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- It's probably worth noting this about a direct competitor of Cylance:
"CrowdStrike hires Goldman Sachs for an IPO in the first half of 2019"
https://www.cnbc.com/2018/10/19/crow...f-of-2019.html04-25-19 03:27 PMLike 7 - Decent little reversal today, almost exactly fulfilling the bears' prediction that the 8.88 gap would get filled. Out of curiosity, and directed at people more familiar with tech indicators, why must gaps get filled? Given that this has happened multiple times, even if there are lags of months or sometimes years. If material news changes the valuation of a stock (as in the last earnings, or the QCOM award), when there is a fundamental change in valuation such as cash, why would any seller opt to let the shares go at the pre-news price?
And to that end after looking at some old candlestick charts, using the bears' own logic about 'all gaps must get filled', when should we expect the 16.44-16.18 gap from 11-Feb-2013, or the 29.25-24.60 gap of 16-Sept-2011 to get filled?Andy_bb_king likes this.04-25-19 03:48 PMLike 1 - It's probably worth noting this about a direct competitor of Cylance:
"CrowdStrike hires Goldman Sachs for an IPO in the first half of 2019"
https://www.cnbc.com/2018/10/19/crow...f-of-2019.html
Posted via CB1004-25-19 05:38 PMLike 3 - So, more from BoA/ML.
Takeaways from analyst day
Management recaps transition, reiterates FY20 outlook
BlackBerry recently hosted its 2019 analyst day in San Ramon, CA, with presentations from CEO John Chen, CFO Steve Capelli, and others. The main messaging of the day was similar to the 2018 event, with management recapping its difficult transition from lossmaking hardware to software/services. Although the revenue mix in FY19 has mostly flipped since FY14, from roughly 5% software revenue contribution in FY14 to 95% in FY19, BlackBerry’s legacy technologies, patents, and mobility expertise underpin much of the company’s strategy to enable customers to trust IoT through security, privacy, and control of data.
On financials, CFO Steve Capelli reiterated the company’s FY20 outlook for total revenue growth between 23% and 27% YoY, operating margins to dip YoY, and positive EPS/FCF for the year. Management also laid out a more detailed TAM (total addressable market) estimate of $22bn, which breaks down into $3bn for Communications, $3.2bn for Unified Endpoint Management, $1.8bn for Embedded Software, and $14bn for Endpoint Security. We believe the Endpoint Security estimate is high versus a $6.5bn Endpoint Protection Platform (EPP) market, per Gartner. However, we do recognize that Cylance also helps BlackBerry tap into the large $20bn+ cyber security services market. BlackBerry also more narrowly defined its direct TAM at $4.1bn, which represents the regulated industries and hyper-secure organizations where BlackBerry focuses. Lastly, management revisited its ‘timeless’ or long-term model, which calls for ~90% mix of recurring vs non-recurring software, 80-85% gross margin vs 78% in FY19, 20-25% operating margin vs 13% in FY19, and 25-30% adjusted EBITDA margin. Management believes it can approach the timeless model in roughly 3-5 years.
Cylance – artificial intelligence leadership
BlackBerry focused most of the day on its $1.4bn acquisition of Cylance. Cylance brings a leading endpoint protection platform to BlackBerry, which helps to fill out BlackBerry’s efforts to provide a broader EoT platform. Stuart McClure, Cylance’s co-founder/CEO and now BlackBerry’s President of Cylance, laid out Cylance’s journey and strategy to prevent cyber-attacks. Core to the Cylance DNA is the company’s AI and machine learning (ML) models to detect unknown threats and malware. A key differentiator is the ability of Cylance’s endpoint agent to apply AI/ML models even when offline from the network. The most obvious technology synergy between Cylance and BlackBerry in the near term is Cylance’s potential to bring security to BlackBerry’s mobile presence. Longer term, management praised Cylance’s AI leadership, which should provide a valuable foundation for the EoT/Spark efforts.
Cylance is expected to deliver roughly $217mn in FY20 revenue, representing the midpoint of management’s 25-30% growth outlook. The company has over 4k active total customers and 80 of the Fortune 500. Longer term, we do see an opportunity to cross-sell amongst BlackBerry’s core government and high-end enterprise customer base and Cylance’s more diversified enterprise and mid-market presence. However, in FY20, management expects to take cross-selling efforts slowly, first testing the waters with around 20-25 customers over coming quarters. BlackBerry may also be able to leverage Cylance’s partners such as Optiv, KPMG, and Verizon with its traditional enterprise offerings.
Negatively, Cylance remains in high-growth startup mode, with FCF margin of -52% and -$70mn cash burn last year. We expect BlackBerry’s operating margins and EPS to take a meaningful dip in FY20 from 12.4%/$0.21 to 4.8%/$0.10, respectively. Although management expects operating margin improvement and the deal to be accretive in FY21 and beyond, the tough competition in endpoint security and Cylance’s slowing growth may require more meaningful and disruptive cost-cutting over time.
IoT segments: ESS, BTS, Licensing
Enterprise Software and Services – more investment needed
Management also discussed each revenue segment in detail, yet we note that the segment reporting is slated to change in FY20 (see Table 1). The Enterprise Software & Services (ESS) segment, which mainly represents the UEM platform, Athoc, and SecuSuite, is expected to reach the low end of the 12-16% growth guidance at $408mn revenue in FY20. We see risk that operating expense growth is required to reignite growth, particularly with aged products like Athoc and SecuSuite. Management described both products’ go-to-market efforts as too narrowly focused on the government vertical, with new changes expected to better address enterprise trends. This is positive, in our view, as we believe BlackBerry has underinvested and lost market share in FY19. Despite a growth CAGR for the Communications market up 34% in 2017-2021 and the UEM market up 9% from 2017-2021, per management, BlackBerry’s ESS sales declined in FY19, even when adjusting for 606 accounting changes.
[…]
BlackBerry Technology Solutions – QNX remains the bright spot
The biggest change from the 2018 to 2019 event was the lack of emphasis on the BlackBerry Technology Solutions (BTS) segment. Although management remains positive on QNX auto design wins, growth prospects, and market leadership, there was little discussion of other efforts, such as Radar and asset tracking. We believe the Radar success to date has been disappointing, and management may have to restructure its go-to-market strategy to maintain viability. The QNX discussion was positive, with management seeing the revenue per car generally improving from roughly $1-3 to $3-5, with further upside potential as digital cockpits and ADAS (adaptive driver assistance system) functions become more widely adopted. We expect customers that adopt more of the QNX functions, such as Byton, Ford, and Land Rover, to represent revenue per car up to $25. Separately, despite a lot of focus on QNX fitting into the EoT platform and Cylance, we see very limited synergies. Management is targeting $237mn for FY20 BTS revenue, which represents the high end of the new IoT segment growth outlook of 12-16%, but we note the new reporting may make it difficult to judge the QNX vs Enterprise growth.
Licensing – tough to get comfortable with long-term trajectory
We continue to view the sustainability of the Licensing business (40% of total sales in 4Q19) as the biggest risk to longer-term revenue estimates. Management reiterated its FY20 outlook for a 5% segment revenue decline to roughly $270mn, but we see some risks in achieving this target and maintaining the revenue level. First, we note that the 4Q19 upside was driven by 71% YoY growth in Licensing from $58mn to $99mn. However, $46mn of the $99mn was non-cash consideration for patents received. We view this as a particularly weak driver for the 4Q19 revenue beat. Second, the recurring run-rate for the Licensing business is estimated at $160mn, per management. We believe roughly $20mn of the $160mn annual revenue was derived from the Emtek BBM licensing agreement and Emtek just publically announced it is discontinuing its BBM (BlackBerry Messenger) app. With added potential pressure on the $160mn recurring licensing revenue and a steep target for $100mn+ one-time licensing revenue in FY20, we see risk to licensing revenue estimates in FY20 and longer term.
Spark and BlackBerry’s EoT aspirations
With all eyes on BlackBerry’s EoT plans and roadmap for Spark, the presentations mostly disappointed, in our view. Spark is meant to bring together BlackBerry’s IoT-related technologies, such as UEM, Cylance, QNX, Certicom, Radar, and Athoc, into a common platform. However, we believe the glue to piece together these disparate products is still missing, and many of the pieces may prove to be unrelated. For instance, Radar container tracking has little overlap with notifying employees of emergencies with Athoc. Encrypting data transmission also is common in any communication today for a wide range of applications. Additionally, QNX has a strong presence in IoT devices, namely autos, yet application developers leveraging the QNX OS and IT admins securing email accounts with UEM are worlds apart, in our view. We recognize that more details related to Spark will likely be announced with its release in September 2019, but currently we see few tangible use cases and view BlackBerry’s portfolio as mostly unrelated technologies. The most meaningful near- to medium-term opportunity is for BlackBerry to prove that customers find value in combining UEM and Cylance into a common platform.
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.04-25-19 05:54 PMLike 5 - Just read through the 10Q's for both FB & SNAP.
For SNAP, in the notes, there was no change to the wording in their contingency, legal matters, or patent litigation sections from the previous report.
For FB, in the notes, no change to patent litigation section, but a change in contingency / legal matters section from the previous report:
They added 2 sentences about an FTC inquiry and estimating a range of loss from $3-5 billion.
They also added the following sentence:
"In addition to the FTC matter, although we believe that it is reasonably possible that we may incur a substantial loss in some of the other cases, actions, or inquires described above, we are currently unable to estimate the amount of such losses or a range of possible losses."
They have many other suits against them currently, so read into it how you want.
Posted via CB1004-25-19 07:19 PMLike 12 - BlackBerry Short Interest drops again.
Drops 0.6% or 123,492 shares; down to 19.43 million as of 4/15. Not great, but with the spike and sell off after ER, is better than increasing.
Posted via CB1004-26-19 05:39 AMLike 9 -
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.
If Optiemus and BBMo folded up tomorrow like BB Merah Puthih did. Would it matter? I sure revenues would drop to some degree, but so would associated cost (in time). I'm not sure these are even profitable for them, we haven't gotten to the levels most were talking about back 2-1/2 years ago.
By the end of the year is sounds like SAF will be over... might be a good thing for investors if the smartphone IP Licencing ended as well by that point.morganplus8 and Greened like this.04-26-19 10:02 AMLike 2 - From the only contributor to SA whose work I will post:
BlackBerry Software Revenue: A Billion-Dollar BB Is Re-Born
Gio Danisi04-26-19 10:42 AMLike 6 -
To be coy for a moment, It's only asset destruction if it is an asset that we are talking about.
Have you tried BBMe yet? Minus some stickers and the Channels, it is supposed to be pretty good.rarsen and morganplus8 like this.04-26-19 12:10 PMLike 2 - OT:
https://www.cbc.ca/news/politics/pri...book-1.5110304
Facebook breached Canada's privacy laws, watchdogs' report finds
Federal privacy commissioner plans to take social media network to court
Good find!! That is big news that we need behind us, in perfect timing too.
Say what you may about the current US president, but one plus from his "Fake News" campaign is that a ton of truths are now surfacing. This Fake-book being just one.
I see the Hedge Funds are coming back:
https://finance.yahoo.com/news/were-...html?.tsrc=rssLast edited by Bacon Munchers; 04-26-19 at 12:58 PM.
smithm565 and morganplus8 like this.04-26-19 12:29 PMLike 2 - Analyst Summit 2019 Presentation:
https://www.blackberry.com/content/d...esentation.pdf
Analyst Summit 2019 Strategic & Financial Session
https://www.blackberry.com/content/d...l-sessions.pdf04-26-19 01:15 PMLike 5 -
With BBM consumer going EOL one can hope that they expend the energy and resources to at least put groups back in. But I doubt that will ever happen.
The separate encryption of each and every transmission is kinda cool even if there's no real way to test/see it is really happening.morganplus8 and Bacon Munchers like this.04-26-19 01:46 PMLike 2 - BBMe pales in comparison to BBM consumer. When they did the split they removed groups, stickers and a host of other stuff. Plus, there is a bit of undocumented stuff you have to do if you buy several licenses at once. You become a "company" and invites and admin are done through a website. That site, while intuitive enough, wasn't very well documented in the beginning. I haven't logged into it in years to see if anything changed or improved.
With BBM consumer going EOL one can hope that they expend the energy and resources to at least put groups back in. But I doubt that will ever happen.
The separate encryption of each and every transmission is kinda cool even if there's no real way to test/see it is really happening.
I saw BBM Consumer as a bloated app. No need for all those things that they tried to bolt on.
End to end encryption alone make BBMe a better app in my view.04-26-19 04:30 PMLike 3 - I've been following BB a lot more intently over the last few weeks, possibly due to frustration over the price despite good news. The cognitive dissonance in my brain of a stronger and stronger company that's being rewarded with a weaker and weaker share price needs reconciling. Here's a bit more, so lets see how the market reacts.
https://www.pacermonitor.com/public/...ook,_Inc_et_al
Basically is an update to the lawsuit yesterday from FB.
"NOTICE Withdrawing Pre-Institution Motion to Stay in View of Court's Guidance filed by Defendants Facebook, Inc., Instagram, LLC, Snap Inc, WhatsApp Inc.. (Keefe, Heidi) "
Again not a lawyer, but my understanding was FB filed a motion to stay (suspend) the proceeding, pending a full review of all of BB's patents and their validity. Could be argued that this was nothing more than a stalling tactic.
"In view of court's guidance" I think could refer to Judge Wu saying something along the lines of "quit screwing around, cut the BS and get on with it". It could also mean they're closer to a settlement, but then I'm not sure if it need reference the court's guidance. Regardless, a positive development in my opinion.04-27-19 08:38 AMLike 9 - PR:
BlackBerry Cylance to Receive IRAP Certification
Company Becomes First Endpoint Security Provider To Complete Assessment To Deliver Native AI Security to Australian Federal Agencies04-29-19 07:38 PMLike 10 - ... just a couple quick things, slightly OT:
BlackBerry rss feed I noticed is no longer valid in my news reader. Looks like they only have their website Blog running(?)
Also, BlackBerry has endorsed using Zoom video some time ago when people were barking about BBM Video not being cross-platform.
Lately Zoom has taken off in the market with their recent IPO, but a word of caution to investors, as it looks like people are piling into the wrong symbol!
If you want a chuckle, check out 'ZOOM' vs. 'ZM' and note the sudden massive increase on ZOOM price.
Sorry, this is really only for stock nerds....04-30-19 12:25 PMLike 7 -
LOL
Well, maybe not all analysts, but most likely the analysts still talking SAF and EMM will say that.morganplus8 likes this.04-30-19 03:38 PMLike 1 -
Sometimes companies decide to reverse split their shares just because they want to offer their shares at reasonable prices to attract new shareholders. There are examples of stocks that have prospered after doing so, including Citigroup (C). Citi probably had the most famous reverse split—a 1 for 10 reverse split in May 2011. Citi became a $40 stock and is now trading at $66. The split was billed as “returning value to the shareholders.” The company had already survived the financial meltdown, and had begun paying a dividend, so investors thought it probably couldn’t get any worse. And they were right!
Other companies like AIG (AIG), E*Trade (ETFC), Motorola (MSI) and Priceline.com (PCLN), have endured—and prospered—after a reverse stock split.
You can see that these firms that not only survived but prospered were fairly large and well-known businesses. And most studies have confirmed that firm size is very important in the determination of successful reverse stock splits, along with operating and price performance prior to the split, and, of course, market volatility.
I think you can conclude that, to be on the safe and conservative side of investing, if one of your holdings announces a reverse stock split, and it is a struggling, small company, you might do well to cut your losses. However, if it falls into the category of a well-run company, you can investigate a bit more to see if dumping your shares is the prudent thing to do.
https://cabotwealth.com/daily/how-to...-shareholders/
Posted via CB1004-30-19 05:35 PMLike 4 - Reverse Stock Splits Aren’t All Bad
Sometimes companies decide to reverse split their shares just because they want to offer their shares at reasonable prices to attract new shareholders. There are examples of stocks that have prospered after doing so, including Citigroup (C). Citi probably had the most famous reverse split—a 1 for 10 reverse split in May 2011. Citi became a $40 stock and is now trading at $66. The split was billed as “returning value to the shareholders.” The company had already survived the financial meltdown, and had begun paying a dividend, so investors thought it probably couldn’t get any worse. And they were right!
Other companies like AIG (AIG), E*Trade (ETFC), Motorola (MSI) and Priceline.com (PCLN), have endured—and prospered—after a reverse stock split.
You can see that these firms that not only survived but prospered were fairly large and well-known businesses. And most studies have confirmed that firm size is very important in the determination of successful reverse stock splits, along with operating and price performance prior to the split, and, of course, market volatility.
I think you can conclude that, to be on the safe and conservative side of investing, if one of your holdings announces a reverse stock split, and it is a struggling, small company, you might do well to cut your losses. However, if it falls into the category of a well-run company, you can investigate a bit more to see if dumping your shares is the prudent thing to do.
https://cabotwealth.com/daily/how-to...-shareholders/
Posted via CB1004-30-19 08:38 PMLike 0
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