), up from $250mn in FY15, as it ramps a new Enterprise Mobile Management business. We expect it to fall short as its target assumes that it can leap frog market leaders Airwatch, Mobile Iron and Good– contrary to our customer surveys. We model $426mn in Software revenues.
    2. Expect losses to widen in 2016, prompting more restructuring – We expect widening losses and below-consensus EPS as the legacy high-margin Service revenue falls faster than consensus expectations, while the new Software business grows slower than expected/guided. We model ($0.26) in FY16 EPS vs. consensus of ($0.12), worse than our estimate of ($0.19) in FY15E.
    3. Expect sizeable miss in February quarter – While our thesis is primarily driven by our below-consensus view of Software and Services in FY16/17, we also expect a sizeable (13%) near-term revenue miss in the February quarter on weak hardware sales due to a delayed rollout of the Classic. However, we expect that to prove temporary, and expect Hardware sales to drive revenue upside to consensus estimates for FY16/17 on higher ASPs, though not contribute much to EPS given lack of profitability.

    Putting together our below-consensus view of Software and Services (where all the profits are) and our above-consensus view of Hardware (which is not profitable), we expect widening losses in FY16/17 despite higher revenues (Exhibit 1). We see 16% downside to our $9 12-month price target, based on an 85%/15% blend of sum-of-the-parts valuation and M&A. We lower our M&A weight from 30% to 15% (and departmental M&A rank from 1 to 2) as we now see lower likelihood of acquisition.

    What could make us more positive
    To get more positive on BlackBerry shares, we would need to see one or more of the following: (1) Stronger traction of BES12 by enterprises, either due to market share gains and customer adds or rapid upgrades to premium services and higher ARPU. (2) Better profitability on the Hardware business as the company moves towards an outsourced manufacturing and distribution business model. For example, BlackBerry moved some of its manufacturing to Foxconn in 2014, which allowed it to have a variable cost model and take reduced inventory risk. In addition, it increased the use of online sales channels such as its own website, Amazon, and Alibaba. (3) Traction with new business models, such licensing the patent portfolio, achieving significant QNX revenues in the automotive sector, meaningfully monetizing BBM, and/or developing a successful IoT platform.

    Software-driven turnaround likely to disappoint in 2015

    BlackBerry has guided for $500mn in software revenues in FY16 (Feb), up from $250mn in FY15, as it ramps its BES12 solution to compete in the Enterprise Mobile Management (EMM) market against competitors such as Airwatch (part of VMware), Mobile Iron and Good. The $250mn in Software revenues in FY15 is comprised of its legacy Blackberry Enterprise Server (BES) software licenses (which are declining), legacy technical support (also declining), as well as its QNX licenses in the automotive sector, which are growing. In addition, BlackBerry’s December 2014 acquisition of private German company Secusmart (for encrypted voice) adds about mid-teens millions of annual revenues. With the base Software business declining over the last 3 years, even assuming growth in QNX and Secusmart in FY16, we estimate that the vast majority of the incremental $250mn in targeted revenues for FY16 needs to be generated through sales of the BES12 solution.

    While we view BlackBerry’s solution as fairly competitive from a technology perspective, we believe its implied target of $250mn in incremental revenues is likely unachievable, as it would far exceed the total estimated revenues of market leaders Mobile Iron ($167mn) and AirWatch ($146mn), despite coming to market years later. We are modeling $136mn in BES12 revenues for BlackBerry in CY15E, which would drive downside to consensus estimates, yet may still prove aggressive (Exhibit 3).

    The unit economics make the math challenging – BlackBerry has signed 6.8mn licensees under its EZ Pass program, which essentially allowed companies to convert prior BES users, or third party EMM Licenses, to BES12 licenses for free. That program ended in December 2014, and EZ Pass licensees now have to decide if they want to upgrade to the Gold package ($60 per year for the license subscription plus $12 for maintenance); otherwise, they would need to pay $8/year for Silver maintenance.

    To get to its $500mn goal for FY16 (or $250mn in incremental sales), BlackBerry would need to convert at least 3mn of its EZ Pass licensees to the Gold package (assuming they are converted on Day 1 of the fiscal year, or proportionately more if they are converted later in the year). Our estimates assume that BlackBerry gets to 8mn subscribers by the end of FY16 at a quarterly ARPU of $11, which implies a mix of around 40% Gold and 60% Silver licensees. Even so, given a ramp throughout the year, that only translates to $217mn in EMM revenues for BlackBerry in FY16 (and $126mn in CY15, given the back-end loaded nature of the ramp). As of the GS Technology Conference in mid-February, BlackBerry did not have much concrete visibility into reaching its software revenue target, as EZ Pass licensees have until July 1 to deploy BES12 in order to retain the licenses.

    However, as we show below, customer demand for the BES 12 platform appears low based on three separate surveys with IT executives, value added resellers, and office supply purchasing managers.

    GS IT Survey (Dec 2014)
    In our December 2014 IT Survey, only 1% of respondents said they plan to deploy the BES12 and BlackBerry Classic, while another 10% said they plan to evaluate BES12.

    GS Software VAR Survey (Jan 2015)
    In our software team’s value added reseller (VAR) survey, BlackBerry was shown as losing momentum in MDM in 2015 by the majority of respondents, with none of the VARs seeing it as gaining momentum. Mobile Iron and VMware’s Airwatch were seen as gaining the most momentum, followed by Citrix XenMobile.

    GS Retail and IT Hardware Office Supplies survey (November 2014)
    In our retail and hardware teams’ office supplies survey, only 7% of purchasing managers cited BlackBerry as their mobile technology going forward, down from 17% in 2012. Meanwhile, the iPhone and Android smartphones have gained very strong traction.

    Sustainable profitability likely to prove elusive

    BlackBerry was able to achieve positive FCF in the November 2014 quarter for the first time in two years, and a quarter ahead of schedule, as a result of aggressive opex cuts (down 52% yoy) and improving the cost structure of its hardware business (e.g. outsourcing manufacturing to Foxconn with a variable cost model).

    However, we forecast that the company will return to negative FCF and will see widening losses as early as the August 2016 (F2Q of FY16) quarter, as a result of rapid declines in its high-margin Services business (GSe down 47% in FY16) and a slower than expected ramp in its Software business (GSe $426mn in FY16 vs. company target of $500mn). Our Services forecast assumes that the BlackBerry subscriber base (that pays service access fees) declines by 40% in FY16, an acceleration of the 34% decline in FY15, as a result of the upgrade to BB10 devices such as the Classic; recall that unlike the legacy BB7 (and prior) devices, BB10 devices do not pay service access fees. We are modeling the ARPU declines accelerating to 17% in FY16 (vs. 11% in FY15E and 18% in FY14), as they continue to get pressured by increased price concessions and a mix shift to emerging markets, as well as the non-repeat of delinquent Service recoveries in Argentina ($15mn in F2Q15) and Venezuela ($30mn in F1Q15).

    Curiously, the more success BlackBerry sees this year with the ramp of the BlackBerry Classic, the worse it will be from a cash flow perspective, as any user who converts from an older BB7 device to the Classic stops paying the Service fees and needs to be won back again as a BES12 Software customer.

    Valuation: Lowering price target to $9 from $10

    We lower our 12-month price target to $9 from $10 as we lower our M&A rank from 1 to 2, implying a medium (15-30%) probability vs prior high (30-50%) probability, and our corresponding weight in our price target from 30% to 15%.

    Our price target methodology is now based 85% on a $9 sum-of-the-parts (SOTP) asset valuation (unchanged) and 15% M&A value of $11 using a 0.9X EV/S (unchanged). This approach assumes that BlackBerry’s turnaround ultimately proves unsuccessful. Our SOTP asset valuation assumes 1) projected cash ($3.5/share), 2) patents ($3.1), 3) BBM ($1.4), and 4) QNX ($0.9). Our M&A value of $11/ share is now weighted at 15% vs 30% previously, lowering our weighted 12-month price target to $9 from $10 as we remove the incremental premium. We describe our departmental M&A framework in more detail below.

    We see a reduced probably of M&A for several reasons: 1) After explicitly putting the company up for sale in 2013, the company is now prioritizing a turnaround over strategic alternatives, 2) BBRY shares are up around 80% since the 2013 lows while revenues are down more than 50%, thus making a takeout less likely (BBRY is now trading at 1.1X LTM EV/S, compared to HP’s acquisition of Palm at 0.9X and Google’s acquisition of Motorola Mobility at 1.1X), and 3) in response to press speculation (WSJ) that Samsung was interested in buying BlackBerry in January 2015, managements from both companies have come out and denied these allegations. In addition, while BlackBerry and Samsung have partnered on delivering KNOX security functions, Samsung also partners with BlackBerry’s competitors, such as MobileIron and Good Technology.

    Upside scenario yields only $10 per share valuation
    We also present for illustrative purposes an alternative SOTP scenario if BlackBerry were to succeed and deliver on its $500mn Software target (we currently model $426mn in FY16). In this alternative scenario, we value Blackberry’s operating businesses under the assumption of a more successful company transition, which we segment into Hardware, Software, and Services. Even in that upside scenario, we estimate a $10 per share SOTP valuation for the company. We value the operating businesses (hardware and software) using relative valuation and add the DCF from the Services business and the net cash on the balance sheet in the prior quarter (plus expected tax refunds).

    We value the Hardware business based on the trough valuations of other smartphone vendors that had struggled in the past, including HTC, Motorola Mobility, Nokia, and Palm. We value the Software business based on competitors including Citrix and Mobile Iron.

    Our M&A Framework
    Across our coverage universe, we examine stocks using an M&A framework, considering both qualitative factors (exposure to key markets/products, asset mix) and quantitative factors (IRR and theoretical returns following a buyout, using our standardized departmental LBO model) to incorporate the potential that certain companies could be acquired at a premium to current share prices.

    We then assign a M&A score as a means of ranking companies under coverage from 1 to 4, with 1 representing high (30%-50%) probability of M&A activity, 2 representing medium (15%-30%) probability, 3 representing low (10%-15%) probability and 4 representing minimal to no probability (0%-10%). For companies ranked 1 or 2, in line with our standard departmental guidelines we incorporate an M&A component into our target price.

    Sentiment appears overly complacent
    With the shares up over 80% since the 2013 lows, short interest has declined significantly. Also, we assume that some portion of the shares that are short are for hedging the $1.25bn convert, making the “real” underlying short interest less than the 17% of total shares outstanding. While the stock price and sentiment have justifiably improved during the successful phase 1 of the turnaround (cost-cutting and shoring up the balance sheet), we don’t think the stock reflects the much higher challenges associated with phase 2 of the turnaround (gaining share in a highly competitive market).
    And of course, this...

    Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
    Cheers and thanks!
    03-09-15 08:11 PM
  25. bbjdog's Avatar
    WHAT! He changes from bear to bull and then stops analyzing BlackBerry? Guess we can't have an analyst doing that now can we? There is a natural order that must be maintained at BBRY shareholder cost of course.

    LOL


    Posted via CB10
    Peter Misek I have followed for a while. When the BB10 was released, he was one of the bullish analyst on the software side. He really wasn't to much into the hardware, his argument was that BlackBerry was going to do a lot better with EMM,MDM and their bes server. He has always believed in BlackBerry. If anyone can recall he was always defending BlackBerry, when everyone was negative. I respect Peter Misek and his out of the box thinking. When everyone was talking about Z10, he was talking about EMM and BES10.

    Edit: all the best Morgan!
    Last edited by bbjdog; 03-09-15 at 09:14 PM.
    03-09-15 08:31 PM
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