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  • The Bull Case For BBRY And Why None Of It May Ever Come True.  8 comments
    Sep 20, 2013 12:39 PM | about stocks: BBRY, AAPL, MSFT, NOK, SSNLF

    The only reason I'm writing this instablog is to have a fact based debate on one of the most polarizing companies out their, BlackBerry. Formorly known as Research in Motion. Throughout this debate I may reference the company by its orgininal name only to remind people that changing your name doesn't change who you are.

    Michael Blair recently wrote an article claiming that the negative bashing by SA users and the media conspiracy are behind the decline of Rimm's stock. Likely pure hogwash, but ok you can say that, no back it up. So here I am presenting an opportunity for all the Rimm bulls and especially the SA contributors to engage someone who knows a little bit about the market, who is also short this stock, and convince them on their perspective. In the spirit of good sport, if a convincing logical argument is sustained, I will cover my short position. However if by all accounts every argument presented is proven flawed or flat out wrong, agree to simply say in a post... "I could be wrong about this stock and this company." Simple isn't it?

    So with all that said, present your cases.

    Disclosure: I am short BBRY.

    Additional disclosure: The comments are that of my own and an expression of my beliefs of the company. They are not intended to taken as financial advice, before making any trades consult your personal financial adviser for advice. I am a licensed securities professional and active daily market participant, therefor I can not and will not answer any questions regarding your personal financial situation.

    Stocks: BBRY, AAPL, MSFT, NOK, SSNLF
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Comments (8)
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  • I saw your post. I like your idea and will be following the debate, if it happens. You mentioned being fact based and I believe you're encouraging the idea of keeping emotions out of it.

     

    So with that, you might want to re-write your initial blog entry because you're already off to a bad start. The company is called Blackberry, and other peoples opinions are not hogwash.

     

    Also, rather than waiting for someone else to start, why don't you make your case as the first step. The next ER is only a week away. The quarter is done. Why not give everyone your quantitative take on how that will play out. The bulls can offer their feedback and their take. The great thing about that is we don't have to wait long to see who has credibility. After the ER is done, the debate could move out further into the future.
    20 Sep 2013, 01:18 PM Reply Like
  • Author’s reply » Point Taken and thank you. Yes I will change the name to reflect the current ticker and also explain my reason for being short.
    20 Sep 2013, 01:20 PM Reply Like
  • Author’s reply » Because I have many reasons to be short I'll break the posts into segments based upon their lines of businesses and operations.

     

    Due to a recent post highlighting the value of BBM, my position is this. BBM is extremely hard to value and may be virtually worthless, I don't mean to say that it has no value because I'm sure to someone it does, but the overall value of it in the whole grand scheme of being a multinational company is fractions of a penny at best. In the world of instant and text messaging apps, there are many to choose from, each one having their pros and cons, but at the end of the day they are simply messaging applications. BBM is no different in that aspect. While instant messaging has evolved quite a bit over the years but the underlying basis of it is that it is a form of communication.

     

    How I see BBM and why putting a value on it is simply impossible if there even is a value to contrived. As a former BlackBerry user I had the Bold, the Pearl, and the Torch (the device that originally caused my defection) when I used BBM I saw it as a form of text messaging. Nothing more, nothing less. But it was a form that kinda was based on "status", simply put "we are BlackBerry users". But I still used text messaging. And now at this point that status marker is gone and can not be revived by going multi-platform.

     

    Also this is a highly saturated market, that most of these messaging apps as just being a part of technology's attempt to reinvent the wheel, that will only materialize in the end the original technology wasn't broken and didn't need to be fixed. In this sense I'll bring your attention to these data points.

     

    The two biggest social media sites with messaging services process:
    FB 55mm daily updates http://bit.ly/1evLPvj
    Twitter 400mm tweets a day http://bit.ly/1evLPvm

     

    WhatsApp 27B messages a day http://tnw.co/1evLPvp
    BBM 10B a day however I'm not sure how reliable the sources are, because they claim to have gotten the number from the company, but to my knowledge they don't report this figure individually. http://bit.ly/1evLPvs

     

    Those figures alone are pretty amazing. LOL what happened to picking up the phone. But they all don't compare to SMS. Now while getting exact figures is next to impossible, here in the US according to 2012 data 5.71B SMS were sent here in the U.S. Now that is a much lower number than the previous ones, but those account for worldwide figures, where the latter is just for the U.S. Total global telco SMS communications is most likely greater than all of these other services combined.

     

    So are these messaging apps just a fad, IDK only time will tell, but given the amount of players in the market and their user base positioning for innovation and growth leads me to believe that there isn't much room for other players. While Rimm may be able to carve out some users from other services with a multi-platform BBM, the longterm viability of that market is more of question than BBM itself.

     

    Lastly I'll touch on the BBM valuation, based on the information above I see no reason to give BBM any significant valuation. They process less messages then WhatsApp, have a fraction of the user base of Twitter and FB (which I never would have compared them to in the first place, but Rimm bulls love to dream and say that they can take over the world; TUFENK I'm talking to you), and at the end of the day the undisputed king is SMS. And that is something that the eventual dethroner of hasn't been invented yet. But as this fact may will most likely be reversed to some degree, BBM users are shrinking, not growing, where each and every service previously mentioned is. Yes a multi-platform will increase the number of users, but once again BlackBerry is arriving late to the party and now has to take users as oppose to creating them.

     

    There is much more I could say/give on BBM but I'll leave that to the debate, if one is to even happen. I'm not trying to bash you bulls, but much of what you guys post here on SA is unfounded garbage. Yes some shorts do to, but it is way more lopsided to the long side.
    20 Sep 2013, 02:26 PM Reply Like
  • Another common bull argument is BBRY will survive and be profitable as a niche player. I don't think so.

     

    The fact of the matter is, the smartphone busines is fast moving and capital intensive. Tremdendous resources are needed to invent and improve. Apple just set the bar with a new A7 chip, fingerprint sensor, dual flash, etc. Even that is not done, it goes as far as 6 months when everyone is looking and thinking about I6. In the end, it will have a different form factor and more security feature prospectively.

     

    It's a long winded way of saying big recurring cap-ex. big cap-ex means big production to break even, big production means they better sell or you end up with billions's in unsold inventory. There is not smartphone vendor in this world that can make money selling 10M devices. HPQ, MSFT can withstand those, BBRY cannot. Samsung is vertifcally integrated, Lenovo/LG has multiple business segments. As a niche security phone vendor, it will never work in the end anyway, look how far bb7 has taken them. you'll lose market share just like they have been for 4 years and went from 50%- 2%. That market share will never get them any profit.

     

    So niche smartphone maker is not feasible,how about enterprise? It's a possibilty. The problem is BB enterprise that you know and love is really Service access fee related to bb7 devices. no devices, no leverage, and no SAF. A lot of bulls magically think enterprise is a slam dunk cash cow without a concrete roadmap how SAF (which will be 100% gone in two 2 years) of $3B can be replaced. So if it they can survice as a niche security vendor outside the boundary of bb7 and SAF, i have not seen it. Blackberry balance is not it. This segment of the business generates less than $20M in revenue, can it take it to $3B to replace the lost SAF. Shorts don't think so.
    20 Sep 2013, 02:52 PM Reply Like
  • Had BlackBerry delivered a compelling ecosystem along with their BB10 series devices, we wouldn't be having this discussion.
    Instead we would be debating the horse race between BlackBerry and Microsoft and who will likely win.

     

    BlackBerry totally missed the boat when they thought an engineers' dream OS would sell phones.

     

    The bulls can blame American media, Marcap, and everyone else, but the fact remains that the entire rebirth of BlackBerry has been a comedy of errors. So much so, that I think BlackBerry will serve as an example of what not to do in business.

     

    I feel bad for the deluded longs that are about to follow this company into the toilet.
    20 Sep 2013, 03:04 PM Reply Like
  • Well, I guess there won't be a debate. That hurt. Never fall in love with a stock...
    20 Sep 2013, 04:00 PM Reply Like
  • Author’s reply » lol not after that report
    20 Sep 2013, 04:13 PM Reply Like
  • Michael is trying to prop up his log calls on brry. ...he is also shorting crm costing hime a bunch and long msft before it gotta 3 dollar haircut
    20 Sep 2013, 09:52 PM Reply Like
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