12-19-13 08:11 AM
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  1. Roo Zilla's Avatar
    Citigroup Slaps 'Sell' Rating on BlackBerry Amid Dwindling Options | Fox Business

    http://bgr.com/2013/12/11/blackberry...ness-analysis/

    Citi has given BBRY a "sell" rating, expecting it to drop to around $4. There have been numerous threads and comments about BlackBerry giving up the handset business and going all software, even though the interim CEO has stated without reservation they will continue to make handsets. They're not going to quit on handsts for one simple reason, they can't afford to do it. So rejoice!!! BlackBerry will continue to make handsets, for the near term at least.

    "Citi said even simply shutting BlackBerry down would come close to wiping out the company’s cash balance, which the current valuation is based on. Separation and shut-down costs could approach $1 billion and purchase commitments would add another $2.9 billion for BlackBerry, which has cash balances of $2.6 billion plus a $1 billion investment from Prem Watsa’s Fairfax, Citi said."

    -FoxBusiness

    "Gelblum thinks it would cost BlackBerry another $450-$500 million in separation costs to get rid of the rest of BlackBerry’s staff in the smartphone division, and then potentially another $1.5 billion in separation costs related to hardware, $1 billion in capex commitments tied to BlackBerry’s NOC, $400 million in other purchase commitments and $200 million in operating leases. This puts the total cost well above the company’s total available cash even with the $1 billion it recently raised from Fairfax and other investors."

    -BRG
    12-13-13 12:38 AM
  2. qbnkelt's Avatar
    Interesting reads....thank you.
    12-13-13 03:16 AM
  3. kevinnugent's Avatar
    Interesting also that this part of the article didn't make it onto the CB front page article. Conspiracy!?
    JeepBB likes this.
    12-13-13 05:08 AM
  4. nt300's Avatar
    Interesting read, thanks.
    I keep saying this, no such thing BBRY will exist without there remarkable handsets. They may make a profit or a small loss on the hardware business, but that hardware will keep them in business and boost there image.
    BeautyEh likes this.
    12-13-13 05:15 AM
  5. m1a1mg's Avatar
    So, they are required by contract to keep making phones that they can't sell, and this is good news? You do realize they might eventually bleed cash to zero, right?

    SMDH!
    JeepBB and bbq10l like this.
    12-13-13 09:55 AM
  6. aniym's Avatar
    Interesting read, thanks.
    I keep saying this, no such thing BBRY will exist without there remarkable handsets. They may make a profit or a small loss on the hardware business, but that hardware will keep them in business and boost there image.
    So a boost to their image is worth losing $1 billion in a quarter?
    12-13-13 11:45 AM
  7. ccbs's Avatar
    So, all of their cash balance is tied up and effectively they should be valued with no cash?
    kevinnugent likes this.
    12-13-13 01:35 PM
  8. sentimentGX4's Avatar
    So, all of their cash balance is tied up and effectively they should be valued with no cash?
    Eh, it's speculation. If any of the analysts were actually more than halfway accurate with their predictions, then they'd be millionaires and not analysts. Or at least their financial institutions wouldn't constantly be plowed during this or that financial crisis.

    I wouldn't recommend buying Blackberry stock and I think that Blackberry is headed to 0 USD/share absent of a buyout of some sort as well; but, I still take the contractual obligation estimates with a grain of salt. Especially coming from Citibank.
    mkelley65 likes this.
    12-13-13 02:17 PM
  9. BigCountry1100's Avatar
    So is blackberry gonna go bust or should we keep our BlackBerry phones?

    Posted via CB10
    12-13-13 06:09 PM
  10. app_Developer's Avatar
    So, all of their cash balance is tied up and effectively they should be valued with no cash?
    That's what some of us have been saying for a while now. They have had very little cash when you consider their upcoming obligations, even back when they were "debt free".


    Sent from my iPhone 5S using Tapatalk
    12-13-13 06:13 PM
  11. kevinnugent's Avatar
    So is blackberry gonna go bust or should we keep our BlackBerry phones?

    Posted via CB10
    Even if they do go bust, your phone should still work.
    12-13-13 09:02 PM
  12. kevinnugent's Avatar
    So, all of their cash balance is tied up and effectively they should be valued with no cash?
    Light bulb moment for some, I'm sure. Now you know why the BOD wouldn't allow any of their cash to be spent - on marketing or anything else. It's all accounted for.
    app_Developer, JeepBB and Drew808 like this.
    12-13-13 09:03 PM
  13. chr1sny's Avatar
    That's what some of us have been saying for a while now. They have had very little cash when you consider their upcoming obligations, even back when they were "debt free".


    Sent from my iPhone 5S using Tapatalk
    I think it also explains why they sought the financing from prem when they had "cash in the bank". They knew the existing cash on hand might not be enough in the event of a hardware shutdown.
    kevinnugent and JeepBB like this.
    12-13-13 11:08 PM
  14. Roo Zilla's Avatar
    Eh, it's speculation. If any of the analysts were actually more than halfway accurate with their predictions, then they'd be millionaires and not analysts.
    Why do you think they aren't millionaires? My good friend is an analyst at private equity fund. He has a high 6 figure income, and his annual bonus is usually in the $2M range. I presume analysts at bigger funds are compensated even better. Analysts don't have to get EVERYTHING right. They just have to get a lot of it right. For example, his recommendation of buying Walmart and bank stocks after the financial crisis hit in late 2008 got him a promotion and a huge raise and bonus increase in 2010.
    JeepBB likes this.
    12-14-13 09:24 AM
  15. habs_fan's Avatar
    Why do you think they aren't millionaires? My good friend is an analyst at private equity fund. He has a high 6 figure income, and his annual bonus is usually in the $2M range. I presume analysts at bigger funds are compensated even better. Analysts don't have to get EVERYTHING right. They just have to get a lot of it right. For example, his recommendation of buying Walmart and bank stocks after the financial crisis hit in late 2008 got him a promotion and a huge raise and bonus increase in 2010.
    I Wana be friends with your friend lol please

    Posted via CB10
    12-14-13 09:42 AM
  16. Superfly_FR's Avatar
    There's something I would like to be told, because I don't understand.
    There are brilliant people here, I have my lesson several times a day. I'm sure they can help me.

    - BlackBerry has been losing money on hardware. So far so good, I'm still here.
    - The proof is that they wrote down $1 Billion inventory. Ohhhh yesss; the "write down" is a little tricky (as no one knows really at what unit price nor quantities) but ok,ok, I'm still here.

    But when I wonder "why" they lose money, my natural candid answer is : "because they've produced more than they can sell".
    In other words: what they spent to create, build and sell the devices cost more than sales revenues.

    So I dig a bit and see what a - retail (applstore) price $650 - iP5 16Gb cost structure looks like.
    Warning : As my sources do not all exactly agree, I'll only use rounded (to superior) figures, we just want the whole picture - kind of.

    Components $ 200
    Manpower $ 12.5
    build (plants) costs $ 15.5
    Patents fee $ 8
    add some related costs
    Delivery $ 3
    Guarantee $ 10
    Services (like cloud, store and so on) $ 29
    Total $ 280

    Sounds right, as apple stated (Samsung case) gross margin was between 49% and 58%.
    Let's discount a "slave-like-labor" penalty for those human-conscious company like BlackBerry.
    Makes the labor cost X 3 (wet finger here) rounded at $38, for a $ 305 grand total.
    So, basically let's bargain all this around 50% gross margin.

    Of course, the devices didn't appear spontaneously, it's the fruit of R&D. Say, a full year or R&D.
    In 2012 the total amount of BlackBerry R&D was $1.5-billion (rather intense, if you ask me).
    This includes of course several projects, like BB10 OS and BES10, QNX-M2M and so on.
    As an hypothesis, I'll split 1/3 for devices; I believe it's pretty high.
    So, a full year of R&D for the devices scores around $500Mill (?) [any sourced / informed accurate value very, very welcome]

    Now, the final mixture ...
    Given an average BB10 device price tag at $400 (wet finger again, mix ASP and customers sales)
    Given the gross margin of 50% ($200)
    A neutral balance point can be set at : 500Mill/200 = 2.5-Mill devices.

    Say I've been wrong in my calculations, have to add marketing, promotion, incentives, whatever.
    Say, I've been wrong by a ratio of 2 for 1.
    Still, we then have a net profit after 5Mill devices

    That's so weird, I must be wrong ...
    Explain like if I was 10yo, please.
    BeautyEh, rarsen and web99 like this.
    12-14-13 10:09 AM
  17. JonCBK's Avatar
    I Wana be friends with your friend lol please

    Posted via CB10
    Come to New York, there are thousands of guys like that here. It is nothing special to make a million a year before turning 35.

    Posted via CB10
    12-14-13 10:12 AM
  18. Superfly_FR's Avatar
    That's what some of us have been saying for a while now. They have had very little cash when you consider their upcoming obligations, even back when they were "debt free".
    You cannot account future engagements without the matching future incomes ... this "instant photo" has no sense, IMHO. Even if you believe in poor future performance, you must balance it with revenues, because these engagements are meant for production. And as soon as something is produced, it has a value ... of course more if sold than not. But still: a value.

    We I've read this so many times ... and I wish I had better accounting skills and appropriate English to put a break on this. Tell me about misleading people ... (<= this is your easy exit if you don't want to debate)
    Last edited by Superfly_FR; 12-14-13 at 10:27 AM.
    12-14-13 10:13 AM
  19. avt123's Avatar
    Come to New York, there are thousands of guys like that here. It is nothing special to make a million a year before turning 35.

    Posted via CB10
    I'm pretty sure at least 80% of the worlds population considers that pretty "special". Maybe you mean "it's nothing new"?
    JeepBB and Plazmic Flame like this.
    12-14-13 10:32 AM
  20. Superfly_FR's Avatar
    I'm pretty sure at least 80% of the worlds population considers that pretty "special". Maybe you mean "it's nothing new"?
    lol, you mean 99% right ?
    avt123 and JeepBB like this.
    12-14-13 10:47 AM
  21. avt123's Avatar
    lol, you mean 99% right ?
    Yes. I was just trying to be generous, that is why I said "atleast" lol. Anyone making less than a million dollars a year would find this special and that is the 99%. I have several family members making that type of money and they find it very special.
    Superfly_FR and JeepBB like this.
    12-14-13 10:49 AM
  22. app_Developer's Avatar
    You cannot account future engagements without the matching future incomes ... this "instant photo" has no sense, IMHO. Even if you believe in poor future performance, you must balance it with revenues, because these engagements are meant for production; as soon as something is produced, it has a value ...
    It's not quite that simple. BlackBerry has thousands of people working on handset design, development, and marketing. As they scale that down, it costs them real money with every layoff. So that's one reason I've never been impressed with their cash position. Even if they layoff half of them, that's still quite a cost. And if they only layoff half, then the remaining half are another huge expense separate from their commitments to outside suppliers.

    Second, when they introduce new models they can't just go to some screen shop and order 1 million screens at a time at any reasonable price. Tim Cook's biggest contribution to Apple was how he changed the market for device components. Samsung and Apple procure components in multi-billion dollar lots. Companies like Samsung and LG of course also make many of their own components like screens and SoCs.

    So we saw this with PlayBook and Z10, every new model requires billions in new purchase commitments. This is not just because BlackBerry was bad at estimating demand, it is because you can't design and build custom smartphones and tablets at any reasonable cost without making these huge commitments to suppliers. Apple and Samsung have worked for years to make the market the way it now is. So the Z30 has probably added even more financial commitments, as will every new model they introduce until they give up on hardware.

    Third, any new device requires some marketing commitment, which also costs money. Maybe you say that BlackBerry will avoid this by just downsizing to a smaller enterprise-focused company. You still have the issue that they can't get from here to there without losing a large portion of their remaining cash, though.



    Sent from my Nexus 5 using Tapatalk
    JeepBB, sati01 and ccbs like this.
    12-14-13 10:51 AM
  23. habs_fan's Avatar
    Come to New York, there are thousands of guys like that here. It is nothing special to make a million a year before turning 35.

    Posted via CB10
    I'm in the wrong job lol

    Posted via CB10
    12-14-13 10:57 AM
  24. cgk's Avatar

    Second, when they introduce new models they can't just go to some screen shop and order 1 million screens at a time at any reasonable price. Tim Cook's biggest contribution to Apple was how he changed the market for device components. Samsung and Apple procure components in multi-billion dollar lots. Companies like Samsung and LG of course also make many of their own components like screens and SoCs.
    Apple sort of does in a hidden way - it has a strategy of making loans to key component fabricators for plant providing a number of advantages.
    12-14-13 11:30 AM
  25. Superfly_FR's Avatar
    It's not quite that simple. BlackBerry has thousands of people working on handset design, development, and marketing. As they scale that down, it costs them real money with every layoff. So that's one reason I've never been impressed with their cash position. Even if they layoff half of them, that's still quite a cost. And if they only layoff half, then the remaining half are another huge expense separate from their commitments to outside suppliers.

    Second, when they introduce new models they can't just go to some screen shop and order 1 million screens at a time at any reasonable price. Tim Cook's biggest contribution to Apple was how he changed the market for device components. Samsung and Apple procure components in multi-billion dollar lots. Companies like Samsung and LG of course also make many of their own components like screens and SoCs.

    So we saw this with PlayBook and Z10, every new model requires billions in new purchase commitments. This is not just because BlackBerry was bad at estimating demand, it is because you can't design and build custom smartphones and tablets at any reasonable cost without making these huge commitments to suppliers. Apple and Samsung have worked for years to make the market the way it now is. So the Z30 has probably added even more financial commitments, as will every new model they introduce until they give up on hardware.

    Third, any new device requires some marketing commitment, which also costs money. Maybe you say that BlackBerry will avoid this by just downsizing to a smaller enterprise-focused company. You still have the issue that they can't get from here to there without losing a large portion of their remaining cash, though.



    Sent from my Nexus 5 using Tapatalk
    I presume you answer both posts above.
    What I'm pointing out is the "dynamic" nature of these engagements. I was particularly thinking to suppliers' ones.
    About the cost of devices, the previous post was intended to (try to) figure out what was a possible break even point. I was wondering about it considering the Jolla launch with a $399 device ... how's that they could while BlackBerry couldn't ?
    12-14-13 11:47 AM
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