Our checks with prime broker desks reveal the pricing of the negative rebate (the annual charge for hard to borrow shares) is a firm 6.5%. The availability of shares to borrow is as scarce as it was last time we checked. We think the pricing and the increase in outstanding shorts is the cause for the recent drop in BBRY shares from the mid $16s to the current $13s.
Yesterday, we wrote an article about Google's (GOOG) Android based relationship with Samsung (GM:SSNLF) and the coming war over advertising revenue splits. The takeaway from the article is that BlackBerry may ironically be the main beneficiary from the GOOG vs. Samsung spat. Google has every intention of making sure no phone vendor dictates advertising revenue splits with it. We think there is more to the advertising story in mobile evolving with new emphasis on privacy issues and user control.
In the meantime, Android's app developers, according to Goldman Sachs analyst Simona Jankowski, are porting over 1000 apps per day. Jankowski reported the following after attending the BlackBerry Forum in San Francisco on February 26. Here are some snippets from GS:
"Keynote presentation by Richard Piasentin, VP of US Sales, Marketing and Operations...BlackBerry's global tour aimed at promoting BB10 awareness and excitement...well attended by developers, enterprise IT personnel, and loyalists...BlackBerry is registering almost 1k apps per day...actively training 60k retail reps and creating 25k points of presence throughout the US market ahead of the launch...demos showcased the ability to launch BB services on iOS and Android via a simple application launch and authentication, which fully incorporates BB security functionality. We maintain our Buy rating based on the expected positive mix shift to BB10."
More news also came in from Forbes yesterday. This time it is positive. Maybe it's because co-author Andrew Till is helping Eric Savitz see the light and came up with the headline: "Why BlackBerry Can Regain Momentum In The Enterprise." The article is timely because of Samsung's push into the enterprise arena with its new Knox software. The push is the subject of a NYTimes article today titled "Samsung Armors Android to Take On BlackBerry." We must admit, BBRY sure has a way of getting into its fair share of battlegrounds. Moreover, the press here will actually help BlackBerry by highlighting their long standing leadership in enterprise security. As Andrew Till of Forbes highlights here:
Having spent some time with the platform, here are the advantages I believe BlackBerry has on its side:
- The BlackBerry 10 platform: This robust platform is fast and highly responsive, putting BlackBerry on a competitive level with other competing smartphone OS platforms. It is built on QNX, which has been the leading software platform for the automotive industry for many years. This means that although it's new as a mobile phone platform, unlike other new entrants it is far from being an immature platform.
- The lack of applications: Many see this as a weakness and a major barrier for the company, but I beg to differ. By not offering an overabundance of consumer apps, the company underscores its focus on the enterprise and productivity as its target market and shows decision makers that they are not getting lost playing the consumer hype game. Having the right apps that enhance the power of what is essentially a mobile productivity tool is much more important for BlackBerry's target market than having 30,000 different wallpaper themes.
- The user interface: BlackBerry's new user interface has clearly been optimized around messaging with its unique hub set up which allows access to all your messages and conversations at any time, from any application. Also, the enhanced predictive text experience is simply a joy to use and is going to force a lot of companies to re-think how they optimize and speed up message input on their devices. Don't be surprised if you find that new Z10 users are sending you long emails that you never thought possible for someone to write without a physical keyboard.
- Secure access and remote management: BlackBerry Enterprise Service 10, the company's new version of its Web-based mobility management software, allows an enterprise to remotely manage security settings for all employees' smartphones and provide secure access to corporate data through the devices. BlackBerry Balance, a new feature, helps users keep their personal and work information in separate spaces on their phone (something that several companies have been trying to do without success on Android for some time). This feature works well and addresses a clear pain point for professional users. It's this type of thought and attention to detail, geared toward the mobile prosumer, that will enable BlackBerry to regain its high value position in the enterprise market.
- Keyboard options: The few who have stuck with RIM through its fall from grace say the keypad is what sets the phone apart from the sea of touchscreen devices. The company's announcement of both touchscreen and keypad models allows an option for both those who loved the old version and those who have been tempted by the Apple and Android products on the market. Another interesting aspect is the care and attention to detail in ensuring a strong level of commonality between the QWERTY and Touch models. This will enable users to seamlessly move between different form factors, which could prove invaluable in a world where people increasingly own multiple mobile devices.
- Cross Platform Integration: Perhaps more for the future, but QNX, the foundation of BB10 is still a leading OS for the automotive market. This will give BlackBerry the potential to develop innovative in-car experiences that could be highly attractive to the prosumer market. Seamless integration of voice, video and navigation experiences are still not where they need to be as a whole and no other company in the world owns the in-car and mobile device platform in the way that BlackBerry does.
BBRY recognized it had to draw the circle around all platforms and secure all its competitors' devices as well as their own. The good news is that BBRY is sure getting a lot of free PR these days. Do companies really want Samsung securing their passwords and confidential information? It feels like the fox guarding the hen-house.