1. KemKev's Avatar
    From the Financial Post section of Canada's National Post. A bit long but worth the read...

    BlackBerry Ltd’s near-death experience has passed, but rebuilding balance sheet won’t be easy

    The clock is still ticking on BlackBerry Ltd.’s attempted turnaround, but it’s clear chief executive John Chen has managed to buy some time for the embattled technology company.

    Since taking command of the once powerful Waterloo, Ont.-based technology pioneer in November, Mr. Chen has moved quickly to jumpstart BlackBerry’s transition from primarily a seller of smartphones to a specialized provider of enterprise grade software and services.

    First came the ruthless culling of senior management, followed quickly by a landmark manufacturing outsourcing deal designed to limit the company’s exposure to potential product value writedowns.

    Since the company last reported financial earnings in late December, Mr. Chen’s efforts to put BlackBerry’s financial house in order have continued. It has unveiled plans to drive revenue from its BlackBerry Messenger (BBM) technology, reached an agreement to sell most of its Canadian real estate holdings and unveiled a flagship smartphone that resurrects the company’s legacy physical trackpad and menu buttons in an effort to appeal to its hard core enterprise users.

    Indeed, some analysts, including RBC Capital Markets’ Mark Sue, believe liquidity worries are no longer a near-term risk for BlackBerry. With US$500-million in tax refunds expected this quarter and another US$300-million to US$400-million or so to come from real estate sales, adding to the company’s US$2.2-billion net cash balance, BlackBerry should have enough to offset an expected quarter-billion dollar loss.

    Shares of BlackBerry are up roughly 40% since Mr. Chen assumed control in November, as investors appear to be buying into the idea that Mr. Chen may have what it takes to execute a turnaround where his predecessors could not.

    On Friday, BlackBerry will report fourth quarter earnings before markets open. And though Wall Street analysts are not expecting Mr. Chen to have fixed all that ails BlackBerry, many appear willing to give the freshly minted CEO more time to execute his vision.

    “BlackBerry’s CEO is manning the phones to convince enterprise CEOs and CIOs to give BlackBerry a second chance,” Mr. Sue wrote in a note to clients on Monday.

    “Fixing the balance sheet may provide the challenged company much needed time to turn things around, so earnings this week will be all about preserving cash and cutting costs. The near-death experience is behind us now; now, it’s about the specifics of charting a course to promised cash flow break-even by F1Q.”

    Mr. Sue estimates that if the transition to Foxconn Technology Group production can boost BlackBerry’s blended gross margins to the mid or high 30s, the company should be cash flow break-even at about US$600-million per quarter in opex.

    BlackBerry’s opex run rate was at US$823-million in fiscal Q3 2014, while its prior guidance was US$600-million.

    “Should service revenue attrition continue or if Foxconn smartphone demand doesn’t improve, BlackBerry will need to cut more opex,” the analyst said.

    Mr. Sue stressed the importance of stability in BlackBerry’s enterprise business, as his model assumes 15 to 20 million enterprise subscribers equates to five to seven million handset shipments each year and US$1.6-billion in service revenue.

    He expects the company will report an 11% decline in quarter-over-quarter revenue to US$1.06-billion for fiscal Q4 2014, which is below analysts’ average estimates of US$1.11-billion.

    Mr. Sue also forecasts a US51 EPS loss, coming in slightly ahead of analysts’ average estimate of a US57 loss.

    “We expect BlackBerry to continue to report losses, but of a smaller magnitude than prior quarters,” he said, reiterating a sector perform rating and US$11 price target on the stock.

    TD Securities analyst Scott Penner also believes BlackBerry’s liquidity concerns are now off the table, with the confirmation of recent real estate sales the latest in a string of decisive actions taken by chief executive John Chen.

    He said investors’ initial focus should be on BlackBerry’s cost containment and cash flow, forecasting revenue of $1.18-billion and an EPS loss of 52.

    “The first question will be whether the loss trajectory points to the goal of sustainable cash flow breakeven by Q4/15 (as indicated by management on the Q3/14 call),” Mr. Penner said in a report.

    The analyst maintained his hold rating and $10.50 price target on BlackBerry.

    “Although recent announcements from BlackBerry served to clarify the product road map for the BES, MDM, and BBM businesses, the potential upside remains uncertain,” he said.

    “Key items to watch for in the quarter will be incremental updates on the different segments.”

    Cormark Securities analyst Richard Tse on Monday upgraded BlackBerry to buy from market perform and hiked his price target to $11.50 from $7.50.

    Mr. Tse expects the positive sentiment around BlackBerry will continue to build as it strengthens its balance sheet, but he noted that a sustainable business is still a ways off.

    “BlackBerry’s platform transition continues to be an uphill battle,” the analyst said.

    “But despite the intense competition, a major product transition, and lack of visibility, the expectations based on the short-term actions should continue to fuel the positive sentiment.”

    BlackBerry Ltd’s near-death experience has passed, but rebuilding balance sheet won€™t be easy | Financial Post
    Last edited by BergerKing; 03-25-14 at 12:20 PM. Reason: Added QUOTE code.
    03-25-14 12:17 PM
  2. BergerKing's Avatar
    Not everything can be said in short blurbs, and thanks for posting this.
    03-25-14 12:22 PM
  3. pkcable's Avatar
    03-25-14 12:23 PM
  4. sixpacker's Avatar
    And what's your take on this?
    03-25-14 12:25 PM
  5. sentimentGX4's Avatar
    Blackberry's "near death experience" hasn't passed. Either there was never a near death experience to begin with and it was all hype/hate/whatever or Blackberry is still near death.

    Blackberry is unarguably not in better condition than it was 6 months or a year ago. While John Chen may or may not be a more competent CEO, the fruits of his labors have not been harvested yet. Until the Z3 or Z20 launches, BBRY is still very much on the trajectory set by Heins and I cannot see how with an aging lineup of phones that trajectory has possibly improved.
    milo53, Rello, richardat and 1 others like this.
    03-25-14 05:36 PM
  6. Relletti's Avatar
    Good read. I would like to think that it's near death experience is behind them but I don't know. It can still go either way. I do like what Mr Chen has done so far with blackberry.

    Sent from my Z30 using Tapatalk
    03-25-14 06:12 PM
  7. Andrew-NYC's Avatar
    It's the Z3 and Q20 - NOT Z20!
    Blackberry's "near death experience" hasn't passed. Either there was never a near death experience to begin with and it was all hype/hate/whatever or Blackberry is still near death.

    Blackberry is unarguably not in better condition than it was 6 months or a year ago. While John Chen may or may not be a more competent CEO, the fruits of his labors have not been harvested yet. Until the Z3 or Z20 launches, BBRY is still very much on the trajectory set by Heins and I cannot see how with an aging lineup of phones that trajectory has possibly improved.
    03-25-14 07:50 PM
  8. bluetroll's Avatar
    BBM update coming next week too!

    Posted via CB10
    03-25-14 09:50 PM
  9. RyanGermann's Avatar
    The release of the Q20 and demonstrated proof that the device has regained the familiar usability of BBOS devices and then the dominoes will start to fall... where the dominoes are "resistance to buying BlackBerry devices because of concerns that BB is going to go out of business." It will take a few courageous CIOs to convince their board to go BlackBerry in the current climate, but once those first few do, then the others won't have the same concerns about BlackBerry's viability as a company.

    If the Q20 can't start to turn BB's fortunes around then I am all out of ideas as to what will... if the fearmongering about BlackBerry's demise has been so damaging that even if BlackBerry released a device that s*its gold bricks no one would want to "risk" buying it, then the only OTHER hope would be for an angel investor so angelic they should really be called a "god" investor... this company would have to publicly commit to keeping BlackBerry going "as it is" and have so much money 'to burn' that customers would wipe the sweat off their nervous brows and place their orders for 10s of thousands of BB devices.

    ...and, THAT'S why the anti BB bias of the last few years isn't just "harmless blogging"... it's caused serious harm to a company that makes great products that made errors, yes, but still, the technology is excellent, which we all know... media industry professionals who support BlackBerry haven't done enough to call others in the industry to task for this crap. It made lots of people who might have considered a BB device rule it out... and this article isn't an exception: it doesn't seem to mention the quality of the technology (very few do) so I'm not sure what good will come of this article, a lone voice in the wilderness.
    gebco likes this.
    03-25-14 09:53 PM
  10. Rello's Avatar
    I'd argue they are still very much in trouble. I really don't know if anything they do will help their situation when it comes to devices. Anything can happen but if this next batch still doesn't improve their situation, I think people might have to just accept that most consumers just don't care about the companies devices anymore.

    As great as devices that HTC makes, and they still can't touch Samsung or Apple....and they don't have nowhere near the hate that BlackBerry currently gets. Hopefully Chen has BIG surprises for BB10...

    Posted via CB10
    03-26-14 03:49 PM
  11. richardat's Avatar
    Blackberry's "near death experience" hasn't passed. Either there was never a near death experience to begin with and it was all hype/hate/whatever or Blackberry is still near death.

    Blackberry is unarguably not in better condition than it was 6 months or a year ago. While John Chen may or may not be a more competent CEO, the fruits of his labors have not been harvested yet. Until the Z3 or Z20 launches, BBRY is still very much on the trajectory set by Heins and I cannot see how with an aging lineup of phones that trajectory has possibly improved.
    They are in a much worse position than ever before....period. It's as simple as that. People don't seem to grasp in the slightest why they're doing what they are, and why grandiose plans and promotions aren't happening.....it's just weird. In any case, the company outlook is extremely bleak as always. Their primary revenue stream and business model has disintegrated, and they must now reinvent - which IS exactly what Chen is trying to do. He's in a bad position though because, resources have been used, and good-will amongst business partners is at an end. That's why, it's even worse than it was say 8 months ago - that and the hail Mary pass was a fumble - so hope is gone as well.

    Chen's done the right thing by basically throwing in the towel on what WAS bb. The phones were NEVER going to sell, and nothing can sell them now...you HAVE to move on. He's gotten rid of much of the company to the point where they aren't even what was BB anymore - but that too was absolutely necessary. They are, in essence, a very large start-up without an idea. They have many more resources than the typical start-up, but they also have a bad reputation, and ticking clock (even with their greatly reduced costs)....it's pretty...no, it's REALLY bad....Chen really does have to pull out a bit of a miracle.
    03-26-14 07:55 PM
  12. qwerty4ever's Avatar
    They are in a much worse position than ever before....period. It's as simple as that. People don't seem to grasp in the slightest why they're doing what they are, and why grandiose plans and promotions aren't happening.....it's just weird. In any case, the company outlook is extremely bleak as always. Their primary revenue stream and business model has disintegrated, and they must now reinvent - which IS exactly what Chen is trying to do. He's in a bad position though because, resources have been used, and good-will amongst business partners is at an end. That's why, it's even worse than it was say 8 months ago - that and the hail Mary pass was a fumble - so hope is gone as well.

    Chen's done the right thing by basically throwing in the towel on what WAS bb. The phones were NEVER going to sell, and nothing can sell them now...you HAVE to move on. He's gotten rid of much of the company to the point where they aren't even what was BB anymore - but that too was absolutely necessary. They are, in essence, a very large start-up without an idea. They have many more resources than the typical start-up, but they also have a bad reputation, and ticking clock (even with their greatly reduced costs)....it's pretty...no, it's REALLY bad....Chen really does have to pull out a bit of a miracle.
    I wish I could disagree with you but there is no basis for argument. BlackBerry is precariously positioned to rise or fall much as someone trying to balance a teeter totter by themselves; it's possible but not guaranteed.

    Posted via CB10
    03-27-14 05:18 AM

Similar Threads

  1. I hate to admit it, but I am joining the Z30 club?
    By HotFix in forum BlackBerry Z30
    Replies: 33
    Last Post: 11-06-14, 09:48 AM
  2. Replies: 12
    Last Post: 03-27-14, 01:09 PM
  3. ? (BlackBerry logo) doesn't show in my sig but does in others...
    By celticmagick in forum CrackBerry Apps
    Replies: 2
    Last Post: 03-24-14, 08:01 PM
  4. Replies: 3
    Last Post: 03-24-14, 05:21 PM
  5. Replies: 1
    Last Post: 03-24-14, 12:50 PM
LINK TO POST COPIED TO CLIPBOARD