BB - BlackBerry

[Guest valueInv]

His thesis has been break-up value as long as I remember. Of course there is a lot of subjectivity in that valuation.

 

What was the valuation he posted based on breakup value? Why all the posts about QNX, IoT,M2M, cloud services?

[Guest valueInv]

Wsj on BBRY:

 

http://online.wsj.com/article/SB10001424052702303983904579091473667579040.html

[Parsad]

No it is not Txlaw, but as a casual observer to this board I find the comments whether bullish or bearish interesting. However the derogatory comments are becoming a bit much. Calling out members names to insult them serves little purpose other than to show ones insecurity and lack of a personal life. Constructive criticism of BBRY on the other hand is welcome as it is always important to understand the bull and bear case.

 

And what do you think of all the false and misleading information

posted on this thread?

 

How is it false and misleading?!  Investors were analyzing the business...both bullish and bearish like any other thread.  Cheers! 

[wachtwoord]

Indeed, if an argument or information is invalid please offer counter arguments instead of throwing ad hominems and ad auctoritatems around the table.

[rpadebet]

http://business.financialpost.com/2013/09/20/blackberry-to-cut-4500-jobs-warns-of-huge-q2-loss-what-the-analysts-say/?__lsa=822e-df9b

 

Just like clockwork. All of them go bearish.

 

Feels like the point of maximum pessimism. Almost every value investing guru recommends to invest at this point. Don't they? 

 

[SI]

If you are asking that question, I would not be buying the stock.

[giofranchi]

Will Mr. Watsa buy the rest of BBRY?

 

http://seekingalpha.com/article/1707752-who-is-going-to-buy-blackberry-mike-lazaridis-large-tech-or-prem-watsa?source=email_investing_ideas&ifp=0

 

Sincerely, knowing how much Mr. Watsa likes FFH’s 30% cash position, I think it is very unlikely he will use it now to buy BBRY…

And, if I were him, I wouldn’t… Not now… Things are still not clear enough… Given the great deleveraging we are living through and high stock market prices, before parting with its cash, FFH should still wait and be patient… Let’s take the evidence that “this time is different” and policy makers have truly been successful in averting yet another panic, when it finally comes for sure… Not now… Imo it is still too early.

 

giofranchi

 

 

 

[DCG]

So the company bought a new plane for around $29m just 2 months ago while sales were imploding. Seem like a great management team.

[rpadebet]

So the company bought a new plane for around $29m just 2 months ago while sales were imploding. Seem like a great management team.

 

 

Used Plane. But yes dumb

[Guest wellmont]

http://business.financialpost.com/2013/09/20/blackberry-to-cut-4500-jobs-warns-of-huge-q2-loss-what-the-analysts-say/?__lsa=822e-df9b

 

Just like clockwork. All of them go bearish.

 

Feels like the point of maximum pessimism. Almost every value investing guru recommends to invest at this point. Don't they?

 

hard to say when max pessimism is. but there certainly could be lots more bad news. for example they may actually come clean and say they are getting out of device business. instead of pretending to still be in it. This report is way worse than even the most bearish bbry analyst imagined. how could you come away positive after reading it. resources are being converted-----to dust.

[Guest wellmont]

here is what most positive bbry analyst on wall street has to say today.

 

In a report published Monday, Jefferies analyst  Peter Misek  downgraded the rating on  BlackBerry Ltd.  (NASDAQ: BBRY) from Buy to Hold, and lowered the price target from  $15.00 to $8.00 .

In the report, Jefferies noted, “We conducted a proprietary survey over the last three weeks. The results indicate substantial value for BBRY's MDM business but that the handset business will be sub-scale going forward, meaning units, ASPs, and margins will be under pressure and lead to a negative value for the handset business (vs. our prior $0 est). Also, it means greater subscriber loss, undermining the value of the services business for potential acquirers.”

BlackBerry Ltd.  closed on Friday at  $8.73 .

[rpadebet]

here is what most positive bbry analyst on wall street has to say today.

 

In a report published Monday, Jefferies analyst  Peter Misek  downgraded the rating on  BlackBerry Ltd.  (NASDAQ: BBRY) from Buy to Hold, and lowered the price target from  $15.00 to $8.00 .

In the report, Jefferies noted, “We conducted a proprietary survey over the last three weeks. The results indicate substantial value for BBRY's MDM business but that the handset business will be sub-scale going forward, meaning units, ASPs, and margins will be under pressure and lead to a negative value for the handset business (vs. our prior $0 est). Also, it means greater subscriber loss, undermining the value of the services business for potential acquirers.”

BlackBerry Ltd.  closed on Friday at  $8.73 .

 

I thought the Credit Suisse guy was the bullish analyst today (he actually upgraded from Sell to Hold - attached his blurb)

But I don't understand why he doesn't cut the Op ex in his projections. Does he have a reason to believe BBRY will not be able to deliver on the "cut Opex by 50%" as promised? 

 

Also, do you know of any bearish PT below $6 a share?

file.pdf

[rkbabang]

http://business.financialpost.com/2013/09/20/blackberry-to-cut-4500-jobs-warns-of-huge-q2-loss-what-the-analysts-say/?__lsa=822e-df9b

 

Just like clockwork. All of them go bearish.

 

Feels like the point of maximum pessimism. Almost every value investing guru recommends to invest at this point. Don't they? 

 

 

Keep in mind value investing doesn't mean that one should buy any company that has a lot of pessimism surrounding it.  Sometimes a company really is on the way to zero. I'm not saying BBRY is worth zero, but the longer it goes without a sale/breakup and/or doing something drastic to turn things around the less it will be worth.  This is a company that will be worth much less 6 months from now and much less still in a year.

[Guest wellmont]

jefferies (misek) has been the biggest most vocal and visible bullish sponsor of bbry over the years. Perhaps not now because this has to be career threatening I imagine. I did see a $5 target today. I believe National Bank or National securities? Here is a somewhat bullish take for you.

 

In a report published Monday,  Paradigm Capital  analyst  Gabriel Leung  downgraded the rating on  BlackBerry Ltd.  (NASDAQ: BBRY) from Speculative Buy to Hold, and lowered the price target from  $15.00 to $10.50 .

In the report,  Paradigm Capital  noted, “BlackBerry announces much lower‐than‐expected preliminary Q2 FY14 results...Clearly, these are very disappointing results. Despite the company's comments around increased BES 10 penetration, we believe its deteriorating financial position could prompt enterprises to delay adoption of BB10 devices, which could further exacerbate the decline in BlackBerry's financial situation. As such, we believe there is an even greater sense of urgency to find a strategic buyer, which could result in a quick sale of the company (with the ball being in the buyer's court).Using a sum‐of‐parts(see table 1), including a value for cash, patents and enterprise customers), we arrive at a revised target price of  $10.50  (was  $15.00 ). Although we believe we are close to an end‐game takeout scenario, given the modest return relative to the inherent risk in this investment (i.e. as a standalone entity), we are downgrading the stock to Hold (was Spec. Buy). We are refraining from adjusting our estimates pending the release of the full results on September 27th.”

[Guest wellmont]

wells fargo says there is value in bbry real estate and buildings. they must have built a "taj mahal" back in the day? they also say Hardware has Negative Gross Margins. Not net margins. Not operating margins. Not ebitda margins.  Negative Gross margins.

 

In a report published Monday,  Wells Fargo Securities  analyst  Maynard Um  reiterated a Market Perform rating on  BlackBerry Ltd.  (NASDAQ: BBRY).

In the report,  Wells Fargo Securities  noted, “On the one hand, we believe a more concentrated focus by BBRY is positive and think restructuring the company for the revenue opportunity is the right move. However, despite BBRY citing increasing penetration of BlackBerry Enterprise Service 10 servers (note it did not break out how many are merely test servers), we are concerned that customers may delay or altogether forgo purchases given the uncertainty surrounding the company (for example, if there is a buyer, would they be committed to long-term customer support and roadmaps). We believe BBRY needs to act quickly and decisively in coming to a conclusion with regard to any potential sale of the company and should look to sell assets (like parts of its  $1.3bn  in buildings/leasehold improvements/other) to bolster its cash position. Other issues – 1) based on our estimates, hardware gross margins are likely negative this quarter and 2) plans to re-tier the Z10 would put more pressure on gross margin.”

 

[Guest wellmont]

rumor (that makes some sense btw) on Cross Platform BBM

 

from a crackberry user:

I have been hearing from multiple people that the whole project/service has been canceled. It wont be released at all BlackBerry determined it was not able to maintain its servers or provide the service with the most recent round of layoffs and restructuring.

[matts]

Scotiabank's Gus Papageorgiou also kept his buy after the announcement. In my opinion a still ridiculous $13.20 target (down from 14.20). He has been bullish for years and looking very silly.

 

Recommendation

■ Maintain Sector Outperform. We expect some form of corporate transaction to occur that will benefit shareholders. We believe a takeout could occur at $13.20/share.

[rpadebet]

wells fargo says there is value in bbry real estate and buildings. they must have built a "taj mahal" back in the day? they also say Hardware has Negative Gross Margins. Not net margins. Not operating margins. Not ebitda margins.  Negative Gross margins.

 

In a report published Monday,  Wells Fargo Securities  analyst  Maynard Um  reiterated a Market Perform rating on  BlackBerry Ltd.  (NASDAQ: BBRY).

In the report,  Wells Fargo Securities  noted, “On the one hand, we believe a more concentrated focus by BBRY is positive and think restructuring the company for the revenue opportunity is the right move. However, despite BBRY citing increasing penetration of BlackBerry Enterprise Service 10 servers (note it did not break out how many are merely test servers), we are concerned that customers may delay or altogether forgo purchases given the uncertainty surrounding the company (for example, if there is a buyer, would they be committed to long-term customer support and roadmaps). We believe BBRY needs to act quickly and decisively in coming to a conclusion with regard to any potential sale of the company and should look to sell assets (like parts of its  $1.3bn  in buildings/leasehold improvements/other) to bolster its cash position. Other issues – 1) based on our estimates, hardware gross margins are likely negative this quarter and 2) plans to re-tier the Z10 would put more pressure on gross margin.”

 

This one is more in line with my assessment of it.

Yes they have land and buildings worth 1.4B (as per last Q). Net PPE is about 2.2B and Gross is 5B

Waterloo,Canada (HQ & Manf) - 1800K Sqft

Other Canada (R&D) - 480K Sqft

USA (Sales) - 240K Sqft

 

And yes Hardware Gross margins are negative (it was true even last quarter). That is why I keep saying getting out entirely out of the Hardware business is not bad for the liquidation valuation. If you sell less phones you lose less cash in this case.

 

If they milk the Service business (for as long as it lasts), sell the buildings, preserve cash,sell the software/apps there is value here (botched BBM launch over the weekend, definitely hurts the valuation ). Patent valuation is a wild card.

 

How quickly they do this is the key? Longer it drags on, more it hurts the valuation.

[Cardboard]

I think there is value here between cash, patents, 70 million users, buildings and whatever else. The key is to stop the bleeding or stop selling new hardware and cutting expenses to the bone.

 

People also have to keep things in perspective. BBRY current market cap is $4.3 billion and still has $2.6 billion of net cash. APPL is worth $440 billion and has well over $100 billion of net cash. GOOG has a market cap of $296 billion. So an Apple, Google, Microsoft, Samsung or some other large Asian player could swallow BBRY without a burb at a net cost of say $5 billion (net of cash), keep whatever they want, transition customers to their own platform and liquidate the rest to almost pay for the entire price. Seems like a pretty low risk acquisition to me.

 

People will point out the $1 billion write-down and $500 million cash bleed but, what do you expect when an entire product line is a flop? So this is not an on-going cash burn rate. And since the company now seems to have an understanding of the magnitude of the disaster, they will cut aggressively and find real solutions.

 

I mentioned before that once a company announces that it will explore strategic alternatives that quite often the price drops even below the pre-announcement price after a while due to various factors. It seems to have happened here again.

 

In terms of the point of maximum pessimism, it could be here or not. I just want to point out that nobody here was positive on Best Buy surviving at $12 a share in December and is now at $38!!! So much about people abilities to predict the future.

 

Cardboard

[TwoCitiesCapital]

I think there is value here between cash, patents, 70 million users, buildings and whatever else. The key is to stop the bleeding or stop selling new hardware and cutting expenses to the bone.

 

People also have to keep things in perspective. BBRY current market cap is $4.3 billion and still has $2.6 billion of net cash. APPL is worth $440 billion and has well over $100 billion of net cash. GOOG has a market cap of $296 billion. So an Apple, Google, Microsoft, Samsung or some other large Asian player could swallow BBRY without a burb at a net cost of say $5 billion (net of cash), keep whatever they want, transition customers to their own platform and liquidate the rest to almost pay for the entire price. Seems like a pretty low risk acquisition to me.

 

People will point out the $1 billion write-down and $500 million cash bleed but, what do you expect when an entire product line is a flop? So this is not an on-going cash burn rate. And since the company now seems to have an understanding of the magnitude of the disaster, they will cut aggressively and find real solutions.

 

I mentioned before that once a company announces that it will explore strategic alternatives that quite often the price drops even below the pre-announcement price after a while due to various factors. It seems to have happened here again.

 

In terms of the point of maximum pessimism, it could be here or not. I just want to point out that nobody here was positive on Best Buy surviving at $12 a share in December and is now at $38!!! So much about people abilities to predict the future.

 

Cardboard

 

Some things to consider

1) I can't remember if I stated publicly my support for Best Buy, but I bought in at $15 and sold for a slight gain after Schulz said he wasn't going to make a bid. Missed the run though :/.

2) I don't think this is a point of maximum pessimism. I started my position back in August of 2012 because people were disappointed the new phones had been delayed and there was very public talk of bankruptcy despite no debt and hundreds of millions in FCF. That was a point of max pessimism where people were somehow training bankruptcy for a debtless company and driving down the price as if liaison was a bad thing at that point. 

3) The situation is different now, the phones flopped, they're burning cash now, and they've only written off one phone.  What hastens if you get $500M write downs for the Q5 and Q10 and maybe the Z30? There is as much as $4 billion in purchase commitments right?  When they announce those you might get the point of maximum pessimism. 

 

[ERICOPOLY]

So an Apple, Google, Microsoft, Samsung or some other large Asian player could swallow BBRY without a burb at a net cost of say $5 billion (net of cash), keep whatever they want, transition customers to their own platform and liquidate the rest to almost pay for the entire price. Seems like a pretty low risk acquisition to me.

 

 

That needs to happen quickly before the customers wander off to another platform on their own accord.  Now that BBRY has terminated their only upgrade path... the clock is ticking.

[rpadebet]

I think there is value here between cash, patents, 70 million users, buildings and whatever else. The key is to stop the bleeding or stop selling new hardware and cutting expenses to the bone.

 

People also have to keep things in perspective. BBRY current market cap is $4.3 billion and still has $2.6 billion of net cash. APPL is worth $440 billion and has well over $100 billion of net cash. GOOG has a market cap of $296 billion. So an Apple, Google, Microsoft, Samsung or some other large Asian player could swallow BBRY without a burb at a net cost of say $5 billion (net of cash), keep whatever they want, transition customers to their own platform and liquidate the rest to almost pay for the entire price. Seems like a pretty low risk acquisition to me.

 

People will point out the $1 billion write-down and $500 million cash bleed but, what do you expect when an entire product line is a flop? So this is not an on-going cash burn rate. And since the company now seems to have an understanding of the magnitude of the disaster, they will cut aggressively and find real solutions.

 

I mentioned before that once a company announces that it will explore strategic alternatives that quite often the price drops even below the pre-announcement price after a while due to various factors. It seems to have happened here again.

 

In terms of the point of maximum pessimism, it could be here or not. I just want to point out that nobody here was positive on Best Buy surviving at $12 a share in December and is now at $38!!! So much about people abilities to predict the future.

 

Cardboard

 

Some things to consider

1) I can't remember if I stated publicly my support for Best Buy, but I bought in at $15 and sold for a slight gain after Schulz said he wasn't going to make a bid. Missed the run though :/.

2) I don't think this is a point of maximum pessimism. I started my position back in August of 2012 because people were disappointed the new phones had been delayed and there was very public talk of bankruptcy despite no debt and hundreds of millions in FCF. That was a point of max pessimism where people were somehow training bankruptcy for a debtless company and driving down the price as if liaison was a bad thing at that point. 

3) The situation is different now, the phones flopped, they're burning cash now, and they've only written off one phone.  What hastens if you get $500M write downs for the Q5 and Q10 and maybe the Z30? There is as much as $4 billion in purchase commitments right?  When they announce those you might get the point of maximum pessimism.

 

Good points Zach. Yes in Jul 2012 seems like we had exactly 0 buys on this stock. We have 6 as of today, so maybe we have some more to go.

 

Anyways, now that CNN has called it. We can pack our bags and go home now

 

http://money.cnn.com/2013/09/23/technology/mobile/blackberry/index.html?iid=HP_LN

 

 

[Guest wellmont]

you know I don't see CS with any special insights. they had an $85 price target on bbry in dec of 2010. these guys have been kool-aide drinkers all along. and they still predict $4b of hardware revenue in 2015?

[SI]

Stock halted.

[Guest wellmont]

$9 in cash from fairfax.