BB - BlackBerry

[Guest valueInv]

ohh man!

 

The snide remarks really really deteriorate the quality of the discussions of this board and take away the appeal of this amazing place.

 

Wish there was a way to impose a limit of the number of words a user could type on any given day. I think it would automatically improve the quality a lot.... lol jst a thought.

 

The quality of discussions depends on the quality of information and analysis posted. You have little quality if people don't ask the meaningful questions.

[Myth465]

TX I can understand your frustration.

The tone in this thread is lacking, also perhaps I overreacted to your post.

 

I know you have studied BBRY and tech in def, and to be honest I am taking a very high level view of the field, but alot of people I respect agree that BBRY is toast. Palm had as much potential as BBRY, and was as dominate, but has gone the way of the dust bin. Also most of the hype posted / discussed / and analysed has proven to be hype. BBRY isnt working in the field, and thats not up for debate.

 

I have spent alot of time on SD and frankly it hasnt worked out. Any one said avoid it due to a quick look and based on Management and cash flow has been correct. I give them their credit and should have heeded their advice. My hours and hours of careful analyse was beaten by their rationale 15 minute review of a 10k and by google Tom Ward, or reading the related party disclosures in the 10Q.

 

Sometimes an opinion based on something other then in-depth analysis can be right, and sometimes someone steps in and buys Nokia or Skype for a mint rendering that opinion wrong. Only time will tell, my only frustration was that it seemed like anyone who disagreed that BBRY had a future was instantly a troll, wrong, and unhelpful. It makes it appear that a person isnt allowed to share an opinion on something unless he either agrees or includes hours and hours of detailed analysis.

 

Either way I think we have all got our points across, and this will come down to Stretegic Buyers, and what Prem Watsa can hustle up. 

[Aberhound]

My bet is that Prem makes a deal with Dell and his hedge fund supporters and takes BBRY private. Prem ends up with part of the private deal. Between the two companies they can package assets to float while they keep the Crown Jewels. If Heins is right about the future of computing Dell gets a much easier path to the future. NSA wants an American owner so they likely are asking people to step forward. An American owner will end BBRYs current problems with American Telcos. The changes in the market are so dramatic that a private company has a big advantage in making the big changes required. If the deal is done watch for QNX appearing in Dell peripherals and servers which will allow automatic updating with the mobile handset and give Dell servers a big advantage. Then QNX and the service business will be made a separate publicly traded company much like EMC did with VMWare. VMWare and BBRY have the best two competing virtualization technology and so far only EMC and VMWare are monetizing that advantage. Dell needs similar technology to compete with the other cloud server providers.

 

I wonder if the Canada Pension Plan will step forward like they did with Skype for a flip (tripled their money) and stabilize BBRY while the complex puzzle is assembled? Political change is required in Canada to allow a foreign buyer and the pension fund has the clout to lobby for the required changes.

[Guest wellmont]

i would say the likelihood that dell would assume even more risk than he already has is close to zero.

[Guest wellmont]

bbry is going to be parted out...

 

http://mobile.reuters.com/article/idUKBRE98C12320130913?irpc=932

 

handset business worth minus $2b

[Guest wellmont]

massive bbry restructuring ahead.

http://allthingsd.com/20130918/blackberry-to-slash-its-workforce-by-up-to-40-percent/?mod=atdtweet

 

[Guest valueInv]

massive bbry restructuring ahead.

http://allthingsd.com/20130918/blackberry-to-slash-its-workforce-by-up-to-40-percent/?mod=atdtweet

 

Funny how the usual suspects don't want to discuss BBRY now.

[gary17]

I see this as a long term big plus for the company.

 

We will find out by this time next week the bbm downloads in iOs and androi

[bmichaud]

The Company is up for sale, selling below TBV with an implicit bid from Watsa, and it's now laying off 40% of its workforce....how is that anything but good?

[rpadebet]

This looks very interesting now to me compared to the other options out there...

The EV is 2.5 bill. Won't just the patents be worth this much?

 

The software, PPE, Net working cap are at least 1-2 bill. They don't have any debt they can default on, so even in the worst case liquidation scenario there seems to be 20% upside. Only question here is when you can get the money once it is liquidated. Today's news about layoffs indicates, not that long, if indeed that's the route they are going.

 

As a going concern, TTM EBITDA seems to be 1 Bill. (This EBITDA could deteriorate over the next couple of quarters, but after that it should improve quite a bit given the 40% savings in employee costs.) EV at 2.5xTTM EBITDA + Patents+Software +Cash seems like a good deal.

 

If I am completely wrong in my assessment there is always hope that one of my other large holdings MSFT might pay an absurd premium to acquire parts of this  :)

 

 

[Guest valueInv]

This looks very interesting now to me compared to the other options out there...

The EV is 2.5 bill. Won't just the patents be worth this much?

 

The software, PPE, Net working cap are at least 1-2 bill. They don't have any debt they can default on, so even in the worst case liquidation scenario there seems to be 20% upside. Only question here is when you can get the money once it is liquidated. Today's news about layoffs indicates, not that long, if indeed that's the route they are going.

 

As a going concern, TTM EBITDA seems to be 1 Bill. (This EBITDA could deteriorate over the next couple of quarters, but after that it should improve quite a bit given the 40% savings in employee costs.) EV at 2.5xTTM EBITDA + Patents+Software +Cash seems like a good deal.

 

If I am completely wrong in my assessment there is always hope that one of my other large holdings MSFT might pay an absurd premium to acquire parts of this  :)

 

How do you know the patents are worth 2.5b?

[Guest wellmont]

The Company is up for sale, selling below TBV with an implicit bid from Watsa, and it's now laying off 40% of its workforce....how is that anything but good?

 

it certainly is not good for being a going concern. that kind of massive layoff is disruptive and paralyzing. it is good if the intention is to sell it off in pieces or to a buyer who wishes to operate bbry as a niche company. I believe PW wants the deck cleared before he makes a bid. he does not want the blood on his hands. he wants to operate bbry as a niche. a layoff of this magnitude is going to need explaining very soon. they are going to have to come clean and inform investors "what's the new plan"?

[TwoCitiesCapital]

The Company is up for sale, selling below TBV with an implicit bid from Watsa, and it's now laying off 40% of its workforce....how is that anything but good?

 

I think this is a slight positive over all, but it's not hugely bullish. It's good because it will help manage cash burn and they NEEDED to do this for awhile. They are only selling a fraction of the phones they were before, that means they can only support a fraction of their workforce. I'm actually surprised to see large cuts like this take so long. It's bad because it's an admission that the BB10 isn't working out nearly as well as the management hoped. We all already knew this, so the limitation of cash burn is probably a net positive but it does give us insights into this quarters' sales...they certainly won't be an improvement from last quarter.

 

Cutting the employee head count and maintaining cash flow will make it a more attractive acquisition but pretty much guarantee that it won't continue on as a public company.

 

 

[rpadebet]

This looks very interesting now to me compared to the other options out there...

The EV is 2.5 bill. Won't just the patents be worth this much?

 

The software, PPE, Net working cap are at least 1-2 bill. They don't have any debt they can default on, so even in the worst case liquidation scenario there seems to be 20% upside. Only question here is when you can get the money once it is liquidated. Today's news about layoffs indicates, not that long, if indeed that's the route they are going.

 

As a going concern, TTM EBITDA seems to be 1 Bill. (This EBITDA could deteriorate over the next couple of quarters, but after that it should improve quite a bit given the 40% savings in employee costs.) EV at 2.5xTTM EBITDA + Patents+Software +Cash seems like a good deal.

 

If I am completely wrong in my assessment there is always hope that one of my other large holdings MSFT might pay an absurd premium to acquire parts of this  :)

 

How do you know the patents are worth 2.5b?

 

Good question, you forced me to look around and research to get a valuation estimate for these. :) Glad to find out that I wasn't too off the mark.

 

Various kinds of analysis for this are available on the internet, one of the most quoted and recent one is linked below. They apply a discount here to competitor patents to get to 2.25B, but one can make an argument BBRY patents are more valuable because most likely they are newer than Motorola's and also if you remember during the good old days when BBRY was very popular you didn't see many competitors try and replicate BBRY either in software or device. That indicates to me that their patent portfolio was very strong. Also I think the valuable portion of BBRY's patents could be the one's to do with Security and Enterprise technology because that's where they are still a major player.

 

http://blogs.wsj.com/corporate-intelligence/2013/08/26/the-numbers-behind-blackberrys-patent-goldmine/

 

Finally their most recent financial report shows that as of 1-Jun-2013, their Acquired Technology and Intellectual property is worth $5 Billion at cost and $3.448 Billion after amortization.

 

I fully concur that it is very hard to put an exact value on these, but you can get a fair idea from the above about how much they could be worth roughly. Not to mention in the right hands they are probably worth a lot more.

 

Add in the cash, PPE&inventory and the potential for EBITDA expansion (FCF is slightly higher  as Cap ex recently been less than D&A), the downside is very limited here. You can think of it as a cheap call option on an outcome which is above current severely depressed market expectations. Don't get me wrong, it doesn't seem like a long term compounder by any means, at best it appears to me like a workout which gets resolved in the next few quarters.

 

PS: I would have been happier if MSFT had bought BBRY instead of NOK.(I am definitely not advocating it now  :)) They could have realized synergies in Enterprise business, solidified that market and left the consumer space to the Apple and Google.

 

 

 

 

[Guest valueInv]

This looks very interesting now to me compared to the other options out there...

The EV is 2.5 bill. Won't just the patents be worth this much?

 

The software, PPE, Net working cap are at least 1-2 bill. They don't have any debt they can default on, so even in the worst case liquidation scenario there seems to be 20% upside. Only question here is when you can get the money once it is liquidated. Today's news about layoffs indicates, not that long, if indeed that's the route they are going.

 

As a going concern, TTM EBITDA seems to be 1 Bill. (This EBITDA could deteriorate over the next couple of quarters, but after that it should improve quite a bit given the 40% savings in employee costs.) EV at 2.5xTTM EBITDA + Patents+Software +Cash seems like a good deal.

 

If I am completely wrong in my assessment there is always hope that one of my other large holdings MSFT might pay an absurd premium to acquire parts of this  :)

 

How do you know the patents are worth 2.5b?

 

Good question, you forced me to look around and research to get a valuation estimate for these. :) Glad to find out that I wasn't too off the mark.

 

Various kinds of analysis for this are available on the internet, one of the most quoted and recent one is linked below. They apply a discount here to competitor patents to get to 2.25B, but one can make an argument BBRY patents are more valuable because most likely they are newer than Motorola's and also if you remember during the good old days when BBRY was very popular you didn't see many competitors try and replicate BBRY either in software or device. That indicates to me that their patent portfolio was very strong. Also I think the valuable portion of BBRY's patents could be the one's to do with Security and Enterprise technology because that's where they are still a major player.

 

http://blogs.wsj.com/corporate-intelligence/2013/08/26/the-numbers-behind-blackberrys-patent-goldmine/

 

Finally their most recent financial report shows that as of 1-Jun-2013, their Acquired Technology and Intellectual property is worth $5 Billion at cost and $3.448 Billion after amortization.

 

I fully concur that it is very hard to put an exact value on these, but you can get a fair idea from the above about how much they could be worth roughly. Not to mention in the right hands they are probably worth a lot more.

 

Add in the cash, PPE&inventory and the potential for EBITDA expansion (FCF is slightly higher  as Cap ex recently been less than D&A), the downside is very limited here. You can think of it as a cheap call option on an outcome which is above current severely depressed market expectations. Don't get me wrong, it doesn't seem like a long term compounder by any means, at best it appears to me like a workout which gets resolved in the next few quarters.

 

PS: I would have been happier if MSFT had bought BBRY instead of NOK.(I am definitely not advocating it now  :)) They could have realized synergies in Enterprise business, solidified that market and left the consumer space to the Apple and Google.

Does anyone know who of the big players does RIM already have licensing deals with? What payments have been made?

[rpadebet]

I don't believe they disclose that. would that affect your estimate of value? What do you think the patents are worth?

[bmichaud]

WTF cares about the patents - tangible BV is higher than the current price, and you get any patent and services value for free. 

[DTEJD1997]

The story of mass layoffs getting loose in the media is going to be very demoralizing...

 

Of course, it does not take a rocket surgeon to figure out that many jobs are going to be lost at Blackberry.

 

I hope they can get things stabilized relatively quickly, but I think that is going to be a very, very difficult task.

 

 

[Liberty]

http://blogs.blackberry.com/2013/09/bbm-for-android-iphone/

 

BBM for iOS and Android.

[Guest valueInv]

I don't believe they disclose that. would that affect your estimate of value? What do you think the patents are worth?

 

Didn't get tie today, will address tomorrow

[Guest wellmont]

this is why bbry trades below tangible book value. it's overstated.

 

11:45 AM EDT, 09/19/2013 (MidnightTrader) -- Blackberry (BBRY) is up 0.4% at $10.44 a share, still largely trading in positive territory today despite a Bloomberg News report the company's inventory of unsold smartphones is now approaching $1 billion.

The story also speculates BBRY could write down much of that inventory next week when it reports financial results for its fiscal Q2 ended last month. If it occurs, the write-down would be the company's fourth in two years.

Price: 10.44, Change: +0.04, Percent Change: +0.4

http://www.midnighttrader.com © 1999-2013 MT Newswires, a Division of MidnightTrader, Inc. All rights reserved.

[Guest valueInv]

this is why bbry trades below tangible book value. it's overstated.

 

11:45 AM EDT, 09/19/2013 (MidnightTrader) -- Blackberry (BBRY) is up 0.4% at $10.44 a share, still largely trading in positive territory today despite a Bloomberg News report the company's inventory of unsold smartphones is now approaching $1 billion.

The story also speculates BBRY could write down much of that inventory next week when it reports financial results for its fiscal Q2 ended last month. If it occurs, the write-down would be the company's fourth in two years.

Price: 10.44, Change: +0.04, Percent Change: +0.4

http://www.midnighttrader.com © 1999-2013 MT Newswires, a Division of MidnightTrader, Inc. All rights reserved.

 

How much would it cost to layoff 40% of their workforce?

[Palantir]

So what's in these "Intangibles"?

 

[Guest wellmont]

well it depends on where bbry goes with this restructuring. the tea leaves are saying that this could be the "big one". 40% implies that they may be shutting down the handset business. write down may be an acknowledgement that bb10 did not work. if this is the big one, I have seen estimates that closing the device business takes $2 off the value of bbry. there will be engineering and support layoffs as well. but I suspect it won't look pretty on statements. the market has probably been discounting the closing of the handset business so it won't' be a surprise. this is why you see the ho hum reaction to the layoffs and the write down. the market had it sussed out. so the stock may actually go up under the assumption that they are prepping for a sale and the buyer wants a clean slate and a niche business that could be profitable in time.

[Guest valueInv]

well it depends on where bbry goes with this restructuring. the tea leaves are saying that this could be the "big one". 40% implies that they may be shutting down the handset business. write down may be an acknowledgement that bb10 did not work. if this is the big one, I have seen estimates that closing the device business takes $2 off the value of bbry. there will be engineering and support layoffs as well. but I suspect it won't look pretty on statements. the market has probably been discounting the closing of the handset business so it won't' be a surprise. this is why you see the ho hum reaction to the layoffs and the write down. the market had it sussed out. so the stock may actually go up under the assumption that they are prepping for a sale and the buyer wants a clean slate and a niche business that could be profitable in time.

I'm thinking more alongs the lines of Tangible BV. If they have to spend a lot of money on the layoffs and have a big inventory write down, your look at some very different numbers.