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BlackBerry (NASDAQ:BBRY)

Annual and Special Meeting of Shareholders Conference Transcript

July 9, 2013 10:00 AM ET

Executives

Barbara Stymiest - Independent Chairman

Thorsten Heins - Chief Executive Officer

Brian Bidulka - Chief Financial Officer

Phil Kurtz - Assistant General Counsel and Assistant Corporate Secretary

Frank Boulben - Chief Marketing Officer

Kristian Tear - Chief Operating Officer

Steven Zipperstein - Chief Legal Officer

Tim Dattels - Director

David Kerr - Independent Director

Claudia Kotchka - Independent Director

Richard Lynch – Director

Roger Martin - Independent Director

Prem Watsa - Independent Director

Bert Nordberg - Director

Steve Gilbert - Computershare Investor Services

Margaret Barton - Computershare Investor Services

Analysts

Vic Alboini - Jaguar Financial

Barbara Stymiest

Good morning. My name is Barbara Stymiest, Chair of the Board of Directors of Research In Motion Limited. On behalf of your Board of Directors and management it’s my pleasure to welcome you to the company’s Annual and Special Meeting of Shareholders.

Before we begin, I would like to take this opportunity to introduce the members of the company’s senior management team and the Board of Directors who are here today. Seated with me on the stage are Thorsten Heins, the Chief Executive Officer of the company and the Member of the Board of Directors; Brian Bidulka, Chief Financial Officer; and Phil Kurtz, Assistant General Counsel and Assistant Corporate Secretary of the company, he will act as Secretary for the meeting.

In addition, members of the company’s senior management team are in attendance today, including Frank Boulben, there he is, thank you, our Chief Marketing Officer; Kristian Tear, our Chief Operating Officer; and Steven Zipperstein, our Chief Legal Officer.

Also in attendance are the following directors and director nominees of the company. Tim Dattels; David Kerr; Claudia Kotchka; Richard Lynch; Roger Martin; and Prem Watsa; and Bert Nordberg is joining this meeting via the webcast.

The formal part of the meeting will be chaired by me and following the completion of the formal business for which this meeting is called, Thorsten will present an update on BlackBerry’s business and there will be an opportunity for shareholders to ask questions.

Before I call the meeting to order I have a few brief remarks. First, it continues to be an honor for me to serve as your Chair of the Board of Directors of this renounced Canadian company and to work with my fellow Board members and with the company’s management team. Since we met last year, the company has achieved its primary goals of launching the BlackBerry 10 platform and evolving quickly into a leaner and more nimble organization.

At the same time, the company remains in the period of transition and has new priorities to address in order to realize its mobile computing vision in the highly competitive environment and Thorsten will elaborate upon that later.

The Board is aligned with management on strategies for navigating through this process and building long-term shareholder value. We the Board remained completed supportive of management and continue to see great potential in the hardware, software and service innovations that the company has launched and intends to launch around its new platform.

This past year of transition has also extended to your Board of Directors. Mike Lazaridis, Co-Founder of the company and creator of the BlackBerry announced his resignation as Vice Chair in March, after nearly 30 years with this company. And there is probably no need to remind anyone in the room of the accomplishments of Mike in revolutionizing the mobile communications industry when he invented the BlackBerry and of course, he is so widely recognize as one of Canada’s great innovators.

You will also note that John Richardson and John Wetmore have chosen to not stand for reelection today. John Richardson served the Board well for over 10 years including five years as Lead Director and John Wetmore has served this Board for six years including leading the compensation, nomination and governance committee.

On behalf of the Board and the company, I thank Mike, John Richardson and John Wetmore for their many years of service and I would like to let you know that we greatly appreciate their contribution and the benefit of their input and expertise.

The Board is actively engaged in the ongoing process of enhancing its membership and improving its effectiveness. In February of this year, Dick Lynch, the former CTO of Verizon and Bert Nordberg, the former CEO of Sony Ericsson joined the Board, bringing their perspective and experience as former senior executives in the wireless industry. We continue to seek ways to improve our corporate governance by evolving our Board composition and strengthening our policies and our practices.

I would now like to call this meeting formerly to order. On registering for the meeting today, all eligible shareholders should have received a handheld electronic voting device. With these new devices we will be doing way with the marking, collecting and counting of paper ballots that you’ve been used to in prior years. We believe that these voting devices will speed up the voting process and able us to provide with the results of the vote much more quickly.

If you have a handheld voting device, please make sure that the arrows at the bottom of the smartcard are facing you and are inserted up to the red line. A welcome message will appear when the card is inserted correctly. Should you need assistance, please ask one of our representatives.

When voting using the handheld voting device you will be asked after each proposal is put to the meeting by me to cast your vote by pressing one of the button numbered one, two or three on your keypad to indicate your voting preference.

When the polls open, the handset will display the voting option. Once you have made your selection, the word received will appear on the screen of your handheld device to indicate that your vote is being counted.

Should you wish to change your vote simply press again on the corrected button. The last button that you pressed prior to the vote closing will be the vote accepted by the system. We will provide further instructions before each of the vote.

Now as Chair of the meeting, I will ask Phil Kurtz to act as Secretary of this meeting. Steve Gilbert and Margaret Barton of Computershare Investor Services will act as our scrutineers.

I confirm that the Secretary has received the declaration of Computershare Investor Services Inc. confirming that the notice of meeting was properly given to all shareholders entitled to receive notice, the Directors and the auditors which notice the company -- which notice was accompanied by the management information circular and former proxy.

In order to facilitate the proceeding and as we have at previous meeting, we have arranged with certain persons attending this meeting to make and second certain motion.

As all shareholder should have previously received a copy of this notice with your consent I would ask for motion to dispense with the reading of the notice.

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, James.

Unidentified Participant

I second the motion

Barbara Stymiest

Thank you, Roger. All in favor. Any opposed. That motion is carried. Now turning to the quorum and constitution of the meeting the srutineers report, stating that the necessary quorum of shareholders is present has now been tabled. The scrutineers’ report shows that they are present at the annual and special meeting of shareholders in person or represented by proxy 305,672,477 common shares being 58.3% of the total of 524,159,844 outstanding common shares of Research In Motion Limited.

I therefore declare this annual and special meeting of shareholders to be regularly called and properly constituted for the transaction of business. Now, the first item of business is the presentation of the financial statements of the company for the fiscal year ended March 2, 2013.

These include the consolidated balance sheet as at March 2, 2013 and March 3, 2012 and the related consolidated statements of shareholders equity, operations and cash flow together with the auditors report there on. As copies of the annual report containing the financial statements and auditors’ report were mailed to all shareholders who requested a copy, I would ask someone to move that the reading of the consolidated financial statements and auditors’ report be dispensed with.

Unidentified Participant

I so move.

Barbara Stymiest

Thank you Mike.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Rick. All in favor. Any opposed? That motion is carried. It is now in order to proceed with the election of directors for the ensuing year. As determined by the Board, the number of directors to be elected today is nine.

As set forth in the management information circular, each of the following persons has been nominated for the position of director of the company to hold office for the ensuing year and each has agreed to serve as the director, if elected. Tim Dattels, Thorsten Heins, David Kerr, Claudia Kotchka, Richard Lynch, Roger Martin, Bert Nordberg, Barbara Stymiest and Prem Watsa.

The meeting is now open for further nominations for directors. Does any shareholder or proxy holder wish to make a further nomination?

There being no further nominations, I declare the nominations closed. We will now proceed with the votes to the election of directors. As I indicated earlier, the vote on the election of directors as all of the matters to be voted on today will be conducted through the use of electronic ballot.

If you have already voted in advance by proxy, your vote will already have been compiled by the scrutineers, and you do not need to vote again and use the handheld device.

If you have not yet voted your shares by proxy, you will need the handheld device together with your smart card. You will need to vote for each of the nine director nominees in turn. The director nominees name will appear on the screen behind me.

Each time you see the name of the nominee highlighted on the screen, you have to vote by pressing number one to vote for or by pressing number three to withhold your vote. You may change your vote by selecting a new choice while the vote is open and if you represent more than one account, please be reminded that all of your accounts have been linked to the smart card that’s loaded onto your handheld device and you are voting on behalf of all of the accounts that you are representing.

So the vote is now open for Mr. Tim Dattels. So presuming you have all voted, the vote is now closed. The vote is now open for Mr. Thorsten Heins. That vote is now closed. The vote is now open for Mr. David Kerr. The vote is now closed. The vote is now open for Ms. Claudia Kotchka. The vote is now closed. The vote is now open for Mr. Richard Lynch. That vote is now closed. The vote is now open for Mr. Roger Martin. The vote is now closed. And the vote is now open for Mr. Bert Nordberg. The vote is now closed. The vote is now open for Barbara Stymiest. The vote is now closed. And the final director nominee, the vote is now open for Mr. Prem Watsa. The vote is now closed.

We will show the results of the vote on the screen behind me at the end of the formal part of the meeting. We will now proceed with the next item of business on the agenda, which is the reappointment of auditors. Would someone please move the Ernst & Young LLP be reappointed as the independent auditors of the company until the next annual meeting of shareholders and that the Board of Directors of the company be authorized to fix the auditors’ remuneration.

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, John.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Carmen. The vote on the reappointment of the auditors is now open. Please vote now by pressing one to vote for the reappointment of Ernst & Young and press three to withhold your vote.

Thank you. The vote on the reappointment of the auditors is now closed. And we will show the results of this vote on the screen behind me at the end of the formal part of the meeting.

The next item of business is the change of the company’s name to BlackBerry Limited. The special resolution which can be found in the management information’s circular distributed in connection with this meeting provide that the company’s name be changed from Research In Motion Limited to BlackBerry Limited.

In late January of this year, the company adopted the name of its revolutionary BlackBerry smartphone to coincide with the launch of its new mobile computing platform BlackBerry 10. This change consolidates the company’s brand into a single cohesive global presence. To be effective, the special resolution must be approved by two-thirds of the vote cast by holders of common shares to vote in person or by proxy.

Would someone please move the special resolution be adopted?

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, James.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Roger. The vote on the name change to BlackBerry Limited is now open. Please vote by pressing number one to support the motion or by pressing two to vote against the motion.

Thank you. The vote on the name change is now closed and we again will show the results of the vote on the screen behind me at the end of the formal part of the meeting.

The next item of business is the amendment and restatement of By-Law No. A3 of the company, the resolution which can be found in the management information circular distributed in connection with this meeting provides that the company’s By-Law No. A3 be amended and restated to improve alignment with the Business Corporations Act of Ontario and market standards.

The company’s current by-laws have not been revised since 1999 and given the passage of time are inconsistent with the evolution of applicable law and with certain changes to the administration of the company including with respect to director’s Canadian residency requirements. The specific changes to the by-laws can be found in at Schedule C to the management information circular. Would someone please move that the resolution be adopted?

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, Mike.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Rick. So the votes for the amendment and restatement of By-Law No. A3 is now open, and again, please press number one to support this motion and press two to votes against the motion.

Thank you. The voting is now closed and we will show the results of the votes on a restatement and amendment of the By-Law at the end of the formal part of the meeting.

The next item of business is the approval of a new equity incentive plan to replace the company’s existing restricted share unit and stock options plan. The new plan was approved by the Board of Directors of the company on May 21, 2013 subject to confirmation by shareholders at this meeting.

During fiscal 2013, the compensation nomination and governance committee undertook a review of the company’s prior plan with assistance from Towers Watson, the company’s independent compensation consultant. The committee determines that the adoption of a single combined incentive plan would simplify the interpretation and administration of the company’s equity incentive program and would provide an opportunity to update the company’s equity incentive arrangement to better reflect current market practices.

Under the new Equity Incentive Plan, the total number of common shares available for grant will increase and that total bill will be reduced by one common share for every restricted share unit awarded but by less than one common share for every stock option awarded. Other key changes included reduced award terms, clear option re-pricing restrictions, double trigger acceleration of vesting on a change of control and enhanced debt benefits.

Additional and more specific information can be found in the management information circular that was distributed in connection with this meeting. Would someone please move that the resolution is set out in the management information circular be adopted?

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, John.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Carmen. So the votes for the approval of the new Equity Incentive Plan is now open. Again, please press number one to vote for this approval and press two to vote against. Thank you. The vote for the approval of the new equity incentive plan is now closed and we will show the results of this vote as well on the screen behind me.

The next item of business is the approval of the non-binding advisory resolution on executive compensation. The resolution provides that on an advisory basis and without diminishing the role and responsibilities of the Board of Directors, shareholders accept the approach to executive compensation disclosed in the management information circular. A copy of the company’s Say on Pay policy is set out on schedule E of the management information circular. Would someone please move that the resolution be adopted?

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, Jim.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Roger. So the vote on the approval of the non-binding advisory resolution on executive compensation is now open. To vote, please press one to vote for, and press two to vote against. Thank you. The vote on the non-binding advisory resolution on executive comp is now closed and we will also show the results of this vote.

So I believe that with the speed of this new technology, we are now on the screen you can see that the votes including, I guess, the proxies are shown for the election of directors. And it does indicate that the nine persons have been elected as directors of the company to hold office, until the next meeting of the company in the year 2014 or until their respective successors are elected or appointed.

So Tim Dattels, Thorsten Heins, David Kerr, Claudia Kotcha, Richard Lynch, Roger Martin, Bert Nordberg, Barbara Stymiest and Prem Watsa, I can confirm that all of these director nominees receive more votes for than votes withheld and are therefore are elected.

Now, I will show the results for the remaining votes. So the votes for the reappointment of the auditors is carried and I declare that Ernst & Young LLP have been reappointed as the independent auditors of the company in accordance with the motion.

The motion changing the company’s name from Research In Motion to BlackBerry Limited is carried and that has been approved by more than two-thirds of the votes cast. The motion amending and restating By-Law A3 of the company is carried and I can confirm that this resolution is approved by at least a majority of the votes cast.

The motion approving the new Equity Incentive Plan is carried. And this has been approved by at least a majority of the votes cast and finally the motion approving the non-binding advisory resolution on executive compensation is carried. And this resolution has been approved by at least a majority of the votes cast.

Now, is there any further business relating to the business of this meeting to be brought before the meeting. And as I said, I would remind you that we will have a full question and answer period following Thorsten’s remarks.

For having completed all of the final business for which this annual and special meeting of shareholders was called, I would ask for a motion to terminate this annual and special meeting of the shareholder’s of the company.

Unidentified Participant

I so move.

Barbara Stymiest

Thank you, Mike.

Unidentified Participant

I second the motion.

Barbara Stymiest

Thank you, Rick. All in favor. Any opposed? That motion is carried and I declare the meeting terminated.

I would now like to turn to Thorsten Heins who will provide his comments on the company’s performance over the past year and the company’s plans for the coming year. Prior to Thorstens’ comments, however, Phil will review the company’s Safe Harbor Statement. And as I indicated following his remarks, Thorsten will moderate the shareholder question-and-answer period. Thorsten -- Phil, sorry Thorsten?

Phil Kurtz

Forwarding looking statements in the presentations during this annual and special meeting of shareholders are made pursuant to the Safe Harbor restrictions of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian Securities Laws. The words, expect, anticipate, estimate, may, yield, should, intend, leave and continue and similar expressions are intended to identify forward-looking statements.

Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the company believes are appropriate in the circumstances.

Many factors that cause the company’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including the risk factors related to the company that are discussed in the Risk Factor section of its Annual Information Form which is included in the company’s annual report on Form 40-F and the company’s MD&A, copies of which filings may be obtained at www.blackberry.com.

These factors should be considered carefully and you should not place undue reliance on the company’s forward-looking statements. The company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

And now our CEO, Thorsten Heins.

Thorsten Heins

Thank you very much, Phil, and let me extend the warm welcome to all of you here in the room and also those who are listening on the internet. I would also like to thank the shareholders for approving all of our resolutions today and your votes are viewed as your trust that the management and Board of this company will continue to focus on the transition we’re in the middle of. It is hard work, but we are committing to make steady progress to create shareholder value.

Approximately one year ago, at my first AGM, as your CEO, I told you that the company would undergo significant change at all levels of the company because we needed to change.

BlackBerry 10 was late. Our cost structure was too high. We needed management changes, our application development was low and the corporate culture needed to go through a necessary change in order to adapt for the new BlackBerry acting in a new very, very competitive market.

So to address these challenges, we implemented and established the three-phase transformation plan for BlackBerry and we understood we had to work quickly, but we were also realistic and knew that to ensure a sustainable improvement, it would take more than a few quarters to get where we want to be.

So, the first phase we just needed to be realistic and blend with ourselves. It was really the survive stage for the company and we needed to refocus the organization to deliver on commitments to reduce cost, to deliver BlackBerry 10, to maintain a strong liquidity position, to ensure our products were relevant and change the company’s sentiment out there in the public. And I tell you that was pretty heavy lifting but I’m also confident to say we made great progress on this.

The second phase of our transformation, which we’re just starting now, is to build and to invest into the future, primarily around four key value drivers that are our BES 10 Enterprise Service platform which would include secure cross platform, data and voice capabilities.

Our BlackBerry 10 devices, including targeting vertical specific opportunities as well, unlocking the opportunity with BlackBerry Messenger with the view of BBM for everyone and developing opportunities for our BlackBerry global data network beyond our traditional users.

This stage the second phase is all about building scale for our products and solutions, and we are working hard to move our installed base to BlackBerry 10 and BES 10 as we speak, and also to make BBM the mobile social networking platform of choice.

The third phase is about benefiting from those massive changes and a significant investment we will have made in Phase 1 and 2. In this phase, we will focus on returning the company back to profitability and establishing a leadership position in mobile computing with new services and new industries.

In Phase 3, we anticipate BlackBerry 10 becoming a leading secure mobile computing platform for a variety of endpoints, such as smartphones, but you can also think CORE, you can think machine to machine or what people just call the internet of things.

Devices and customers will be connected through a global secure and reliable BlackBerry data network. It’s one of the largest secure data networks out there. It connects 175 countries with 654 carriers connected to that network.

So with this vision, we move from mobile communication to mobile computing. So all of these endpoints, not just smartphones, all the mobile computing endpoints that are out there can be managed as a service by BES 10 across platform and this will make BES 10 the leading Mobile Enterprise Services platform.

And we also anticipate that BlackBerry Messenger will have achieved an even larger scale than today and serve as a consumer messaging and communications platform. We also anticipate that secure corporate collaboration will also be key in the future mobile computing environment as corporation’s being led by technology-savvy generation goes social in managing their business and servicing their customers.

Our transformation is ongoing and it is in no way easy as many challenges are still remaining in front of us, but we are realistic about, what is required to move our transformation forward in a timely manner towards the success.

So allow me and let me start recapping what we accomplished in the past year during the first stage of our transition, which took the company from losses and burning cash at the start of the year to a sound liquidity position in the fourth quarter at the end of that very fiscal year.

Our changes last year started at the top, as we implemented significant changes at the Board level, adding three outside members with extensive mobile communications industry and business experience. And we also made senior management changes in BlackBerry. We hired a new Chief Marketing Officer, a new Chief Operating Officer, a new Chief Legal Officer, and a new Executive Vice President to lead our Global Human Resources Group and Department. All of them have extensive international experience in the mobile communications industry.

And this new executive team responded quickly to focusing on delivering strong BlackBerry 10 platform to the market and implementing personnel changes throughout the global organization, reducing layers of management and reducing complexity in our company.

Promoting a high-performance culture throughout the entire organization has been a high-priority of mine throughout the first year. We know who BlackBerry is and we know it’s driven by its people and we will continue to invest in all those activities that reinvigorate this competitive culture of the company.

We also implemented significant and major changes throughout the organization and we significantly reduced our cost base with our CORE programs and we saved $1 billion within one year.

We launched the program actually at the start of the year and we achieved our savings target of full quarter ahead of the schedule. Not only did the benefits from this cost reduction program show up in terms of better financial results, but they also put us in a position to reinvest in the new platform in this coming year.

Additionally, the CORE program helped also to create a new attitude and a new culture shift in the company where teams continually now look at how to innovate faster but also how to do things much more efficiently than in the past.

Collaboration be that between our teams and our supplier base also resulted in a much more efficient supply chain. Over the past year, we moved from four manufacturing partners down to two and reduced our manufacturing sites from 10 to four and we also outsourced our global repair operations.

As a result of all these significant changes, our costs are lower, our working capital performance is strong, we see way better production yields and we established a much more robust supply chain that is resulting in a much more efficient way of building our products.

While we’ve reduced cost and drove efficiency in the company. We also invested significantly in this huge transformation of our application ecosystem. At launch of BlackBerry 10, we have the most apps available of any mobile ecosystem at platform launch.

We started with 70,000 global BlackBerry 10 apps at launch and as of today, we have reached a number of over 120,000. And also over the past year, we reestablished credibility with our carrier and distribution partners with the introduction of BlackBerry 10 and BES 10.

While we are satisfied with the reception of BlackBerry 10 in various regions, we fully understand as the management team that we still have a way to go in the U.S. market as the most ferocious and the most competitive market in our industry.

And we delivered our new devices, our Z10, our Q10, our Q5, and we also delivered on our BES 10 Enterprise Management Service which have been designed to give enterprise and consumers more features, more flexibility and the ability to do things smarter and faster.

And in terms of our financial strength, we firmly established a strong balance sheet. Last year at this time, we had $2 billion in cash and no debt on the company. By year end, cash flow is up to $2.9 billion and this was accomplished despite incurring restructuring cost of $220 million, as well as supplying other funding commitments.

BlackBerry delivered on significant change in the past year and importantly, we delivered on our commitment in the areas that we said we would deliver. But let me be very clear while we have made all this great progress and while we are proud of what we achieved in the first phase of our transition, we are still in the midst of a major complex transition of this company. And like most of these major transformations of companies, progress can be volatile and it can be volatile in the short-term basis.

I assure you that every employee in BlackBerry understands the level of commitment and work that is needed to get us into the next stage of our transformation. While this year, we are all embarking on the second stage of this very transformation and it will involve additional investment and it will also involve a continued drive for efficiency throughout our organization.

Before I talk about our priorities for this year, let me briefly reference our first quarter financial results which we released at the end of June. In that quarter, the company delivered a strong balance sheet that got even stronger. The early signs of BlackBerry 10 adoptions in some market as product and capabilities just started to rollout, financial results that were in line with our previously provided outlook.

While our Q1 results showed steady progress as we transition the company for the long-term, we obviously did not deliver what many investors and analysts expected in the short term.

As we have said in the past, guidance is very difficult to provide during this transition in areas such as unit volumes, BES 10 deployment, service fees and cost structures, as all of these areas are undergoing significant change as we speak. Because of this, we don’t provide specific guidance.

With little visibility on these items, expectation in the first quarter in areas the companies does not guide were beyond what the company actually could realistically achieve and our results significantly appointed against -- disappointed against the Street’s expectations.

Clearly, in the short-term, investors expect better results and faster progress from us. And I can assure you, we are driving night and day to implement the improvements in our company necessary to build this as a strong company for the long-term.

This is a long-term transition for the company, but I can assure you, we are pushing very, very hard to show these improvements and while the last year was about fixing multiple elements of our business, our first quarter was to start of the second stage of our transition plan and about investing in the launch of BlackBerry 10 and BES 10.

BlackBerry 10 is still in the early phases of its transition, in fact we are only five months in after launch and this is the launch not just of a product, this is the launch of an entire new mobile computing platform and its associated portfolio.

We are five months in to our platform transformation that we anticipate will drive growth for future smartphone devices, greater enterprise efficiencies and new mobile computing opportunities for many years to come.

While many will judge the company’s short-term success on unit sales over a single quarter, we are not a devices only company. We also run a global institute data network and services, businesses, delivering the best enterprise to enterprise and enterprise to workforce securities and our strategy and investments this year are aligned to grow our business in these domains.

BlackBerry is very realistic where it fits into the market and we know that creating volume for customers and shareholders does not involve being everything to everybody. In the coming year during the second stage of our transition, there are four key areas we are focusing on as we work towards maintaining BlackBerry as the leader in enterprise.

These areas of focus includes, our shifting hardware portfolio, our enterprise mobility services, our BBM platform and the continued commitment to maintaining our strong financial position and driving efficiency and reducing cost throughout the organization.

The BlackBerry 10 smartphone portfolio is just starting to fill out. We are only five months in and we have achieved significant numbers of technical acceptances worldwide. The current and upcoming products in our portfolio will also allow us to address different marketers in different regions.

Our goal with our smartphone portfolio is to have not more than six active devices in the market at any given time, let me take into account product lifecycle and development cycle times.

This targeted approach to devices will allow us to efficiently establish and differentiate BlackBerry 10 based on features such as the user interface, our icon QWERTY Keyboard and our secure enterprise and productivity strength.

If you numbered, the BlackBerry V10 is now available across 147 countries including the United States. The BlackBerry Z10 allows us to showcase the BlackBerry experience to both consumers and enterprise.

Our BlackBerry Q10 QWERTY device started its rollout late in the first quarter and this month with over 320 carrier acceptances to complete it to date. The Q10 is now available in 96 countries including the U.S. with 50 more countries expected to launch in Q2.

And at BlackBerry Live in Orlando we announced our new product BlackBerry Q5, our latest and lower price QWERTY device running on BlackBerry 10 and gear to both mature, as well as emerging markets.

The Q5 is available in red, black and white variations. It’s premiered in Dubai two weeks ago and we already have 186 technical carrier acceptances completed and 70 more carriers to launch in the second quarter.

So while eventually our products will move to BlackBerry 10, our existing BlackBerry 7 customer base remains an important market for us. Many emerging markets continue to purchase BlackBerry 7 smartphones based on its effective cost position and the BBM feature.

Our customer base is just starting the transition from the BlackBerry 7 operating system to BlackBerry 10, but we still intend to launch one more BlackBerry 7 product this year to serve the BlackBerry 7 in this markets as well.

Okay, moving on to the second area, I want to discuss the Enterprise Mobility Services, which includes both our traditional enterprise business and new mobile computing opportunities in vertical markets such as automotive.

Our goal is to remain number one in Enterprise Mobility Management and we have completely reengineered and rebuild BES 10 to achieve that objective. Since announcing BlackBerry Enterprise Service 10, service has been installed by customers all around the world and secure workspace for iOS and Android devices has been tried globally with many BlackBerry customers.

At the time of BlackBerry Live in May, we have 12,000 companies that had installed BES 10 for commercial or test purposes. Today, this commercial and test installed base have grown to 19,000, just within four weeks, a clear indication of the strong enterprise interest in our reengineered BlackBerry 10 Enterprise platform.

Now while the Enterprise environment requires longer sales cycles than consumer-only focus product, the successful adoption of BES 10 and enterprise remains the single most important driver for us for future unit sales and service revenue opportunities.

Already over 60% of all of BlackBerry’s Fortune 500 customers, as well as market of government agencies have already installed BES 10. With BES 10 the massive challenge enterprise for us during this transformation is moving from a vertical BlackBerry-only proprietary player to providing a comprehensive cross platform management solution that is evolving to an Enterprise Mobile Services platform regardless of the device deployed.

If you haven’t had already the chance to do so, stop by the BlackBerry 10 display outside the theater where we have an employee showing an iPad and Android Nexus phone that is being run and managed by BES 10.

So this way BES 10 outside key managers lower the total cost of ownership for the enterprise mobility and it also represents a key element of the strategic cross platform direction that BlackBerry is taking.

In fact, I probably can’t provide you a more concrete example of adapting and making real change at BlackBerry and that we have gone from dismissing to bring your own device to work trend to actually embracing it and driving it in the enterprise services and we think we’ve taken the offering and technology to a whole new level in enterprise getting them ready for not just mobile communication but also get them ready for mobile computing and its BlackBerry who is enabling this based on a very strong BES 10 services platform.

And I met with the lot of customers and corporate clients out there as you can imagine in the past and I tell you what they want is, they don’t want their IT professionals to get hung out in managing all these different devices. They want their IT professionals to help their business units to do the business and that’s what they want to focus on and this is what BlackBerry 10 provides as a solution.

So with this type of innovation that we are driving relentlessly through the company and into the market, we have a product at our hands with BES 10 that is a premier solution for enterprises.

And we all follow the news, let’s be very, very clear, the topic of security and enterprises, the topic of privacy for consumers is coming back full force and that is for BlackBerry 10 helps protect corporate assets and information, and that is we are on the same device managed by BES 10 and balance, BlackBerry helps to also keep your privacy. Nobody else can do this as good as BlackBerry and it matters, nobody loves to talk about it, but it’s there, you can clearly see it following the news just in the recent days and weeks.

So our post BlackBerry 7 products have just started to be deployed, including the first services such as premium BlackBerry security, just talked about this. But also on top of this BES 10 service platform we have build a service that is cost at your workspace that is now being deployed. We have cross platform device management which is another service that is deployed on that platform and we have secured software downloads as a service that is being deployed on BES 10.

This represent a significantly broader position for BlackBerry Enterprise then we ever had before and yes, we need to achieve scale, we need to get this product out there in the hand of our customers, with consumers and enterprises.

So, yes, we are proactively considering partnerships to expand that offering into enterprises and importantly, create the respective value for the shareholders. And since I’m touching on this topic anyway, let me address upfront the topic of partnership.

Since I get asked, excuse me, since I get asked about this all the time and particularly as we have successfully close let’s say one of our transition but now we are going into the second challenging phase which is building the scale and growing this company and penetrating the market with a fantastic new product.

I want to be very clear on this, BlackBerry will exploit every opportunity to ensure that value is created for shareholders. The Board and management are completely focused on creating long-term value for shareholders and ensuring that our customers have a strong confidence that BlackBerry will be an even stronger partner for them in the future.

When we talk about it, it is really important to understand where this company was a year ago and what we have been realized in just 12 to 15 months. There have been significant achievements, value has been created. We are executing against our strategy and we are focused on delivering long-term shareholder value.

With products like BES 10, we have a new product at hand that has the potential to be a dominant force in mobile communications and mobile computing for many years to come. As my IT managers can finally manage all the plethora of different devices from just one console in the enterprise. And based on that platform, they conduct on additional services that we will deliver to them to enhance, enrich user experience, security of communication and computing in a mobile enterprise.

BES 10 is just a few months into its product life cycle. And the installations will continue to drive service revenues for the company in years. This represents a lot of long-term shareholder value. So we are very serious about investing in the product, making sure we get them out in the market, we penetrate this market and we build our installed base which we then can never to our service business in the future.

And our approach that we are using on the BlackBerry 10 devices is exactly the same. We brought BlackBerry 10 to market. Nobody thought 15 months ago, we could do that. And here we are 15 months later, we have three products already out there. And we have some more new products in the pipeline to launch this fiscal year. And it’s finding it (inaudible).

As a new platform, we will continue to refine that platform and the user experience and enrich it on a constant basis. The smartphone market isn’t defined in weeks of sales or from one quarter to the next. And you could see it currently if you watch what competition is doing.

And there will not just be one or two winners in this market. It’s important how you position yourself. It is important what you stand for. It’s important what segment you are pursuing and it’s important how you define your position, hyper-connected users, multitasking users, I need to get stuff done users. And yes, everything else on the consumer side has to be on par but that’s what our development teams are doing. But this is the audience we are talking to.

So what makes sense for our shareholders and customers and the company. We are 100% open for partnership and alliances across the board in every area of our business because we need to drive scale in the second phase of our transition.

Now, let’s talk about mobile computing. Mobile computing takes wireless capabilities to the next generation of service offering. You have to look at this and think about this like when we went from wireline voice to mobile voice. That was in 1989-1990. And look at 23 years later, what kind of an industry that became.

Huge economic growth, lots of jobs, lots of innovation. Mobile computing is going to do the same thing. It moves from mobile communication to mobile computing. This is going to be your personal mobile computing power wherever you go. It’s going to be secure. It’s going to keep your privacy. It’s going to keep your identity but wherever you go, this is what has all the mobile processing power that you need.

This will be a huge paradigm shift in our industry. And you see the first signs already on the wall with PC sales going down, with laptop sales going down, with mobile devices coming up. This is just the beginning. And mobile enterprises will work differently than they worked today. Those people are saying I need to bring desktop experience to a mobile to do mobile computing. This is stepping way to start.

I give a provocative statement, it says e-mail is already on the decline. It’s mobile messaging that’s coming up. I see it in our company. We use BBM more and more for our corporate purposes. That’s all just a beginning. So everything we do, building the BlackBerry 10 devices, building the BES 10 services, getting our global BlackBerry data network ready for transmitting securely mobile computing data. All this is done to be in the third phase leader in mobile computing.

That’s the vision we are running with the company and this is what the management team is committed to get done. One of the examples of how to explore this really early market and show proof to you and ourselves, for example, is an automotive. The software in BlackBerry 10 QNX fits in 60% to 70% of all kinds of software as an embedded OS.

So what did we do, we announced in Detroit at the auto-motor show that across the BlackBerry data network and with BB10 in your car, you can securely download software into the car. It’s a regulated industry. You don't want anyone to fumble with the software in your car.

This is where BlackBerry plays. This is one of the announcements that we did. And what it does is, it’s not just the cars but it really proved is the software update management for automotive facilitates machine-to-machine communication directly between the automaker and the vehicle. It allows the automaker to easily provide software updates to the car and to the client using our infrastructure that is already globally deployed.

And we’re using it today to update millions of BlackBerry out there. We can use this to update every mobile computing endpoints out there, be it a car, be it a smartphone, be it a telemetry element, be it something in healthcare, this is what the network can do. And this is what BES 10 will be able to do.

So it’s very, very early in this new market but it is going to come. And we have the opportunity with the development we did in the past year to leverage BlackBerry existing global and secure into the network and our R&D engine to be a leader in the Internet of things.

The third area I want to discuss is our services strategy. And the opportunity we are working on to mitigate the decline in our traditional service [excellency] business. In addition to the new services, we are working on the offering on BlackBerry 10. We are also tiding new services and consumer, starting with leveraging BlackBerry Messenger as we announced at BlackBerry Live.

BBM remains the preeminent mobile messaging platform with a hyper-engaged user base. They use BBM for 90 minutes per day. That is an unbelievable commitment to the platform and talks about the user value that it has. This is a truly exceptional engagement in comparison to other traditional social mobile networks. People use it on a rate of 400 minutes per month. That matter because if you have the eyeball, if you have the active time on BlackBerry service, you have something very, very precious at hand.

So what are we going to do with it? We’re going to offer BlackBerry Messenger channels upon it. We have launched it in beta in May 14 and we already have 60,000 active users engaged in this beta. It’s a global beta test. Those users already have created a vibrant ecosystem of over 20,000 channels across more than 160 countries. And we’re just in test phase.

This is not in commercial out yet. But we have huge pickup on BBM. And we run our own BlackBerry channels there as well. So we will continue to update and enrich the BlackBerry Messenger channels experience throughout this beta as we continue to execute towards the launch by the end of the summer.

We’ve also begun to work with agency partners and brand partners to establish the set of business principles to enable users to discover and engage with businesses that are most relevant to them by our channel. So instead of being followed, instead of being passive, the BBM channels you actively choose what you want to sign up for and you are in a direct communication with your channel and it’s the selected brand you love and it is the selected company you love, and is the selected channel you love, could be sports.

This will take mobile messaging to a whole new future. It will become a social networking industry based on mobile. And we have a great opportunity with BBM to participate in that industry.

The fourth piece I want to reiterate is our financial strength which is very strong. And a key asset during the transition phase of this year. Strong products alone are not good enough to ensure a solid, long-term turnaround. So we have an intensive focus on maintaining a strong balance sheets and delivering efficiencies throughout the company.

We are now a $3.1 billion in cash and no debt on the company. The company can use its balance sheet to support all these exciting and future oriented newly launched BlackBerry 10 initiative.

We will continue to focus on our financial strength and we believe we are well-positioned today to invest in our platform of BB10 and BES 10 and to compete in a highly competitive market.

In terms of our outlook, this is an important transition phase for the company as our transformation is still ongoing and challenges remain. It’s not going to be easy. Plenty of value creation was completed in phase one of our transformation. We built all the products. We built all the components that we needed in order to start phase two.

And we anticipate that more long-term value will be created by putting this product into the market and going for scale. We are still early in our launch cycle, whatever the Street expect from us, we are still early and we yet have to see even all BlackBerry 10 product shift to market and to Street, our full BES 10 deployment in the enterprises.

So as we work towards our products and services launched throughout this year, fiscal ‘14 will be the year of investment, where we will look to position ourselves appropriately for sustainable growth by the end of fiscal ‘15. The decisions we make are particularly important to us this year, given that the changes and the investments we implement will be the foundation for innovation, quality, competitive cost base and growth of BlackBerry and BES 10 in the coming years.

Our industry remains highly competitive. It’s probably the most ferocious industry you can work in. But we will continue to launch to support our launches this quarter with new and additional sales and marketing initiatives as we establish BlackBerry 10 as a platform, we are not just selling product, we are putting a platform in place and that’s what we are going to invest in.

We will provide BES 10 consequently with the appropriate support to drive broad-based deployment and future unit growth in sales revenue opportunity for the company. As we said when you reported our first quarter results, we expect our increased investment during this transition, combined with the ongoing competitive environment that it will generate operating losses in the second quarter.

We will utilize our strong cash position to drive adoption of BlackBerry 10 and BES 10 while still maintaining appropriate levels of cash. We will make the necessary investments, the new platform required. And if there is one area, we do have a shorter term focus on, it is in making this investment now in BlackBerry 10 platform deployment.

In addition to our investment initiatives, we are very focused on looking at ways to continue to drive greater efficiency in our companies to offset those investments. We have been investing in internal programs that are evaluating the efficiency of our processes and our cost towards the organization. Benefits from programs like these enable us to reduce spending in some areas and deploy the savings in other value-creating opportunities.

BlackBerry has made a lot of changes and steady progress in the past year to put itself in a position as we can invest in this new platform or it can invest in its new future in the second stage of our transition. Just one year ago, the smartphone was totally different, not only for BlackBerry but for the entire industry. It is now a more mature industry and things change quickly.

But we as a company, we have embraced the concept of change. We have embraced the concept of agility and that has allowed us in the past 15 months to move forward quite dramatically against many expectations that were out there. We knew the decisions we were making last year represented tough changes but today we are a leaner and much more efficient company that has introduced BlackBerry 10 products, BES 10 as an enterprise service platform, mobile computing like software, products like software asset management for automotive as well as our cross platform BlackBerry Messenger product.

One year ago, none of these products existed and today they are just launching. And now we are in a strong financial position to invest in the deployment of those competitive new products. We are doing the right things and we are doing what we’ve said we would do.

We are executing against our strategy. Why the transition is difficult. We are excited about our products, excited about opportunities, but we are also realistic about the significant work that is ahead of us and that is required at this stage of the transformation. My job, the job of my management and all of the employees at BlackBerry is to navigate through the second stage of that transition successfully.

I would like to thank you, our shareholders, for your patience during the complex time. And I can assure you that we will do whatever is necessary to successfully complete that transformation and extract long-term value for shareholders.

That concludes my remarks and I would now like to open the floor for questions for myself, Brian, [Barb] or any of the board members. Before doing so, I think Phil you want to provide some more details on how we conduct the Q&A session. Thank you.

Phil Kurtz

Thank you, Thorsten.

Thorsten Heins

Thank you.

Phil Kurtz

Ladies and gentlemen, the question period for shareholders will last approximately 25 minutes. There are two microphones available in the room at either side of the stage, if you have a question and we will alternate taking questions at the two microphones.

Before asking your questions, please first state your name. As there are a number of shareholders, you may wish to ask some questions. It’s important that you limit yourself to one question, so that other shareholders may have an opportunity as well. If time permits, you are welcome to return to the line for a follow-up question.

With this in mind, please ask the first question.

Question-and-Answer Session

Vic Alboini - Jaguar Financial

Vic Alboini, Jaguar Financial. Thank you for the presentation and it’s very important for us to be very balanced here as well in support of what you’re trying to do you and your management team. Last year, the shareholders asked for a change in management that’s been delivered, a strengthening of the board that delivered the third item which I’d really like you to touch on is the issue of strategic options.

Last year, you engaged JP Morgan and RBC to conduct a review of your strategic option. So you have talked about the long term. Can you share with us and give us some clarity on topics like breaking up the company, a device company, enterprise services software company, patent’s company is that in any respect on your horizon, the potential not only for alliances that you’ve indicated quite rightly but also a private placement in a device company, a private placement in a enterprise company, something more concrete where you are dealing with more companies that are bigger in the land of the giants, whether it’s Microsoft, IBM or others. Could you touch on whether your strategic analysis has led you to some conclusions?

Thorsten Heins

Thank you for that question. I think what I would like to say here is before you go into any strategic option I think you have to create value and the value of the company 15 months ago was very less than what it is today because I was talking about the new product BlackBerry 10, BES 10, and BlackBerry Messenger going across platform and that’s all about driving scale into the market to increase that value of the company.

This is what I and my management team are totally focused on. Are we ignoring the landscape around us? No, we don’t but the point is we got to have a strong position in the market. We got to have a strong position in the enterprise and in the services domain and then whatever happens we’ll take a look at this.

But currently I cannot distract the management with what I expect them to do which is to get this company through the transition phase number two which is number one, we did successful products, number two, is we need to deploy them in the market, and yes where we need alliances there, where we need partnership whatever shape or form they will take we’re absolutely open to look into this because we want to become again a global player in the mobile computing industry.

Unidentified Analyst

Thank you very much Thorsten. That was a very great presentation and really brought a lot of things together. My name is [Gary Bursens] and I am just a small retail investor but a long-term life-term user of BlackBerry and very interested in the progress of the company.

I just have basically one comment for you and your perhaps maybe your marketing manager could also listen to my comment. And this is basically, I think, it’s very important and that’s why a lot of people here or maybe not here for the shareholders meeting but are interested in like what’s happening out there today on Wall Street and the things that you mentioned in briefly. It seems like from January up until the earnings call there was a steady kind of up and down but the positive upticks for everything in BlackBerry. I'm talking now New York and Wall Street.

And then when the earnings call came out and they made the presentation, there was like a deep. We all know what that was and everything that happened. My question and my comment basically to you and it's basically a little bit short term but I think it's very important because I myself have done branding for 30 years. I’m not computer savvy but I've done branding.

We are in a very important point publicly with the company too in its perception. The BlackBerry brand is outstanding but it's the New York and Wall Street and basically the American consumer that’s not somehow giving it a fair shake and that is my concern. So my question is how does BlackBerry pay more attention because this is for your survival with Wall Street, the short sellers, the New York-based people. Do you have special advisor or consultants that give you advice on dealing with this very, as you say, vicious particular timing. And I think this is very important for the short-term of this company, is that fair?

Thorsten Heins

Yeah. Thank you very much for that question. I think it talked a bit about the exactly different perception of BlackBerry in different markets actually because I am traveling a lot to see our customers. And when I hit other regions, I get different reactions, right. But as I said in my presentation, we know we have to be strong in the U.S and it is the ferocious battleground.

Let me go back 12 months where we started and Frank has the data. By the way, his team under Frank leadership did a fantastic job in achieving this. We had about 70% negative sentiment a year ago, right. BlackBerry was written off. You guys go bankrupt. You have no chance. You are no where near but the question was not does BlackBerry have the future, the question was when is BlackBerry going to die, right?

Unidentified Analyst

Yeah.

Thorsten Heins

So we engaged tremendously with all of our management team. I have to thank them for that and really engaged with Wall Street, with analysts, with journalists. And we told them what we’re up to and the sentiment changed, I think just we measured this on an ongoing basis. Now 70% are positive and 15 to 20-ish are neutral and then you have the doubters, right, that say you guys are not going to make it.

What happened in Q1 is actually also a bit of food for thought for all of us I think because we said in the earnings call of Q4 that we would be approaching breakeven. Now I don’t know what that means to you, but what it means to me is we will run up a slight loss. And we always maintained that position and then we got into the mode of all the launches, Z10 launch in all the countries we’re launching in. The Q10 carrying quite some hopes, the Q5 launch and three more products to come and the expectations just were written up in a way that I was kind of assume saying where is that coming from and that hit us.

But I want you to understand that we will always do our best as the management team to deliver on what we committed to you in the quarter before. Now it is a rocky road. There is no guarantee for success ladies and gentlemen for what we are doing just be really clear about it. But what I also know is it is a fantastic opportunity. And it’s on us to shape that opportunity. So there is no reason to hide away and kind of let others do this thing. We can do this as BlackBerry.

For the marketing question, it is short-term oriented. I mean I am not giving you any news about how many short-sellers we have in our stock. And I also question that philosophy a bit frankly because I'm here to build something with my team. I'm here to maintain and build a second-phase innovative company for Canada and for North America. I am here to return profits to shareholders. I'm here with my team to create jobs and not to destroy jobs, all right? And we’ve got to get through this. And we got to get through this and I am wearing a new suit but it’s not made of Kevlar, so I can still take the punches but we will have to continue to take punches. This is not going to be an easy path.

On the branding side, I think we have taken lot of initiatives. We will keep moving with getting females into technology. This is not just a good topic of the day. Our industry needs females in technology because otherwise we will get short on resources and intelligence and creativity, right.

It is a must for all technology companies to engage and encourage young females to go for technology, to keep moving campaign, talk about the strength of BlackBerry, collaboration, being hyper-connected, contributing, creating that is what BlackBerry is about.

We are not about consuming. Yes, we all listen to music on a BlackBerry. We all take our pictures with a fantastic camera. But in general, we use BlackBerry as a tool to help make us perform better, to help make our enterprise perform better, to help us get through our life and be connected any given time. There is more brand campaigns to come.

In the year specifically, I would absolutely admit that this is an uphill battle but we are doing everything we can that’s why we invest in additional marketing, that’s why we invest in additional brand campaign.

And to your question, does Frank have good advisors that help him with Wall Street in New York? He sits in New York. Our marketing and branding team sits in New York so they feel this pulse every, everyday and they are connecting with those people every day.

So, Frank, if you later on want to share some more thoughts about this absolutely happy. Your point is well taken. It is well understood. It is part of our game plan to address exactly these issues. Is it going to be an uphill fight? Yes it is. But guess what? We are ready for that fight and we will give you the best we can, that’s all I can say. But we are also strong in other regions, where we have a strong BlackBerry brand and where we still sell. But point well understood and I think we will address it accordingly.

Unidentified Analyst

Thank you very much. It was well…

Thorsten Heins

Thank you.

Unidentified Analyst

My name is Richard [Telse].

Thorsten Heins

Hi, Richard.

Unidentified Analyst

Thank you for your presentation. My name is Richard [Telse]. I am a very, very tiny investor. And like everyone in this room, I lost money. And for me it was significant amount of money. One of the factors in that loss, I believe was sales expectations did not meet analyst expectations. I spent the spring in the U.S. and I watched personally the rollout of the Z10. I visited many points of sales and my sense is that the rollout of the Z10 was a disaster. I talked to staff at many points of sale and they were either inadequately trained or not trained at all. Marketing materials were missing. Was the Q10 rollout handled better?

Thorsten Heins

Okay. That’s the question? Good. First, let me comment on Z10. And I agree with you that for us there were also many lessons learned. The way we channel product into the markets goes mostly through our carriers. Carriers range the product then they decide how they promote the product and you have to win with these promotion slots with the carriers.

The challenge we had was we were not just launching a new BlackBerry 7 next product, we were launching a whole new platform and if you remember with a whole new interface with a big hard flow, with a whole set of new application 70,000 at launch and that is a humongous task to educate a market that is basically over served by all of these new products coming in and kind of stick out of the noise.

While the teams did the best they could, I don’t have the number Frank, but I think we trained something like 50,000 sales reps and webinars. We went to the cities, invited them, trained them. Did we reach every shop where we perfect at the launch? Probably not. Is it a disaster? I don’t think so. Because if I look at several markets out there, we clearly have data that we are gaining market share in the above $500 segment.

Is it very exciting what we see? No. We need to continue to work on it. But it’s five months into not just rolling out one product. Its five months into rolling out an entire new portfolio. We’re still building new BB 10 devices as we speak.

Happy to share that with Frank and get your information towards Frank, Q10 we are always trying to improve. We are always trying to get better. But the major step function here is not to get you from one product to the other, the major step function is, this is what BlackBerry 7 was and this what BlackBerry 10 can do, right.

And has a plethora of new possibilities, it has a way more efficient way of working with it and we need to continue to invest into educating the market and that’s what I was talking about, we said, we will invest in pushing this platform into the market. This is exactly one of the investments that we will be doing and continuing to train and educate the market.

Now, I will say that from my personal experience visiting a lot of countries. It is really a challenge in the U.S. It is a challenge in the U.S. and we will take this challenge on and we will work as hard as we can to resolve it and make sure we have a good entry point.

But Z10 has its fans. I mean if you look to New York Times review of saying this is a great device with a bristling set of new features and doing, I start swiping on my tablet, right. I mean, you know you are up to something really, really different and good. Getting it into the broader masses is a job that we need to do specific in U.S. Point well taken.

Unidentified Analyst

Will there be an opportunity to ask two other questions…

Thorsten Heins

I will leave this to my. Okay. Thank you for your question. I think I am getting over there.

Unidentified Analyst

Hi. Tim Rongue from [Gulf]. I am a small retail investor relative to some of the people in this room. My small retail investment is rather a large part of my portfolio and I do hope that the company will survive and prosper.

I am a great supporter of the company. I am a great user of the product. I think it’s a superb product. I have the new Q10. Wow, I am still trying to learn how to use it, a fabulous product.

Thank you for the presentation. I am not somebody who thinks the company should be broken up. I don’t believe that, okay, that’s, I don’t believe that’s a way to create wealth in this country. I travel around the world a lot and I use my BlackBerry a lot. I have sat in high commission offices and I have had many discussions with high commissioners and the consensus is Canada is not going to get wealthy selling potash and pulses.

So let’s get behind high technology. Let’s get behind manufacturing. Let’s get behind BlackBerry. Anyway that’s not my question. My question is probably related to a couple of the things we said earlier and that’s with respect to the U.S. market again.

I read something this morning that some of the carriers may actively be obstructing the brand perception in the U.S. and I would like your comment about that? Also if you could add, what is it about the U.S. market that makes it so difficult, that makes those people so difficult to get to. Is it the fact that the Apple product is so entrenched? Is it nationalism? What is it? That’s the -- that are my question. Thanks

Thorsten Heins

Okay. Thanks. Thank you for that question. I would love to talk about the first part though. No because I think you are absolutely hitting on something that when I talk to Canadian government and when I talk to industry partners. I strongly believe that with BlackBerry at the core and a lot of these fantastic innovative start ups that we have be it through Communitech center, and around the Waterloo region.

I mean if you look, if you drive to this place and to drive to Waterloo University and you see how vibrant the research life in Waterloo is and if you see how well the university has worked together with Communitech to convert this into startup companies. I think Canada has the opportunity to be courageous, invest and become a leader in mobile computing.

There is no reason why we should leave this to others. We can do that. So we need to build in my view an alliance around this in order to really get industry going but this is wealthy jobs. This is the economy of the future.

We may like it or not. But all of our interactions, your interactions with your service providers with your entity utility company, be it your grocery store, it will all change. It will all change and it will change because of mobile computing with this little thing that you have, right. So totally agree. We need to drive this home.

And I am working with industry peers in Canada talking to this University about what we can do to drive this even further because that’s just one of these personal challenges I have given my staff, the number is commitment to you and to BlackBerry, but the second one really is, we got to drive this even stronger, got to drive this stronger in the country’s interest.

You ask, as I said, it’s a very, very competitive market. And we have the channel with the carriers and we work in partnership with them but we are also competing for their resources and we are competing for their spots.

Carriers are under heavy pressure these days because they have to make money off of transport capabilities. They are actually kind of like a utility company, right. They sell data plans. They are under tough cost scrutiny themselves.

So it is hard to convince them to not go where the perk is, to go where the perk is going to be because they are under short pressure from their investors. They have to deliver numbers. And for a certain extent, I really, really value the relationship with our carrier partners but there is an opportunistic thinking, all right.

And I will give you one public number that is a carrier that we have great respect for probably known as the iPhone carrier in the U.S. selling six million smartphones in their last quarter and 5.2 million of those smartphones are iPhones, right.

I mean that is just the recipe that they hammer out and it is a competitive market, it’s our job to convince them that we have something that is worthwhile being in their shops as well. It’s not for us to complain about the carrier. It’s our job to get out there, prove to them, create pull demand on our product and then engage with them to get that product out there. It’s the most difficult, U.S. is the most difficult challenging country to do that.

Unidentified Analyst

Hello. Okay. My name is [Kenny Yeng] and I am also a retail investor. And I want to thank you, though I am saying for leading BlackBerry through its difficult stage one transition and I hope we as a shareholder will benefit from stage two and stage three as we discuss.

So my question is regarding the, it’s BlackBerry’s financial query numbers, so I was wondering if the management or the board considering more transparent reporting styles because as we see in the Q1, BlackBerry did not release its BB 10 sales numbers or its subscriber numbers until the quarterly conference calls and I think that really damages investor confidence in the short-term. So I was wondering if there is a consideration about what non-U.S. -- non-GAAP measures that’s used consistently throughout future reporting or has there been a discussion about that?

Thorsten Heins

Thanks for that question. We are not trying to avoid transparency, but we have to be realistic of where we are in this market and things change quickly even within the quarter, right. A new product comes out, hit the shelves, changes the equation. And by the way you can see that even with this one large Korean company that actually had some news yesterday, right.

I mean, nobody is protected from that ferocious competitiveness at the moment. So it’s just really difficult for us changing our portfolio, changing our BES play, changing our BBM play to say, this is what the company is going to do in a quarter, right. Now, we are not in a position. Let us mean we are flying blind. I mean, we gave our guidance for Q1 and we did what we said we would do and we just got hammered by the Street because the expectations were getting out of bond. Could we have guided more detailed? No, because it is the transition phase.

We are just moving from one to two. We are just getting product out there. We are just getting this in the hands of our customers. We need to drive hard like these questions around marketing. How do we get into the shops? How do we get it to the consumers, educating our consumer base?

It is at the moment just not the right thing to put guidance out there that is extremely volatile in an extremely competitive market. Will it ever stabilize again? I hope so with all these churns going away well that’s doing the job in stage two that we are talking about. I am looking forward to hope of your request and be more clear again about quarter after quarter what’s going to happen. It’s not going to happen the next quarters.

Brian Bidulka

Right. And…

Unidentified Analyst

Okay. It’s a…

Thorsten Heins

Okay. Thank you. Good exercise.

Unidentified Analyst

Hello. My name is [Aaron Cake].

Thorsten Heins

Hi.

Unidentified Analyst

I am a small time shareholder, BlackBerry user for I think about 14 years now.

Thorsten Heins

Okay.

Unidentified Analyst

And I understand that launching a new platform like BB10 is a monumental undertaking not only from a infrastructure side to it, device side to marketing everything. But as I work in the trenches, I set up BES installations, I activate phones, I support customers. I have noticed a trend with BB 10, in that I have customers asking for features that were on their previous BlackBerry devices which simply aren’t on BB 10. My biggest example in my life and the reason I still 9900 instead of a Q10 is notifications, the notification system on the older operating system was very robust on the new system it’s not.

So in this industry of very fast paced movement, we still haven’t seen the lack of fragmentation in the BB 10 updates that we used to have with BB 7, every carrier would have a different version and for years it was talked about that RIM had a excellence relationship with carriers.

So is there a way that relationship can be levered -- leveraged to sort of being a level playing field for all carriers bypassing whatever delays that they are putting into operating systems so that we can have all the devices updated as quick as possible, new features added as quick as possible and we don’t have that issue of people on a large U.S. carrier complaining that they don’t have the same OS as the people on large Canadian carrier. Is that something that can be done? Apple seems to be able to do it. Samsung little bit. So why not BlackBerry?

Thorsten Heins

Okay. First point, the BB 7 and a little secrete are they on BB 10? When we developed that new platform, we had to make a choice at a certain point in time what’s in, what’s out. You are right. It’s a monumental task and it doesn’t help if you don’t complete that task. So we had to prioritize features. We had to really make sure that we go for the experience that we wanted first.

There is -- that goes to your second point. There is software updates out there 10.1, 10.2 coming. That actually addresses a lot of these little secrets and goodies on BlackBerry 7 moving towards BlackBerry 10. I mean, we will not go back, for example, to the trackpad or something. I get a lot of emails with trackpads there.

I mean, that is a platform, a lot of tool. But you know what, once you get used to peak, half floor and use it, people actually love it. So how do we get this into the hands of the customers first.

I think you are describing it correctly. We have to go to the carrier for the carrier testing process. And what we get them through right now is educating them on that this platform has a different architecture that is not intertwined between, it’s got a bit technology wise application process and radio anywhere. So you have a totally separate processor from the radio, which would allow you to upgrade the processor of those features and the penalty from the radio.

We have to prove to the carrier that our architecture and software quality is good enough to allow them to let go, right. And just put the update out there. Kristian and the team, they have achieved record numbers of TAs because of new platform in a few weeks. I mean, we never cranked out that many technical acceptances from carriers as we did in the past new weeks. Fantastic job but we continue to work this.

Right now, you are right there is one fruit company out there that just by this year, buying power they have, they just run over it. We are working in partnership with the carriers. We are working hard with them to speed up those test and development cycles. But I understand their position as well. They are committed to quality of their network.

They are committed to quality for their customers and we have to combine our quality experience with them. Could it be faster? Yes, I believe so. Would there be a different process that could be more user friendly? Yes, I believe so. And we continue working with the carriers but we have decided for them being our partners and we work this in a partnership approach with them.

But I think we are all aware, our constituent carriers and BlackBerry plus some other manufacturers by the way, that we need to change this process to really speed it up.

Unidentified Analyst

Okay. Okay. Thank you.

Phil Kurtz

We have time for one more question. Thank you everyone for your engagement. We will take one more question.

Unidentified Analyst

I’ll try make it a direct one then. Yeah. I have been a shareholder for actually, since just before last year’s annual meeting but a week before. And I have to say that I wasn’t surprised, I wasn’t concerned about your numbers for quarter one. What caught me by surprise and this is probably a question for Mr. Bidulka is the, Venezuela in charge, if you could expand on a bit for me and to the tune, I believe it was $72 million loss that you couldn’t claim, money that you can’t get out of the country or you can’t convert it. But the question is, is that, would that not have been a material enough question to have announced prior to your quarterly earnings?

Brian Bidulka

Yeah. Thanks for that question. So it wasn’t a charge. It was just our inability to racket. The actual service revenue did not meet our revenue recognition criteria. And that’s why we could not recognize. So it’s more of a deferral issue from a revenue perspective. And we did consider whether or not we would have to look at that from a -- just announcing that but we didn’t consider it to be meeting that criteria. So we did not have to do that. And so in just a couple of comments on Venezuela, it is a strategic country for us.

We do have a great consumer and enterprise customers there. And we are working diligently to resolve and improve the cash that is coming out of the country. We did indicate that less than 5% of our current balance sheet exposure in our accounts receivable is reflective of Venezuela. And we have seen improvement in our cash flow since the quarter end and we continue to work on that.

Unidentified Analyst

Thank you very much.

Brian Bidulka

Welcome.

Phil Kurtz

Okay. So I think we haven’t finished the lines yet so. It’s the rule of the game. Quick questions, quick answer, okay. Nine, eight, seven…

Unidentified Analyst

Thank you very much. My name is M.S. Gill. I’m a retail investor again. And very quick question, our company puts our place in the global map and I second to the gentleman that please, please, we are not even thinking about breaking up with this company. Second, my question is that everybody heard about U.S. market, European market. What about Indian market? It’s 250 million people there. They have buying power and I travel there and though young crowd, they are very, very important ingredient in this technology. Nobody address that.

Phil Kurtz

I love this sir. I’m going to volley back, really good. Because you are absolutely right, this is, actually when you look at where this new world of mobile computing starts, it actually starts in those countries that don’t have wireline internet penetration. So guess what, people need to do business. And they have no wireline internet. So they use wireless, more shops, mom-n-pop businesses. They all start emerging during this. Why BlackBerry is so strong in Nigeria. It is exactly that reason plus the security that whatever you do, you say, same in South Africa, same in India, same in Indonesia.

This is where this car of mobile computing is actually really coming from. All right. Because we all have desktops, we all have ethernets wherever go, we are basically wireline connected and we use this for voice. I think it will change with us as well. We see that very, very clearly. So India is besides some other countries on our top 10 country list.

And that is why we have developed the Q5 product for that very market to address it with the right cost position and also to make sure that we enable with the BES 10 service, these micro businesses to come up besides the large enterprises that we support. So we are all in this, right. We will continue to build a portfolio not just for India, for Indonesia, South Africa, Nigeria. I think Philippines coming up, right.

Thailand coming up. So Vietnam, this whole Asia-Pac region is brewing in terms of beating up their way to a wealthy economy. And I think this is a great opportunity for us at BlackBerry to play in there and actually take some lead into those countries in terms of not just mobile communications, in terms of mobile computing.

So there is good opportunity there. I totally agree there is also fierce competition, there is fierce price point that I need to make sure that I’ll be here not to assume to commit a profitability but we need to see what that balance really is. But again, we are not just a device company. We’re building a service. We are building BES 10. We are building all these enterprise services and the devices are part of this and that’s why I agree with you and the gentleman before. It’s an end-to-end solution.

As long as security matters, BlackBerry is a goal standard for security which we are. We got to have this end-to-end solution. Got this up now because clients are most fluctuant. Anybody over there. Anybody over there? If not, we just work deadline.

Okay. Good. Okay. Done. Wonderful. Thank you very much for your attention and we will continue to work hard. Thanks for coming. Okay. And safe drive back everybody. Thank you for coming.

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