01-27-18 07:42 PM
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  1. Chuck Finley69's Avatar
    In order to clarify my point a little bit, I am aware of the fact that Watsa owns shares of stock as well as convertible debt. But if he views any return on the stock as more speculative and return on his debt as a lucrative safe bet, he will use his influence on the board and with his CEO to serve the interests of the debt holders.

    (Even after the much ballyhooed conversion to a software company, Blackberry is still losing money. If we are waiting for income from self driving cars then good luck with that and it will be a long wait.)

    I admit I haven't laid out Watsa's debt/equity positions in a spreadsheet (or in Docs to go) and analyzed them. But I do not think that this is so common a scenario in publicly traded companies. Perhaps I'm wrong but that doesn't change the ethical issues.

    Posted via CB10
    It's either legal or it's not and this is very common in turnaround situations. You don't view separately. It's part of an overall strategy used just like option hedging using collars and so forth. This is basically what insurance companies do from everything to policyholders to outside companies. It's also similar in strategy to casinos operate long term using odds.

    Again, laws are written and your obligations are to shareholders and debtholders. You can debate ethics with your own money but fiduciary standards actually force you to leave your viewpoint out since your job is to look out for your clients best interests legally, not yours morally.
    anon(9803228) likes this.
    12-22-17 04:40 PM
  2. JSmith422's Avatar
    In order to clarify my point a little bit, I am aware of the fact that Watsa owns shares of stock as well as convertible debt. But if he views any return on the stock as more speculative and return on his debt as a lucrative safe bet, he will use his influence on the board and with his CEO to serve the interests of the debt holders.

    (Even after the much ballyhooed conversion to a software company, Blackberry is still losing money. If we are waiting for income from self driving cars then good luck with that and it will be a long wait.)

    I admit I haven't laid out Watsa's debt/equity positions in a spreadsheet (or in Docs to go) and analyzed them. But I do not think that this is so common a scenario in publicly traded companies. Perhaps I'm wrong but that doesn't change the ethical issues.

    Posted via CB10
    Completely agree.
    12-23-17 12:18 AM
  3. JSmith422's Avatar
    It's either legal or it's not and this is very common in turnaround situations. You don't view separately. It's part of an overall strategy used just like option hedging using collars and so forth. This is basically what insurance companies do from everything to policyholders to outside companies. It's also similar in strategy to casinos operate long term using odds.

    Again, laws are written and your obligations are to shareholders and debtholders. You can debate ethics with your own money but fiduciary standards actually force you to leave your viewpoint out since your job is to look out for your clients best interests legally, not yours morally.
    I don't think his point revolved around whether it was legal, illegal, moral, etc.....just that it happened the way that it did because interests were not aligned. Had it been an equity investment instead of debt, even at a preferred tier, there would have been a lot more money available for investment in BB10 or other products which would ultimately benefit equity holders. Instead, they chose to make it a debt placement, then eliminate costs, and reduce overhead. They get first dollar out, and any equity they do hold is gravy, not the meat and potatoes. It's a typical turnaround strategy, and it's never about developing new products or services.
    12-23-17 12:29 AM
  4. markmall's Avatar
    I don't think his point revolved around whether it was legal, illegal, moral, etc.....just that it happened the way that it did because interests were not aligned. Had it been an equity investment instead of debt, even at a preferred tier, there would have been a lot more money available for investment in BB10 or other products which would ultimately benefit equity holders. Instead, they chose to make it a debt placement, then eliminate costs, and reduce overhead. They get first dollar out, and any equity they do hold is gravy, not the meat and potatoes. It's a typical turnaround strategy, and it's never about developing new products or services.
    Yes and no. He conflated two different things. I never suggested it was unlawful or unethical for a large shareholder to hold debt. I did suggest that it is unlawful and unethical when that person influences the CEO to act in any way not in the best interests of the shareholders.

    The debt holders are third parties with contractual rights and no more. The shareholders are owed a fiduciary by the CEO.

    Posted via CB10
    12-24-17 09:59 PM
  5. dpgo's Avatar
    You don't need to do installation on a xperia if you buy a Jolla device.
    I think it is a super nice feature to deliver an OS which is not so device specific. If u can install the OS u like on your computer why on a phone is different?
    I know that drives is the answer but same happened with linux at beginning and now linux is compatible with almost all hardware.

    BlackBerry should let users to decide what we want to do with our 'old' devices, and give to some of us a procedure to unclock our super secure firmware/bootloader. After that Sailfish, Cyanogen,ubuntu....could think in use a potencial users.

    In the same way I will not move to new BlackBerry until I have the freedom of installing what I want



    Posted via CB10
    12-25-17 03:53 AM
  6. Richard Buckley's Avatar
    There is also Lineage OS, don't know if anyone has brought it up yet. But you can, apparently, download the OS to install on phones that you can buy, or may already have.

    But Lineage still has the same problems as all Android forks: it assumes the main issue is with Google; and that a rich echo Android system can be built by a crowd without GPS. The latter is the same dream the proponents of widespread adoption of Linux on desktop have, which has also consistently failed to come about.



    LeapSTR100-2/10.3.3.2205
    ppeters914 likes this.
    12-25-17 09:00 AM
  7. dpgo's Avatar
    There is also Lineage OS, don't know if anyone has brought it up yet. But you can, apparently, download the OS to install on phones that you can buy, or may already have.

    But Lineage still has the same problems as all Android forks: it assumes the main issue is with Google; and that a rich echo Android system can be built by a crowd without GPS. The latter is the same dream the proponents of widespread adoption of Linux on desktop have, which has also consistently failed to come about.



    LeapSTR100-2/10.3.3.2205
    Yes, I said cyanogenmod but the current succesor is lineage OS.
    The project is quite big, and in any moment I can achive success, maybe just a movement of support from a big phone company.

    Our problem, is that even if community is ready to start porting, compiling,etc for our BlackBerry 10 or BlackBerry android, bootloader must be unlocked, otherwise there is not a single chance.

    BlackBerry should realize that there is a need for some users, it is nieche, and this happy users can be its best marketing campaign in a new potential market.

    Posted via CB10
    12-25-17 09:43 AM
  8. Richard Buckley's Avatar
    Yes, I said cyanogenmod but the current succesor is lineage OS.
    The project is quite big, and in any moment I can achive success, maybe just a movement of support from a big phone company.

    Our problem, is that even if community is ready to start porting, compiling,etc for our BlackBerry 10 or BlackBerry android, bootloader must be unlocked, otherwise there is not a single chance.

    BlackBerry should realize that there is a need for some users, it is nieche, and this happy users can be its best marketing campaign in a new potential market.

    Posted via CB10
    Ah, that's why they have a large base of supported devices.

    Don't ever expect BlackBerry to back away from the Root of Trust aspect of their products. It is their only true differentiation in a sea of Android devices. As soon as they allow one non-BlackBerry OS past the RoT that will be gone forever. Trust is fragile.

    LeapSTR100-2/10.3.3.2205
    ppeters914 likes this.
    12-25-17 10:52 AM
  9. Invictus0's Avatar
    You don't need to do installation on a xperia if you buy a Jolla device.
    Sailfish X has to be loaded onto an Xperia device, it doesn't come pre-installed.
    12-25-17 11:04 AM
  10. Chuck Finley69's Avatar
    I don't think his point revolved around whether it was legal, illegal, moral, etc.....just that it happened the way that it did because interests were not aligned. Had it been an equity investment instead of debt, even at a preferred tier, there would have been a lot more money available for investment in BB10 or other products which would ultimately benefit equity holders. Instead, they chose to make it a debt placement, then eliminate costs, and reduce overhead. They get first dollar out, and any equity they do hold is gravy, not the meat and potatoes. It's a typical turnaround strategy, and it's never about developing new products or services.
    It's the same billion dollars either way.... How does it allow for more BB10 either way? Even straight common stock, anyone pumping billion dollars into almost bankrupt company would be making same demands of naming CEO and strategies taken. Once BB10 and BlackBerry failed to sell and be sold, previous management and previous strategy were over and done with. That's just how things are with ALL Capital infusion at that stage and situation. BlackBerry was reduced to beggar status and isn't much above that now. Even now, they're in no position to make any demands of any of their institutional shareholders.
    12-25-17 09:05 PM
  11. Chuck Finley69's Avatar
    Yes and no. He conflated two different things. I never suggested it was unlawful or unethical for a large shareholder to hold debt. I did suggest that it is unlawful and unethical when that person influences the CEO to act in any way not in the best interests of the shareholders.

    The debt holders are third parties with contractual rights and no more. The shareholders are owed a fiduciary by the CEO.

    Posted via CB10
    The interests are very aligned, for company success only. Existing creditors were threatening BlackBerry with bankruptcy for violating debt covenants. If pushed into bankruptcy through debt covenant violations, existing shareholders would be wiped out anyway. The BOD and management has fiduciary obligations to more than just common shareholders...

    At the original stage of this all, Fairfax was equity holder and launched a bid for BlackBerry. The loan was offered after nobody wanted to buy the company anymore.

    Without cash, BlackBerry and BB10 was done unless some philanthropist that loved BB10 and hated Android/IOS wanted to burn cash like Bill Gates and Microsoft only could afford. They looked at BlackBerry and chose to pass.
    anon(9803228) likes this.
    12-25-17 09:11 PM
  12. markmall's Avatar
    The interests are very aligned, for company success only. Existing creditors were threatening BlackBerry with bankruptcy for violating debt covenants. If pushed into bankruptcy through debt covenant violations, existing shareholders would be wiped out anyway. The BOD and management has fiduciary obligations to more than just common shareholders...

    At the original stage of this all, Fairfax was equity holder and launched a bid for BlackBerry. The loan was offered after nobody wanted to buy the company anymore.

    Without cash, BlackBerry and BB10 was done unless some philanthropist that loved BB10 and hated Android/IOS wanted to burn cash like Bill Gates and Microsoft only could afford. They looked at BlackBerry and chose to pass.
    There was a common interest that Blackberry not go bankrupt. That risk was virtually gone once Watsa put in his money and Chen sold everything. That was just a period of months. I'm talking about a period of 3 or 4 years.

    "The interests are very aligned, for company success only."

    Not really. A debt-holder just wants the company to avoid bankruptcy until its notes are paid off. He doesn't care about the long term success, just that there is not catastrophic failure before he gets paid off.
    Last edited by markmall; 12-26-17 at 05:21 PM.
    12-26-17 05:03 PM
  13. markmall's Avatar
    It's the same billion dollars either way.... How does it allow for more BB10 either way? Even straight common stock, anyone pumping billion dollars into almost bankrupt company would be making same demands of naming CEO and strategies taken. Once BB10 and BlackBerry failed to sell and be sold, previous management and previous strategy were over and done with. That's just how things are with ALL Capital infusion at that stage and situation. BlackBerry was reduced to beggar status and isn't much above that now. Even now, they're in no position to make any demands of any of their institutional shareholders.
    It's not like there were no decisions to be made after Chen was installed. JSmith422 is correct that is Watsa was a pure equity holder he might push for different decisions. I recall a shareholder asking Chen at a shareholder meeting if Blackberry would spend anything on advertising. Chen responded that he gets the best "bang for the buck" with targeted internet ads. [This is like people that use Crackberry or search for "Passport" receive ads for the Passport, but no one else.] When I heard this I knew that Chen was not serious about doing what would have to be done to succeed in the handset market, and his forays into other areas would be even more speculative without any real competitive advantage for the company. I lost interest in investing in BBRY.

    These smaller decisions can make a big difference. My belief is that Watsa and his people influenced Chen to be more risk averse that the individual shareholder should want because Watsa was very concerned with his debt position. Yes, this decreases the chance that BBRY goes bankrupt, but it also decreases the chance that a small shareholder receives any significant return on his investment.

    I don't know what you mean by "make any demands of any of their institutional shareholders." Large shareholders should not be controlling company strategy in any way not for the benefit of the company as a whole. There are many cases where minority shareholders file lawsuits because majority shareholders control the company in a way not in the best interests of the overall shareholders.
    DonHB likes this.
    12-26-17 05:16 PM
  14. Chuck Finley69's Avatar
    It's not like there were no decisions to be made after Chen was installed. JSmith422 is correct that is Watsa was a pure equity holder he might push for different decisions. I recall a shareholder asking Chen at a shareholder meeting if Blackberry would spend anything on advertising. Chen responded that he gets the best "bang for the buck" with targeted internet ads. [This is like people that use Crackberry or search for "Passport" receive ads for the Passport, but no one else.] When I heard this I knew that Chen was not serious about doing what would have to be done to succeed in the handset market, and his forays into other areas would be even more speculative without any real competitive advantage for the company. I lost interest in investing in BBRY.

    These smaller decisions can make a big difference. My belief is that Watsa and his people influenced Chen to be more risk averse that the individual shareholder should want because Watsa was very concerned with his debt position. Yes, this decreases the chance that BBRY goes bankrupt, but it also decreases the chance that a small shareholder receives any significant return on his investment.

    I don't know what you mean by "make any demands of any of their institutional shareholders." Large shareholders should not be controlling company strategy in any way not for the benefit of the company as a whole. There are many cases where minority shareholders file lawsuits because majority shareholders control the company in a way not in the best interests of the overall shareholders.
    Every common shareholder gets the same return on investment as long as they bought at same price.... Larger shareholders get a larger voice because they put in more cash. The rules are written that every share gets one vote. More shares equals more votes. If you want to control direction of the company as shareholder, be the largest shareholder. It's capitalism, that's all. What's they saying? Don't hate the player, hate the game. I didn't write the rules but I can assure you they are written to give weight to little guys if they want to band together just like big guys.....

    Some companies issue different classes of common stock and then large shareholders of special voting stock could override regular shares. That's not the case with BlackBerry on common shares.

    As far as Prem goes, he was a large equity only holder that bet on BlackBerry and realized the BB10 strategy was very wrong. He and his executive management have fiduciary obligations to shareholders of Fairfax and they expect Prem to do whatever to protect their interest. The previous BOD eff'd up when they let previous executives pursue BB10 strategy as long as they did when they did. The company never should have run out shareholders money the way they did.

    If you want to gamble and go for broke, that's your right, if you have enough common shares to win a board vote to install your own CEO.

    Your conflict of interest can't really be considered a conflict of interest because it has the support of the majority of common shareholders. Those shareholders include people with just one share....
    12-26-17 06:12 PM
  15. markmall's Avatar
    Every common shareholder gets the same return on investment as long as they bought at same price.... Larger shareholders get a larger voice because they put in more cash. The rules are written that every share gets one vote. More shares equals more votes. If you want to control direction of the company as shareholder, be the largest shareholder. It's capitalism, that's all. What's they saying? Don't hate the player, hate the game. I didn't write the rules but I can assure you they are written to give weight to little guys if they want to band together just like big guys.....

    Some companies issue different classes of common stock and then large shareholders of special voting stock could override regular shares. That's not the case with BlackBerry on common shares.

    As far as Prem goes, he was a large equity only holder that bet on BlackBerry and realized the BB10 strategy was very wrong. He and his executive management have fiduciary obligations to shareholders of Fairfax and they expect Prem to do whatever to protect their interest. The previous BOD eff'd up when they let previous executives pursue BB10 strategy as long as they did when they did. The company never should have run out shareholders money the way they did.

    If you want to gamble and go for broke, that's your right, if you have enough common shares to win a board vote to install your own CEO.

    Your conflict of interest can't really be considered a conflict of interest because it has the support of the majority of common shareholders. Those shareholders include people with just one share....
    You lost me a little at the end. Prem is not a majority shareholder or even close to it, correct?

    Also, decisions like marketing budgets, whether to sell a building or fire every last BB10 engineer are not decisions that shareholders get to vote on. Their representatives on the board or the CEO makes these decisions. If their representatives have a side agenda to benefit certain large shareholders and take actions not in the best interests of the company -- and by extension smaller shareholders -- this is illegal.

    I don't think Chen will ever face a suit on the ground I described because it would be so hard to prove anything he did was not in the best interests of the company. It's just my opinion that he half-a--ed everything he did from his many BB10 phone launches to his Android phone launches and that this overly conservative approach was motivated by Watsa's concern over his debt position.

    This is not OK if it happened. This is a soft form of corruption that hurts small investors.

    Posted via CB10
    12-26-17 06:48 PM
  16. Chuck Finley69's Avatar
    You lost me a little at the end. Prem is not a majority shareholder or even close to it, correct?

    Also, decisions like marketing budgets, whether to sell a building or fire every last BB10 engineer are not decisions that shareholders get to vote on. Their representatives on the board or the CEO makes these decisions. If their representatives have a side agenda to benefit certain large shareholders and take actions not in the best interests of the company -- and by extension smaller shareholders -- this is illegal.

    I don't think Chen will ever face a suit on the ground I described because it would be so hard to prove anything he did was not in the best interests of the company. It's just my opinion that he half-a--ed everything he did from his many BB10 phone launches to his Android phone launches and that this overly conservative approach was motivated by Watsa's concern over his debt position.

    This is not OK if it happened. This is a soft form of corruption that hurts small investors.

    Posted via CB10
    Prem has the majority shareholders backing his agenda. They've voted to support his agenda which is basically whatever Chen wants as entrusted by Fairfax/Prem
    12-26-17 07:15 PM
  17. JSmith422's Avatar
    Yes and no. He conflated two different things. I never suggested it was unlawful or unethical for a large shareholder to hold debt. I did suggest that it is unlawful and unethical when that person influences the CEO to act in any way not in the best interests of the shareholders.

    The debt holders are third parties with contractual rights and no more. The shareholders are owed a fiduciary by the CEO.

    Posted via CB10
    Agreed.
    12-27-17 07:44 PM
  18. JSmith422's Avatar
    It's the same billion dollars either way.... How does it allow for more BB10 either way? Even straight common stock, anyone pumping billion dollars into almost bankrupt company would be making same demands of naming CEO and strategies taken. Once BB10 and BlackBerry failed to sell and be sold, previous management and previous strategy were over and done with. That's just how things are with ALL Capital infusion at that stage and situation. BlackBerry was reduced to beggar status and isn't much above that now. Even now, they're in no position to make any demands of any of their institutional shareholders.
    The difference is cash flow - plus owning stock is definitely different than holding debt and has a whole different bundle of rights. If you want to be involved in the direction of the company that SHOULD be a stock deal, not debt....if it's blended and someone is holding debt and stock you have the opportunity for a conflict of interest.
    12-27-17 07:53 PM
  19. Chuck Finley69's Avatar
    The difference is cash flow - plus owning stock is definitely different than holding debt and has a whole different bundle of rights. If you want to be involved in the direction of the company that SHOULD be a stock deal, not debt....if it's blended and someone is holding debt and stock you have the opportunity for a conflict of interest.
    Sure. That's why shareholders can demand that deal could be put to a proxy vote? Large shareholders gave board majority support to accept debt with disclosed requirements like giving Prem a board seat and naming choice of CEO for turnaround plans.

    There was nothing shady or illegal about the deal. Prem had also tendered initial buyout offer. The BOD and shareholders chose to pursue debt offering with Prem. It had majority support. BB10 was dead whether company took debt or not because it was outta cash for operations and all the other possible buyers were circling like vultures hoping board would decline offer and file bankruptcy protection instead. Under that scenario, creditors would have allowed the company to be picked clean and shareholders would have been wiped out.

    There is no conflict of interest when the conflict is disclosed beforehand. The shareholders don't have to accept the loan to save the company.
    Last edited by Chuck Finley69; 12-27-17 at 08:27 PM.
    anon(9803228) likes this.
    12-27-17 08:08 PM
  20. Troy Tiscareno's Avatar
    I don't think Chen will ever face a suit on the ground I described because it would be so hard to prove anything he did was not in the best interests of the company. It's just my opinion that he half-a--ed everything he did from his many BB10 phone launches to his Android phone launches and that this overly conservative approach was motivated by Watsa's concern over his debt position.

    This is not OK if it happened. This is a soft form of corruption that hurts small investors.
    The BB10 business was over by fall of 2013 when the company was put up for sale. Chen didn't half-*** anything - he intentionally and absolutely spent as little as possible on the money-losing handset business (BB10 in particular) because it was already decided that BB10 - and probably smartphones as a whole - were over. Unfortunately, Chen inherited a bunch of contractual commitments to buy components, so he had to keep the phone business going as cheaply as possible to sell as much of those components as possible until those purchase commitments had been fulfilled.

    No one at BB was under any illusion that BB10 was savable - again, that decision was made before Watsa's loan and before Chen was even hired; it's why Heins was fired and accounting firms brought in to consult. Of course, BB didn't talk about that publicly - that would have undermined the sales of the phones that they were still building with those parts they'd already committed to buy - but it was clear that the decision was made. Chen made plenty of vague half-commitments to the phone business with sales-target caveats (which BB never came close to meeting), and was clear that if those goals weren't met, that BB would exit hardware. People don't say things like that unless it's likely that they'll be following through on that.
    Dunt Dunt Dunt likes this.
    12-28-17 03:06 AM
  21. Chuck Finley69's Avatar
    You lost me a little at the end. Prem is not a majority shareholder or even close to it, correct?

    Also, decisions like marketing budgets, whether to sell a building or fire every last BB10 engineer are not decisions that shareholders get to vote on. Their representatives on the board or the CEO makes these decisions. If their representatives have a side agenda to benefit certain large shareholders and take actions not in the best interests of the company -- and by extension smaller shareholders -- this is illegal.

    I don't think Chen will ever face a suit on the ground I described because it would be so hard to prove anything he did was not in the best interests of the company. It's just my opinion that he half-a--ed everything he did from his many BB10 phone launches to his Android phone launches and that this overly conservative approach was motivated by Watsa's concern over his debt position.

    This is not OK if it happened. This is a soft form of corruption that hurts small investors.

    Posted via CB10
    What exactly did he do or not do, that was not in the best interest of the company?
    12-28-17 06:01 AM
  22. JSmith422's Avatar

    There is no conflict of interest when the conflict is disclosed beforehand. The shareholders don't have to accept the loan to save the company.
    Disclosure of a conflict does not eliminate said conflict.
    12-28-17 02:35 PM
  23. app_Developer's Avatar
    What exactly did he do or not do, that was not in the best interest of the company?
    That’s what I’m trying to figure out from this thread.

    If the issue here is investment in BB10, that wouldn’t have been good for debt OR equity. We’d all have lost a ton of money if they kept throwing good money after bad. On that issue I think any sensible investor in BB, Watsa and BoD included, should agree.
    anon(9803228) likes this.
    12-28-17 05:24 PM
  24. markmall's Avatar
    Disclosure of a conflict does not eliminate said conflict.
    That is right. If Chen made an announcement in 2013 that starting from the date of his hiring he would act in the best interests of both the shareholders and the debt holders -- because his favorite shareholder held debt -- this would still be illegal.

    Posted via CB10
    12-29-17 12:31 AM
  25. markmall's Avatar
    That’s what I’m trying to figure out from this thread.

    If the issue here is investment in BB10, that wouldn’t have been good for debt OR equity. We’d all have lost a ton of money if they kept throwing good money after bad. On that issue I think any sensible investor in BB, Watsa and BoD included, should agree.
    Why do you guys keep fixating only on BB10? His Android effort was half--ssed also.

    Troy, you keep stating that Chen meant to fail on BB10 just to burn off purchase commitments. I watched the whole thing play out and do not agree with this. I don't think Chen had enough information even to know it would fail. This was not even his area.

    Chen's management style guaranteed its failure though. That is the risk aversion a lender would prefer but a shareholder would abhor.

    Posted via CB10
    DonHB likes this.
    12-29-17 12:40 AM
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