BB - BlackBerry

[gurpaul88]

Anyone buying for the arbitrage? its under $8 after hours  ??? Is  the risk is here seen as Prem not getting the financing from the consortium,  or that he somewhere along the line pulls out after more due diligence into the company. In that matter terms are pretty favorable since he is not bound to his bid, having the option to walk away without penalty. However through my understanding through this board Mr. Watsa is a reputable man. Is the market really that skeptical? Or am i missing something here in terms of the downside  :-\

[gary17]

Good investigative report on why bb failed

 

http://www.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602/?page=all

[Guest wellmont]

The best salesman in the company often ends up being CEO.

 

AN INTERVIEW WITH CEO THORSTEN HEINS

 

Did you make the most of the strategic opportunities before you when you became CEO? Did you make the right choices? Are there any you would reconsider?

 

When I was appointed CEO in January, 2012, I knew there were challenges and opportunities for all of us at BlackBerry. We had an aging OS and no LTE product, for example. What we have created with BlackBerry 10, BES 10 and BBM is a reliable and secure foundation to enable us to continue to innovate and create new opportunities. The decisions we made over the last two years were made within the context of a volatile, competitive and ever-changing marketplace – and always with the goal of delivering the vital technology that our customers need and creating value for our shareholders.

 

How do you feel about the way things have turned out with the BlackBerry 10 launch?

 

We launched a new platform that delivers a new and different user experience, an experience that was engineered for people who value extreme productivity, but the downside is that there is a steeper learning curve when it comes to adopting any new technology that is disruptive, and I believe that contributed to the slower sales.

 

Why was BlackBerry 10 so late?

 

As you know, there were delays during the process, but we are proud of what our team has developed and brought to market. The integration of the new features into the platform proved to be more complex and thus more time-consuming than anticipated. The issues were not related to the quality or functionality of the features in the software, but rather the time required to manage the integration of such a large volume of code and prepare it for commercial use globally.

 

Has this been difficult for you personally?

 

This isn’t about me; this is about our employees and our customers. One of BlackBerry’s greatest strengths is its talented, committed and passionate employees. And that is why the recent reduction to the work force was particularly challenging and difficult, albeit necessary, to address our position in a maturing and more competitive industry, and to drive the company toward profitability.

 

This interview has been edited and condensed.

[Guest wellmont]

Anyone buying for the arbitrage? its under $8 after hours  ??? Is  the risk is here seen as Prem not getting the financing from the consortium,  or that he somewhere along the line pulls out after more due diligence into the company. In that matter terms are pretty favorable since he is not bound to his bid, having the option to walk away without penalty. However through my understanding through this board Mr. Watsa is a reputable man. Is the market really that skeptical? Or am i missing something here in terms of the downside  :-\

 

I am not sure why it matters that he is a "reputable" man. He negotiated a deal where the price is not binding. The offer itself is only a LOI. If that's the case how could lowering the price based on further DD damage his "reputation"? IMO the market thinks the deal can get done, but at a lower price than $9. Perhaps $8.50. If he did it at $8.50, would he then be lumped in with the like of Gordon Gekko forever? No. There will still be plenty who say he is doing bbry shareholders a favor, even at that price. He is Covered.

 

He did not get where he is by paying up. He could end this intrigue right now and say I am going to do the deal at $9. Yet he never explicitly says this. He could still do it at $9. But there is still risk he won't. The downside if the deal collapses is $6-$7 imo.

[Guest valueInv]

What was going on inside:

 

http://m.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602?service=mobile#!/

[alertmeipp]

Anyone buying for the arbitrage? its under $8 after hours  ??? Is  the risk is here seen as Prem not getting the financing from the consortium,  or that he somewhere along the line pulls out after more due diligence into the company. In that matter terms are pretty favorable since he is not bound to his bid, having the option to walk away without penalty. However through my understanding through this board Mr. Watsa is a reputable man. Is the market really that skeptical? Or am i missing something here in terms of the downside  :-\

 

I am not sure why it matters that he is a "reputable" man. He negotiated a deal where the price is not binding. The offer itself is only a LOI. If that's the case how could lowering the price based on further DD damage his "reputation"? IMO the market thinks the deal can get done, but at a lower price than $9. Perhaps $8.50. If he did it at $8.50, would he then be lumped in with the like of Gordon Gekko forever? No. There will still be plenty who say he is doing bbry shareholders a favor, even at that price. He is Covered.

 

He did not get where he is by paying up. He could end this intrigue right now and say I am going to do the deal at $9. Yet he never explicitly says this. He could still do it at $9. But there is still risk he won't. The downside if the deal collapses is $6-$7 imo.

 

Prem has to be responsible for his shareholders; thus, he is doing the DD to ensure he is going to get what he think.

 

One can sell Nov $8 put for 70 cents, worst case, u stuck with the share with average cost of 7.3.

[jeffmori7]

Considering Fairfax think Blackberry is worth to take private at 9$, do you think they should buy more on the open market at 8$? Can they do that?

 

I don't want people to answer necessarily about this situation, but in a general case, if a company make an offer at 9$ on a stock and it is trading at 8$, can they buy as most as they can before the tender offer date?

[wachtwoord]

Considering Fairfax think Blackberry is worth to take private at 9$, do you think they should buy more on the open market at 8$? Can they do that?

 

I don't want people to answer necessarily about this situation, but in a general case, if a company make an offer at 9$ on a stock and it is trading at 8$, can they buy as most as they can before the tender offer date?

 

Usually the offer to buy the company has a clause which excludes this.

[txlaw]

Some very interesting articles relevant to BBRY:

 

http://www.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602/?page=all

 

http://pro.gigaom.com/blog/why-blackberry-should-license-its-os-for-free/?utm_source=tech&utm_medium=editorial&utm_campaign=intext&utm_term=698228+last-week-on-research-the-complexity-of-the-cloud-and-blackberrys-last-stand&utm_content=gigaconnie

 

http://readwrite.com/2013/09/30/how-big-the-internet-of-things-could-become

 

The Globe and Mail article is particularly damning regarding management ineptitude at BBRY.  But it is interesting to see that the founders did, in fact, see the possible writing on the wall much earlier on than has been portrayed in the media. 

 

“If that thing catches on, we’re competing with a Mac, not a Nokia,” he recalled telling his staff. -- ML on iPhone

[Guest wellmont]

I guess it demonstrates how totally unprepared they were for the "shift". IOT is DOA @bbry. You get an idea of how managements think (from g&m article) when things are going due south. they only fund cash flowing opportunities. that's even more true today as bbry implodes. And it's way too late to offer bb10 for free. May have been viable 3 years ago.

[alertmeipp]

The sad thing is it seems the company would have been better off keeping the co-CEOs... Heins seems to be a disaster.

[wachtwoord]

The sad thing is it seems the company would have been better off keeping the co-CEOs... Heins seems to be a disaster.

 

They would have been better of not investing anything new, living off off the existing subscribers and returning everything to shareholders while cash-cowing their way towards the end of the company. Sadly, no CEO ever seems to do this, even if it's best for shareholders.

[Cardboard]

That is a very good point Wachtwoord and why traditional value investing, even using Graham net-net approach, needs to be well diversified. Schloss carried something like 100 stocks at most times.

 

Managers always have their grand vision, are full of ego and always believe that they will accomplish wonders. For most, they have never failed before since they always kept on climbing a ladder. Once they reach such situation, their past accomplishments and most often their optimistic attitude does not let them contemplate a runoff of their business.

 

Overall, I have made money with troubled firms, but I am getting sick of it. The headaches along the way and fear of losing it all at times isn't worth it. And nowadays, things seem to change more rapidly than in the past even for non-tech firms, so obsolescence is a real risk to the margin of safety calculated once upon entering the investment.

 

On the opposite side of the spectrum, good businesses keep seeing a steady flow of cash. So even if they miss a quarter or see a little hiccup, you always have that reinforced margin of safety via incoming cash. They never have debt issues and the biggest question is what to do with the cash which is a nice problem to have.

 

Cardboard

[bmichaud]

That is a very good point Wachtwoord and why traditional value investing, even using Graham net-net approach, needs to be well diversified. Schloss carried something like 100 stocks at most times.

 

Managers always have their grand vision, are full of ego and always believe that they will accomplish wonders. For most, they have never failed before since they always kept on climbing a ladder. Once they reach such situation, their past accomplishments and most often their optimistic attitude does not let them contemplate a runoff of their business.

 

Overall, I have made money with troubled firms, but I am getting sick of it. The headaches along the way and fear of losing it all at times isn't worth it. And nowadays, things seem to change more rapidly than in the past even for non-tech firms, so obsolescence is a real risk to the margin of safety calculated once upon entering the investment.

 

On the opposite side of the spectrum, good businesses keep seeing a steady flow of cash. So even if they miss a quarter or see a little hiccup, you always have that reinforced margin of safety via incoming cash. They never have debt issues and the biggest question is what to do with the cash which is a nice problem to have.

 

Cardboard

 

As usual Cardboard, this is a phenomenal post. It was interesting scanning through the "mistakes" thread - from my quick scan, it appears the turnaround/dying businesses/asset valuation situations are where most investors get caught up.

[Uccmal]

That is a very good point Wachtwoord and why traditional value investing, even using Graham net-net approach, needs to be well diversified. Schloss carried something like 100 stocks at most times.

 

Managers always have their grand vision, are full of ego and always believe that they will accomplish wonders. For most, they have never failed before since they always kept on climbing a ladder. Once they reach such situation, their past accomplishments and most often their optimistic attitude does not let them contemplate a runoff of their business.

 

Overall, I have made money with troubled firms, but I am getting sick of it. The headaches along the way and fear of losing it all at times isn't worth it. And nowadays, things seem to change more rapidly than in the past even for non-tech firms, so obsolescence is a real risk to the margin of safety calculated once upon entering the investment.

 

On the opposite side of the spectrum, good businesses keep seeing a steady flow of cash. So even if they miss a quarter or see a little hiccup, you always have that reinforced margin of safety via incoming cash. They never have debt issues and the biggest question is what to do with the cash which is a nice problem to have.

 

Cardboard

 

As usual Cardboard, this is a phenomenal post. It was interesting scanning through the "mistakes" thread - from my quick scan, it appears the turnaround/dying businesses/asset valuation situations are where most investors get caught up.

 

That  seems to be the case.  It is certainly the case with me.  One really does need to hold dozens of these asset plays to make a good return in aggregate.  I too am sick of it.

[SharperDingaan]

It is the nature of the metrics driven process; the only reason we look at a good business is because it got into trouble - & if it is as well run as we want it to be, how often can we really expect this to be the case. To hit our screens, the business really has to be suffering from widespread macro disruption in its primary markets; ie: todays global disruption.

 

If you look at the business case 1st, & metrics 2nd ... most of the issue drops away. You will always be in the most promising sectors, but with the worst dog in the pack. Change the metrics to include payback, & you end up with a much better dog.

 

SD

[Guest valueInv]

The sad thing is it seems the company would have been better off keeping the co-CEOs... Heins seems to be a disaster.

 

They would have been better of not investing anything new, living off off the existing subscribers and returning everything to shareholders while cash-cowing their way towards the end of the company. Sadly, no CEO ever seems to do this, even if it's best for shareholders.

 

If Heinz had come out and announced that he is putting RIM in runoff mode 18 months ago, he would have likely been fired. That's not what the board or shareholders want to hear, even if it's in their best interest. It would have taken an extraordinary amount courage to do something like that. 

 

That's one of the reasons why Nokia was interesting. Elop did the opposite but it took a lot it courage to go for a burn the bridges strategy at a Funnish company like Nokia.

[Guest wellmont]

when ml and jb were fired, bod should have brought in an outsider, like CI did @ motorola mobility, and Nokia did with SE. bbry maintained the status quo by promoting someone who was partly responsible for putting bbry in such a poor strategic position. What he did was not surprising. He wanted to prove that "their" vision was correct. So he forged ahead with a doomed plan from the start, which was essentially deliver a new from the ground up mobile platform that was neither needed nor wanted by consumers.

 

The bbry bod was insular and clubby. pw was likely mesmerized by all the techno bs being thrown around, as well as outnumbered in terms of being a member who thought like an owner.  A new ceo, an outsider, with no ties whatsoever to home grown bbry technologies would have likely recommended moving away from bbos and quickly moving to windows phone or android. or exiting hardware altogether. as was just mentioned, that would have been courageous, and unpoplular, and extremely difficult to do. Lots of responsibility goes onto the bbry bod.

[petec]

Outnumbered yes.  Mesmerised?  I may be wrong but I don't get the impression PW is easily mesmerised, at least not by people talking nonsense!

[Guest wellmont]

my post was not about singling him out. he's an accomplished investor who clearly does not need any defending from anybody here. however, he appeared to have signed off on an absolutely flawed go forward plan. many many mobile analysts (and some here) said as much at the time. and now the stock is $7.50. he also had deep and long established ties to ml, who he trusted as a techno visionary. so reasonable people can come away with different interpretations of his role on the bod. 

[Guest valueInv]

when ml and jb were fired, bod of directors should have brought in an outsider, like CI did @ motorola mobility, and Nokia did with SE. bbry maintained the status quo by promoting someone who was partly responsible for putting bbry in such a poor strategic position. What he did was not surprising. He wanted to prove that "their" vision was correct. So he forged ahead with a doomed plan from the start, which was essentially deliver a new from the ground up mobile platform that was neither needed nor wanted by consumers.

 

The bbry bod was insular and clubby. pw was likely mesmerized by all the techno bs being thrown around, as well as outnumbered in terms of being a member who thought like an owner.  A new ceo, an outsider, with no ties whatsoever to home grown bbry technologies would have likely recommended moving away from bbos and quickly moving to windows phone or android. or exiting hardware altogether. as was just mentioned, that would have been courageous, and unpoplular, and extremely difficult to do. Lots of responsibility goes onto the bbry bod.

 

Except for Samsung, nobody is making money offa Windows or Android either. They would be no different place today even if they followed that strategy.

[TwoCitiesCapital]

when ml and jb were fired, bod of directors should have brought in an outsider, like CI did @ motorola mobility, and Nokia did with SE. bbry maintained the status quo by promoting someone who was partly responsible for putting bbry in such a poor strategic position. What he did was not surprising. He wanted to prove that "their" vision was correct. So he forged ahead with a doomed plan from the start, which was essentially deliver a new from the ground up mobile platform that was neither needed nor wanted by consumers.

 

The bbry bod was insular and clubby. pw was likely mesmerized by all the techno bs being thrown around, as well as outnumbered in terms of being a member who thought like an owner.  A new ceo, an outsider, with no ties whatsoever to home grown bbry technologies would have likely recommended moving away from bbos and quickly moving to windows phone or android. or exiting hardware altogether. as was just mentioned, that would have been courageous, and unpoplular, and extremely difficult to do. Lots of responsibility goes onto the bbry bod.

 

Except for Samsung, nobody is making money offa Windows or Android either. They would be no different place today even if they followed that strategy.

 

They would have maintained their service revenues and profits. They would have still been able to hold a niche market in hardware. They could have focused turning BBM into the vision that Basille had for it. They wouldn't be having multi-billion writedowns and restructuring fees like they've put up over the past two years. It would have been a smaller company with smaller profits - but profits nonetheless.

 

I actually supported and liked BB10 after having seen it with my own eyes. Really enjoyed using the phones. But it didn't get developer support, was targeted at the wrong audience, and they didn't market it at all in the U.S. outside of YouTube and the Superbowl ad from what I can tell. They also wasted time on PR stunts like Alicia Keys and their carrier partners in the U.S. weren't training people on the devices nor were they recommending them to people. Blackberry was killed by poor management, poor partners, and the uninformed/fickle consumer market who deemed the phones garbage before ever even researching them (the strength of a brand...)

[Guest wellmont]

bbry could have operated their hardware platform at break even after moving to android. hardware was one leg of the stool and could simply support their other businesses. but it would not have been a slam dunk. technology companies have to make the Right decisions years in advance of when they will either pay off or go "poof". you simply can't catch up if you have a misstep.

[Guest valueInv]

when ml and jb were fired, bod of directors should have brought in an outsider, like CI did @ motorola mobility, and Nokia did with SE. bbry maintained the status quo by promoting someone who was partly responsible for putting bbry in such a poor strategic position. What he did was not surprising. He wanted to prove that "their" vision was correct. So he forged ahead with a doomed plan from the start, which was essentially deliver a new from the ground up mobile platform that was neither needed nor wanted by consumers.

 

The bbry bod was insular and clubby. pw was likely mesmerized by all the techno bs being thrown around, as well as outnumbered in terms of being a member who thought like an owner.  A new ceo, an outsider, with no ties whatsoever to home grown bbry technologies would have likely recommended moving away from bbos and quickly moving to windows phone or android. or exiting hardware altogether. as was just mentioned, that would have been courageous, and unpoplular, and extremely difficult to do. Lots of responsibility goes onto the bbry bod.

 

Except for Samsung, nobody is making money offa Windows or Android either. They would be no different place today even if they followed that strategy.

 

They would have maintained their service revenues and profits. They would have still been able to hold a niche market in hardware. They could have focused turning BBM into the vision that Basille had for it. They wouldn't be having multi-billion writedowns and restructuring fees like they've put up over the past two years. It would have been a smaller company with smaller profits - but profits nonetheless.

 

I actually supported and liked BB10 after having seen it with my own eyes. Really enjoyed using the phones. But it didn't get developer support, was targeted at the wrong audience, and they didn't market it at all in the U.S. outside of YouTube and the Superbowl ad from what I can tell. They also wasted time on PR stunts like Alicia Keys and their carrier partners in the U.S. weren't training people on the devices nor were they recommending them to people. Blackberry was killed by poor management, poor partners, and the uninformed/fickle consumer market who deemed the phones garbage before ever even researching them (the strength of a brand...)

 

Their services are commoditized on Android, there are many free alternatives to what they provide. They would have to face brutal price competition without economies of scale. Bassile's vision is just that.

 

BBRY was reject not just be consumers but even more forcefully by enterprise users. Consumers were well informed - better than investors. They did not want buggy slow Android ports of apps.

[Guest valueInv]

bbry could have operated their hardware platform at break even after moving to android. hardware was one leg of the stool and could simply support their other businesses. but it would not have been a slam dunk. technology companies have to make the Right decisions years in advance of when they will either pay off or go "poof". you simply can't catch up if you have a misstep.

 

Operating at break even is not a business.

 

 

Here is the next BBRY:

 

http://feedproxy.google.com/~r/Techcrunch/~3/-_rl0iC0NZE/