1. Rob1's Avatar
    Preview: BlackBerry investors to turn up the heat on management | Reuters

    (Reuters) - BlackBerry (BBRY.O) will likely face tough questions about its future at its annual meeting on Tuesday after dismal quarterly results last week triggered a 28 percent plunge in the Canadian smartphone maker's share price.

    Sales of BlackBerry's make-or-break new line of smartphones in the quarter ended June 1 came in well below analysts' expectations and offered little evidence that the company can quickly win back market share from Apple Inc's (AAPL.O) iPhone, Samsung's (005930.KS) Galaxy devices, and other phones powered by Google Inc's (GOOG.O) Android operating system.

    "The results were a quasi death knell for BlackBerry," said John Goldsmith, the deputy head of equities at Montrusco Bolton, which owns more than 1.5 million BlackBerry shares. "The share move last week was very violent. I think you are going to get people standing up and making their voices heard at the AGM."

    BlackBerry has forecast another operating loss for the current quarter, but Chief Executive Thorsten Heins said the company is on the right track and just needs more time.

    "This is a year of investment. We have managed our cash carefully and prudently, and we now have the funds to invest, so this is the 'create the future' year," Heins told Reuters.

    Some investors say BlackBerry must now look at all its options, from a sale of the whole company to a sale of parts. Its valuable patent portfolio and high-margin services business could draw interest from technology companies, according to bankers and investors.

    Interest from private equity is seen to be weak, however, and some investors said they fear that BlackBerry will only lose more value if it keeps posting losses, burning through cash and bleeding subscribers.

    "I think the pieces were worth more than the whole a year or two ago, but that's becoming less of a convincing argument and I am not sure it is true," said one fund manager, whose firm is one of BlackBerry's top 20 shareholders. The manager declined to be identified, citing to his firm's policy.

    Ottawa reviews any big takeover of a Canadian company for competitive and national security reasons. Government officials have often said they want BlackBerry to succeed as a Canadian company, but concede they do not know how things will play out.

    Given the uncertainty about its turnaround prospects, a foreign bid for BlackBerry could be palatable to Canadian regulators, some shareholders say.

    PROSPECTS THINNING

    Heins said BlackBerry is determined to stick to its strategy, and will unveil more devices that run on its new BlackBerry 10 operating system over the next eight months.

    "We stay the course. This is the course that management has created and it is course that the board has accepted," he said.

    A source close to BlackBerry said the sharp drop in the company's share price could trigger pressure on the board to re-examine its options, in spite of reluctance to do a deal.

    "It is the board's job to deal with this objectively, and we hope they would be objective enough to do the best thing for the shareholders," said Don Yacktman of Yacktman Asset Management, another top 20 investor in BlackBerry, with 5.8 million shares, according to Thomson Reuters data.

    Many investors say BlackBerry's new devices are impressive, but they fear the company lacks the wherewithal for a drawn-out fight against Apple and Samsung.

    BlackBerry also competes against Microsoft Corp (MSFT.O) to be the No. 3 platform in the smartphone market.

    "The problem here is they are facing Goliaths like Apple and Samsung, forget about the other Android devices. With a research and development budget that is a fraction of that of those two companies, how on earth can they compete?" Goldsmith said.

    "I love fairy tale endings as much as the next person, but this is David versus two Goliaths, so good luck." (Editing by Janet Guttsman; and Peter Galloway)
    00stryder and richardat like this.
    07-05-13 12:39 PM
  2. Sith_Apprentice's Avatar
    There are many good points in this article, and while I think a sale is premature, they do need to look at other competitive options. Licensing, Patent agreements, etc. BlackBerry needs to show investors it is making progress, and give them something to go on other than the earnings report.
    00stryder, Korepab and fedakd like this.
    07-05-13 12:52 PM
  3. EchoTango's Avatar
    Sadly, the prospects for BB to operate as a standalone company are pretty much gone. The last quarter was a barometer of BB10's trajectory and it looks like volumes are stabilizing at the 2.5 million level, not enough for a viable business. It's possible that this was a blip in the upward trend but the magnitude of the miss was just too great to be explained. Clearly something is wrong with the business model for BB10.

    Once again we all sit on the ledge waiting for something to happen. I'm very afraid, the company is positioning itself to go private, where preferred shareholders will dictate the terms of surrender to the rest and then capitalize on their previous investments. This is the common result of situations were struggling companies have large cash/equity reserves and are looking for protection from public scrutiny and control.

    Trust me, Prem Watsa will get paid in the end no matter how many BB10 units are sold.
    richardat likes this.
    07-05-13 01:50 PM
  4. Sith_Apprentice's Avatar
    Sadly, the prospects for BB to operate as a standalone company are pretty much gone. The last quarter was a barometer of BB10's trajectory and it looks like volumes are stabilizing at the 2.5 million level, not enough for a viable business. It's possible that this was a blip in the upward trend but the magnitude of the miss was just too great to be explained. Clearly something is wrong with the business model for BB10.

    Once again we all sit on the ledge waiting for something to happen. I'm very afraid, the company is positioning itself to go private, where preferred shareholders will dictate the terms of surrender to the rest and then capitalize on their previous investments. This is the common result of situations were struggling companies have large cash/equity reserves and are looking for protection from public scrutiny and control.

    Trust me, Prem Watsa will get paid in the end no matter how many BB10 units are sold.
    I disagree with this statement. This past quarter doesnt have the Q10 available for an entire quarter in all major markets. I think we will see BB10 at around 3.5-4mil units per quarter come next ER. I do agree there is something wrong with the business model, and the staggered launch + fragmented OS is a huge contributor to that.
    07-05-13 01:52 PM
  5. w0lfgang's Avatar
    I disagree with this statement. This past quarter doesnt have the Q10 available for an entire quarter in all major markets. I think we will see BB10 at around 3.5-4mil units per quarter come next ER. I do agree there is something wrong with the business model, and the staggered launch + fragmented OS is a huge contributor to that.
    I understand the whole "it didn't include Q10 sales" argument. But why then would they forecast ANOTHER loss for the next quarter? I hope you're right...if sales are dismal AGAIN....game over
    07-05-13 02:01 PM
  6. hauger's Avatar
    I understand the whole "it didn't include Q10 sales" argument. But why then would they forecast ANOTHER loss for the next quarter? I hope you're right...if sales are dismal AGAIN....game over
    Well hold on there Wolfgang. Keep in mind BB is still a multi-Billion dollar (revenue) business with some pretty clever people working for it. The level of "profit/loss" is a might bit more complex than a simple cash-register business where true profit basically equals accounting profit. In a way, warning of a next quarter loss might be very smart of TH and does not necessarily reflect the predicted success of the Q10.

    For example, say they're expecting modest shipments of the Z10 and Q10 (still waiting for the large IT departments to place their multi-thousand-unit orders). Playing on the fact the market has already priced in a loss to the stock price, the accounting department might be able to use the next quarter to book a number of write-downs and non-cash expenses that every company has to book eventually. Since the "loss" was expected, the market then doesn't punish them for taking the hit on these one-time items.

    That's why the story is never as simple as what's on the front page of the Financial Post. Posting a loss doesn't really mean anything unless there's an understanding of what's causing the loss and whether the cause is one-time or recurring. I was actually okay with last quarter's financials in that they posted a "loss" under conditions of largely increased expenses (marketing and administration), but managed to increase their cash position none-the-less indicating that of the 2.7 million BB10's shipped, the average margin was actually pretty good.

    That's not to say I think management should get a free pass. I think honestly the last quarter stands as a failure in marketing or at least follow-through (I remember being impressed with a semi-aggressive demo booth at Pearson Int Airport) but I'm scared there will be investor push to abandon the current course. Even if the board chooses to stay the course, a few stories of heavy-hitter investors demanding a sell-off or other such action could very easily undermine whatever stability is left and kill the company.

    Funny - 8 days ago I was waiting to reap the rewards of hearing BB beat the street and seeing the stock climb. Today, I'm really nervous for the company's future.
    07-05-13 02:22 PM
  7. w0lfgang's Avatar
    Funny - 8 days ago I was waiting to reap the rewards of hearing BB beat the street and seeing the stock climb. Today, I'm really nervous for the company's future.
    SAME here....yeah, like I was saying....I am by NO MEANS hoping for the companies demise....I have been telling everyone I know "No way is BB going out of business," and the like....I was as big a fanboy as any...and I hope you are right...
    I hate the other platforms...ugh! But, it's very frustrating to watch these imbeciles drive this nice shiny OS right off a fooking bridge! Hang on, I guess....we'll know soon enough
    I hope they "turn up the heat"....to BROIL
    07-05-13 02:32 PM
  8. Mudassir Ayub's Avatar
    Posted via CB10
    sunsetblow likes this.
    07-05-13 04:03 PM
  9. NYC10065's Avatar
    What is killing BBRY is arrogance, plain and simple. They were arrogant when Jim Balsillie was Co-CEO and that arrogance has never dissipated. They felt they could do no wrong. They didn't want to listen. They dismissed iOS and others as "outdated". The treated longstanding users with contempt (witness the holes in BB10 for longstanding BB users and Thorsten Heins' treatment of PB users). And now, they've set themselves on a strict path and they are going to proceed regardless of what the investors (the owners) say.
    07-05-13 04:13 PM

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