BB - BlackBerry

[Myth465]

I think RIM is toast. All they have going for them is security. My company would really like to drop the server fee. Windows is free. Plus I hate my black berry.

 

Myth, good call in 2011.

 

Hope all is well with you.

 

Hey thanks Josh.

Things are well on my end, what about you.

 

I just dont see how RIM works out. Tech has winners and losers, and RIM inmo will be a loser similar to Palm.

[TwoCitiesCapital]

http://www.live-pr.com/en/blackberry-awarded-authority-to-operate-r1050102046.htm

 

The DoD has estimated it will have 8M mobile phones over the next 3 years.  Now that BBRY's MDM is approved, and can manage all platforms,  is it reasonable to believe it will manage most of these devices and collect the $100 a year per device in stable, high margin revenue? This would be huge for them if that is what it means.

 

This guy is pretty bullish about it too, though much of what he says is beyond me so take it at face value. 

http://market-ticker.org/akcs-www?singlepost=3254062

[siddharth18]

Exclusive: BlackBerry open to going private, sources say

http://www.reuters.com/article/2013/08/09/us-blackberry-private-idUSBRE97805C20130809

[Guest wellmont]

not a lot of interest in bbry's new ideas....

 

http://www.indiegogo.com/projects/ubuntu-edge

[Josh4580]

I think RIM is toast. All they have going for them is security. My company would really like to drop the server fee. Windows is free. Plus I hate my black berry.

 

Myth, good call in 2011.

 

Hope all is well with you.

 

Hey thanks Josh.

Things are well on my end, what about you.

 

I just dont see how RIM works out. Tech has winners and losers, and RIM inmo will be a loser similar to Palm.

 

Myth, things are going well also. 

 

I think the next quarter for BBRY will be interesting as the Q10 results will come out.

 

I think this company will be private sooner than later and theres a chance to make 40%/50% on your money from here.  The pensions in Canada are now interested. 

[Guest valueInv]

Remember this little nugget?

 

http://news.cnet.com/8301-1035_3-57576750-94/blackberry-bb10-is-stealing-customers-away-from-rivals/

 

How do they get away with this?

[Myth465]

Josh I have read that as well, sadly that will end the way the acquisition of Palm did for HP. Perhaps though it may go the way of Skype (being sold to a greater fool).

Either way I will be watching. They should go private inmo, it will drop some of the scrutiny.

[BargainValueHunter]

Shares halted in the pre-market:

 

http://www.marketwatch.com/story/trading-in-blackberry-halted-pending-news-2013-08-12

 

...pending a news announcement, Nasdaq said. No further details were given.

[Liberty]

http://www.bloomberg.com/news/2013-08-12/blackberry-forms-board-committee-to-explore-options.html

 

BlackBerry Ltd. said it’s considering putting itself up for sale, the strongest indication yet that the smartphone maker won’t remain independent as competition erodes sales and hammers its stock price.

A special board committee will consider options that can enhance BlackBerry’s value and scale, including joint ventures, partnerships or a sale of the company, according to a statement today. JPMorgan Chase & Co. will serve as its financial adviser.

[Guest valueInv]

The clock starts ticking really fast now. CIOs, app developers and operators are going to hold investments in the BB10 platform until the cloud clears. This means even lower sales.

[txlaw]

So now things are getting a bit more interesting. 

 

I believe we're going to get some more clarity on the value of these assets I keep talking about (QNX, the NOC and security services, BES, BBM, subscriber base, etc.) fairly soon.  The market simply doesn't have the patience to wait for the "new" revenue to come -- though I believe it's coming, in the form of Secure Work Space/BBM subscriptions, BES subscriptions, and more -- but it will certainly listen to what strategics think about the value embedded there.

 

As I have always stated, when it comes to BBRY, think run-off/break-up value and resource conversion (see Martin Whitman et al).

 

------

 

Here's the important part of the press release:

 

[T]he Company's Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.

 

There has been a lot of focus on a PE buyout or sale of the company to strategic buyers, but we shouldn't discount the possibility of a JV, which could actually be the most likely outcome.  I have no opinion on who any potential PE buyers would be, but I highly doubt that FFH would put more money into BBRY.  They own quite a bit of the company already, and they'd be more likely to participate in a PE entity created for the purpose of purchasing BBRY.

 

----

 

Re: strategic buyouts, partnerships, alliances, and JVs, there are a multitude of options out there.

 

MSFT -- A lot of people have suggested MSFT in the past.  I don't believe this makes much sense, though.  MSFT is committed to Windows and its other solutions (included its own embedded systems option), and I don't think it's possible at all to fold in BBRY's core OS technology into Windows.  Having said that, there could be some incentive for MSFT to do a deal in order to take advantage of the security advantages that BBRY has over the competition.

 

AMZN -- Amazon could potentially be a JV partner, in order to bring out an AMZN smart phone, but at this point, I doubt this will happens.  They seem to be fairly committed to forking Android, and I think they don't really have the expertise necessary to form a partnership that would be of much value.  AMZN is better off sticking with Android, but making sure that its services will run on top of BB10.

 

Chinese hardware partners -- Importantly, the announcement talks about getting scale to accelerate BB10 deployment.  One thing that would be great for BBRY would be to do a JV with a low cost Chinese hardware partner who brings scale to the mix.  At that point, BBRY would be focusing solely on software and services, while letting its partner design hardware on an accelerated timeframe.  But one problem with having a Chinese hardware partner is that security is obviously a key differentiating factor for BBRY, and it's not clear that a JV or sale of the hardware ops would survive regulatory scrutiny.

 

Samsung -- Don't count out Samsung as being a potential partner here.  Samsung understands that the OS is commoditizing, and that their advantage lies in hardware manufacturing and in offering software and services on top of the OS.  Samsung has been heavily reliant on Android, but they're trying to address this problem.  They are developing Tizen, they are partnering with Mozilla to develop a solution that will compete with Chrome/ChromeOS, and they could easily start manufacturing hardware that would optimally run BB10.  Samsung has also expressed a desire to be everywhere, not just in traditional "mobile computing" devices, which indicates that they are interested in M2M and IoT (especially since they manufacture a lot of appliances that will be connected to the Internet).  As I keep mentioning, QNX has a huge advantage compared to other OS's when it comes to the M2M and IoT space (due to the differences between a microkernel vs. monolithic kernel).  And QNX allows developers to put HTML5 and Android apps into a container that runs on top of QNX.  Samsung could help BBRY reduce the performance issues we see with sideloading Android apps on BB10 and other OS's built on top of QNX, and could also help to make porting Android apps to QNX-based sysems a lot easier.

 

I could definitely see a partnership with Samsung in the works.  (Sony, on the other hand, seems to be very close to GOOG, and I doubt they will jettison Android right at the time when they are possibly due for a comeback in their electronic hardware ops.)

 

IBM -- IBM has been a leader when it comes to M2M and IoT.  I could easily see them buying BBRY in order to put QNX everywhere and sell software and services tied to QNX.  By purchasing BBRY, IBM would further strengthen their ties to the corporate boardroom, and they would have a shot at offering the premier "mobile computing platform" to handle any devices, appliances, or durable goods that need to be connected to the Internet.  There are many sophisticated manufacturers out there who are looking to provide services that are attached to their goods.  For example, companies like Agco are offering technology solutions to their farmer customers that are intended to increase productivity through data collection.  IBM would love to power these sorts of technology solutions.  And BBRY technology could provide a solution.

 

It's going to be very interesting to see what happens in the next couple of months.

[Guest wellmont]

I had no idea my thesis would play out so quickly.  ;D basically PW told CEO that his strategy failed and the company needs to be sold. although no buyer is going to want bb10. they've had two years to partner with bbry on bb10. nobody is interested. Samsung is working on 3 different OS as it is. They don't need to PAY for a 4th. I could see oracle, ibm, or some other cash rich company buy this:  IP, subscription revenue, enterprise software assets, and cash. The chinese are a natural fit, but that may not fly politically. Japanese and Taiwanese concerns could show interest as well. other ideas: nok, csco, intc, lg.

[rkbabang]

Anyone care to take a guess at what it will eventually sell (or be taken private) for?  I can't see anyone paying what it is trading for today.  My guess is $4B.

 

 

[txlaw]

Also just occurred to me, the big carriers could be interested.  VZ, in particular, as they could also benefit from tying their own services to QNX.

[yp]

Great ideas, as always.

Just a few questions for you (or any other board member);

 

- in case a PE does come in and buy up, would FFH have to sell at the decided price? I can't see PW being happy with that.

- I'm guessing PW has resigned because the conflict of interest lies in being a board member for BBRY and a potential stakeholder (with FFH) in any privatization of the company?

- before I go looking through the BBRY financials; anybody have an idea as to how much of their revenue comes from QNX based products/services like the auto OS products, etc. (not including BB10 based devices, BBM, BES, subscriber base)?

- Also, i'm also interested in knowing what some analysis/ideas are as to how much they might go private for? $4B? More or less?

 

So now things are getting a bit more interesting. 

 

I believe we're going to get some more clarity on the value of these assets I keep talking about (QNX, the NOC and security services, BES, BBM, subscriber base, etc.) fairly soon.  The market simply doesn't have the patience to wait for the "new" revenue to come -- though I believe it's coming, in the form of Secure Work Space/BBM subscriptions, BES subscriptions, and more -- but it will certainly listen to what strategics think about the value embedded there.

 

As I have always stated, when it comes to BBRY, think run-off/break-up value and resource conversion (see Martin Whitman et al).

 

------

 

Here's the important part of the press release:

 

[T]he Company's Board of Directors has formed a Special Committee to explore strategic alternatives to enhance value and increase scale in order to accelerate BlackBerry 10 deployment. These alternatives could include, among others, possible joint ventures, strategic partnerships or alliances, a sale of the Company or other possible transactions.

 

There has been a lot of focus on a PE buyout or sale of the company to strategic buyers, but we shouldn't discount the possibility of a JV, which could actually be the most likely outcome.  I have no opinion on who any potential PE buyers would be, but I highly doubt that FFH would put more money into BBRY.  They own quite a bit of the company already, and they'd be more likely to participate in a PE entity created for the purpose of purchasing BBRY.

 

----

 

Re: strategic buyouts, partnerships, alliances, and JVs, there are a multitude of options out there.

 

MSFT -- A lot of people have suggested MSFT in the past.  I don't believe this makes much sense, though.  MSFT is committed to Windows and its other solutions (included its own embedded systems option), and I don't think it's possible at all to fold in BBRY's core OS technology into Windows.  Having said that, there could be some incentive for MSFT to do a deal in order to take advantage of the security advantages that BBRY has over the competition.

 

AMZN -- Amazon could potentially be a JV partner, in order to bring out an AMZN smart phone, but at this point, I doubt this will happens.  They seem to be fairly committed to forking Android, and I think they don't really have the expertise necessary to form a partnership that would be of much value.  AMZN is better off sticking with Android, but making sure that its services will run on top of BB10.

 

Chinese hardware partners -- Importantly, the announcement talks about getting scale to accelerate BB10 deployment.  One thing that would be great for BBRY would be to do a JV with a low cost Chinese hardware partner who brings scale to the mix.  At that point, BBRY would be focusing solely on software and services, while letting its partner design hardware on an accelerated timeframe.  But one problem with having a Chinese hardware partner is that security is obviously a key differentiating factor for BBRY, and it's not clear that a JV or sale of the hardware ops would survive regulatory scrutiny.

 

Samsung -- Don't count out Samsung as being a potential partner here.  Samsung understands that the OS is commoditizing, and that their advantage lies in hardware manufacturing and in offering software and services on top of the OS.  Samsung has been heavily reliant on Android, but they're trying to address this problem.  They are developing Tizen, they are partnering with Mozilla to develop a solution that will compete with Chrome/ChromeOS, and they could easily start manufacturing hardware that would optimally run BB10.  Samsung has also expressed a desire to be everywhere, not just in traditional "mobile computing" devices, which indicates that they are interested in M2M and IoT (especially since they manufacture a lot of appliances that will be connected to the Internet).  As I keep mentioning, QNX has a huge advantage compared to other OS's when it comes to the M2M and IoT space (due to the differences between a microkernel vs. monolithic kernel).  And QNX allows developers to put HTML5 and Android apps into a container that runs on top of QNX.  Samsung could help BBRY reduce the performance issues we see with sideloading Android apps on BB10 and other OS's built on top of QNX, and could also help to make porting Android apps to QNX-based sysems a lot easier.

 

I could definitely see a partnership with Samsung in the works.  (Sony, on the other hand, seems to be very close to GOOG, and I doubt they will jettison Android right at the time when they are possibly due for a comeback in their electronic hardware ops.)

 

IBM -- IBM has been a leader when it comes to M2M and IoT.  I could easily see them buying BBRY in order to put QNX everywhere and sell software and services tied to QNX.  By purchasing BBRY, IBM would further strengthen their ties to the corporate boardroom, and they would have a shot at offering the premier "mobile computing platform" to handle any devices, appliances, or durable goods that need to be connected to the Internet.  There are many sophisticated manufacturers out there who are looking to provide services that are attached to their goods.  For example, companies like Agco are offering technology solutions to their farmer customers that are intended to increase productivity through data collection.  IBM would love to power these sorts of technology solutions.  And BBRY technology could provide a solution.

 

It's going to be very interesting to see what happens in the next couple of months.

[Guest wellmont]

Anyone care to take a guess at what it will eventually sell (or be taken private) for?  I can't see anyone paying what it is trading for today.  My guess is $4B.

 

agreed. I think investors are going to be disappointed in the final price. if they can even sell it. anything short of an outright sale will also leave investors grumbling.

[Guest wellmont]

looks like we may have another dell in the making. wouldn't it be ironic if PW took this private at the expense of outside shareholders who have very few other options?

 

Mario Gabelli ‏@MarioGabelli 9m

Prem Watsa / Fairfax  front runner re blackberry deal....

Expand

[SharperDingaan]

We are out, with just over a 11% net gain ... but frankly we were lucky; & are glad to be done.

 

This whole thing feels like FBK all over again; a FFH position blocking sale prospects, & an unwillingness to swallow the loss & move on. Shareholders will get forced to swallow a stink bid, & FFH will end up with a sizeable chunk of whatever entity takes RIM out. Ultimately FFH will come out fine; RIM shareholders - not so much.

 

SD

[txlaw]

Great ideas, as always.

Just a few questions for you (or any other board member);

 

- in case a PE does come in and buy up, would FFH have to sell at the decided price? I can't see PW being happy with that.

 

No idea.  If we have someone like OTPP coming in to help take it private, I don't see why FFH wouldn't be allowed to participate. 

 

- I'm guessing PW has resigned because the conflict of interest lies in being a board member for BBRY and a potential stakeholder (with FFH) in any privatization of the company?

 

Yes, I would assume so. 

 

But I wouldn't read too much into this just yet.  Just because PW is taking the right steps to mitigate CoI doesn't mean that a PE buyout is the preferred choice.  IMO, a JV with a strategic would be the best outcome for shareholders in the long run.

 

I don't agree with other folks who are trying to pressure BBRY to do a quick sale at an insane price.  ($4 billion would be an insane price, IMO.)  I don't see a take-under happening, but keep in mind that I also didn't see MSD taking DELL away from the public at such a low price either . . . so take that with a grain of salt.

 

- before I go looking through the BBRY financials; anybody have an idea as to how much of their revenue comes from QNX based products/services like the auto OS products, etc. (not including BB10 based devices, BBM, BES, subscriber base)?

 

This isn't broken out, but you can take a look at the Harman filings after QNX was sold to get an idea.

 

- Also, i'm also interested in knowing what some analysis/ideas are as to how much they might go private for? $4B? More or less?

 

More than $4 billion.  I would be very disappointed if it went for less than what I estimate run-off/break-up value to be. 

[txlaw]

For those of you with access to Bloomberg terminals, I would love to see the shareholder make-up of BBRY at this time. 

[fareastwarriors]

For those of you with access to Bloomberg terminals, I would love to see the shareholder make-up of BBRY at this time.

 

here you go.

 

sorted by file date and % outstanding .

[txlaw]

For those of you with access to Bloomberg terminals, I would love to see the shareholder make-up of BBRY at this time.

 

here you go.

 

sorted by file date and % outstanding .

 

Thanks.

[txlaw]

Btw, if there is to be a PE buyout, I would expect it to be an unleveraged buyout. 

 

Unlike a DELL, where you can sustain some level of leverage, you would have to be insane to add debt to a company like BBRY.

[Guest wellmont]

i still think there is too much uncertainty with the business model for p/e to get involved here. same with strategics. and agree you can't put any debt on this thing. Gabelli basically is saying that PW is the front runner as evidenced by his leaving the bod. and it makes the most sense btw.

 

bbry needs a massive restructuring; and it probably, given the politics involved, is better to do that privately and out of the public scrutiny. this could yield an attractive buyout price for PW that eventually could get him whole on this investment, at the same time leaving outside investors wanting more. much more. in that sense this is very similar to dell in that you will have insider interest but not much else. also it would be easier to get done for insiders because nobody thinks the future of bbry is any good, thus you won't have anybody contest it.

[fareastwarriors]

http://www.theglobeandmail.com/report-on-business/blackberry-says-it-is-exploring-strategic-alternatives/article13708618/

 

 

Fairfax mulls taking BlackBerry private