[robin11]

Many have asked about Blackberry's cash position and why the company isn't spending it and leveraging the balance sheet with debt. Companies often use debt, leveraging the balance sheet to maximize "capital efficiencies" so why not Blackberry? My perspective is as follows:
1. Visibility is low. Heins has stated consumer and enterprise acceptance and adoption of OS10 devices and BES10 is unknown, and competitive pressures are high (from much larger companies with huge cash piles like Google, Samsung and Microsoft, all who covet Blackberry's enterprise market).
2. With such uncertainty, interest costs would be higher than usual, and loan and line of credit covenants would encumber assets and be very restrictive on cash flow thresholds and use of funds. Lenders provide an umbrella when they think the sun is shining, but always ask for it back when it rains, or when they think it will rain.
3. With new OS7 phone, and continued sales of OS7 phones, BIS revenues will continue for some time yet. Although subscribers will continue to decrease, hopefully they will stabilize, providing some ongoing revenue until restructuring is complete.
4. The restructuring will continue for the balance of 2014 through quarters 3 & 4. On the upside, in the next 3 quarterly reports, Blackberry needs to see and report traction in enterprise and consumer adoption. On the downside, should competitors eat into Blackberry's enterprise share in a serious way, consumers not adopt BB10 phones and the new OS, down sizing would have to continue, possibly selling some or all patents, selling the global server farms for BIS and BES10, and right sizing the company to match cash flow to its remaining viable assets which are subsidiaries like QNX and TAT etc.

The bottom line IS the bottom line. By running a conservative balance sheet with as much cash as possible, and not leveraging the balance sheet, management are free to adapt to enterprise and consumer market response, and budget and set quarterly goals without interference and restrictions from lenders, right sizing the company as markets and cash flow dictate. This assures survival, but in what form is unknown, even to management and the board. This is also why so many analysts are negative. Without clarity and visibility, Blackberry is a crap shoot in terms of share price.

[Jonesy1966]

Take a look at the mess that Nokia's in right now; selling plenty of phones but losing money hand over fist, mostly due to their uncontrollable debt load. There's your answer.

[bigbadben10]

Two very good observations here folks. Excellent!

Posted via CB10

[robin11]

Take a look at the mess that Nokia's in right now; selling plenty of phones but losing money hand over fist, mostly due to their uncontrollable debt load. There's your answer.

Nokia is Microsoft's b*tch now.

[bekkay]

By running a conservative balance sheet with as much cash as possible, and not leveraging the balance sheet, management are free to adapt to enterprise and consumer market response, and budget and set quarterly goals without interference and restrictions from lenders, right sizing the company as markets and cash flow dictate.

I am sorry, but most restrictions on the management's actions actually come from shareholders (who ultimately control the company), not lenders.

[Jonesy1966]

Nokia is Microsoft's b*tch now.

I look at it this way: If in your household your income exceeds your expenditures and you can put some to one side and you have reasonable savings stashed away for a rainy day, you don't go taking out a 2nd mortgage.

[smoothrunnings]

BBRY doesn't want it's investors to see just how much they are in the red as I am sure people would figure out the cash on hand is much smaller than their actual debt load.

[Jonesy1966]

BBRY doesn't want it's investors to see just how much they are in the red as I am sure people would figure out the cash on hand is much smaller than their actual debt load.

It is completely illegal for a CEO or board of directors, or anyone else for that matter, not to report debt to the shareholders, it's punishable by very lengthy jail terms and hefty fines if caught. All financials have to be reported and it's something they just couldn't get away with.