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BlackBerry has no plans to exit phone business; Chen promises changes

  • Though new BlackBerry (BBRY -16.9%) chairman/interim CEO John Chen suggests he'll focus on making the company a leader in business services, he says there are no plans to shutter BlackBerry's money and share-losing phone business.
  • Chen does promise additional C-suite changes for the struggling company following Thorsten Heins' ouster, and foresees BlackBerry's turnaround taking at least six quarters.
  • Chen's track record at Sybase - he helped the transform a second-tier database vendor into an early leader in enterprise mobile apps - has raised hopes among BlackBerry investors, and so have his ties to P-E firm Silver Lake, which just helped take Dell private. However, Chen insists his decision to join BlackBerry has nothing to do with Silver Lake.
  • Prem Watsa has echoed Chen's remarks by saying there are no plans to break up BlackBerry. Watsa also claims (in spite of recent reports to the contrary) he could've lined up enough financing for a BlackBerry LBO, but concluded "a leveraged buyout with high-yield debt and at high interest rates was not appropriate for this company." Canaccord, however, thinks a breakup is still the most likely end-game.
  • National Bank has cut shares to Underperform, and MKM has upgraded them to Neutral. The latter is still only giving the company a $6/share sum-of-the-parts valuation ($4 for the services ops, $1.50 for patents, $0.50 for BB10/QNX).
  • Previous: BlackBerry receiving $1B in financing, Heins out
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Comments (28)
  • LYogi
    , contributor
    Comments (2255) | Send Message
     
    This is everything I had hoped for:

     

    a) no buyout at 30 cents on the dollar
    b) shakeup in Management
    c) Proven new CEO
    d) Lifeline to BB10

     

    I can wait six quarters to double my money.

     

    How would that rate of return compare with the best hedge funds out there?
    4 Nov 2013, 03:48 PM Reply Like
  • arcady
    , contributor
    Comments (95) | Send Message
     
    Agreed.
    I was dreading a sellout at $9, although I would have made out OK.
    I see the potential unfolding as folks figure out that security is critical when banking, or arming their home security system remotely.

     

    I'll stand in line with Yogi,

     

    XLBBRY
    4 Nov 2013, 04:40 PM Reply Like
  • Randal James
    , contributor
    Comments (2797) | Send Message
     
    arcady,

     

    I'll see if I can find you two together in line.

     

    http://bit.ly/1854tmq

     

    On a more serious matter, I'm disappointed to read that there are no immediate plans to dump phones or break up the company or doing anything meaningful at all other than write cheques for departing deskholders. In fairness, what more could I expect? TH's chair is still warm and the involved meetings and executive recruiting barely begun.

     

    Lots of people walked through the BB warehouse and surely some of them said "I'd be interested in _____, but only if the price was $______. [I know, many will complain the line wasn't long enough.] With half the workforce of recent years, there should be sites that could be sold or leased and some business units that might be licensed or sold. This is not the time to trumpet what those intentions may be because the obvious failure of the PW takeover will be reason for some of those suitors to make an offer on what had interested them in the first place.

     

    I hope when you get your "Here is what we're doing, how we plan to accomplish it and why we think this is best" that Canada lights up with understanding smiles.

     

    I did chat with my local broker and they do have a few people with sizeable positions in BBRY. Their feeling, much like my own, is that this isn't the end and it will take time to 'right the ship.' Still, it is not past the point of screwing it up further so stay tuned for results because this is a company with a recent history of not-so-hot choices. So, like anything, it isn't all reward, no risk.
    4 Nov 2013, 05:10 PM Reply Like
  • KIA Investment Research
    , contributor
    , BBRY PRO Alerts subscriber
    Comments (9280) | Send Message
     
    I have just two things to say:
    1. Morale in Waterloo
    2. All the promised BBM updates (See #2)

     

    PS. After the Nov 4th $BBRY disaster, how can anyone claim XLBBRY, or "long and strong"?
    Watsa-matter with $BBRY investors?
    4 Nov 2013, 05:32 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    Prem to fat lady: Sit down and shut up!
    4 Nov 2013, 10:05 PM Reply Like
  • Infinity Group
    , contributor
    Comments (578) | Send Message
     
    I agree LYogi except the way this has gone down has left me not believing anything they say. Including they will not breakup the company.
    It's a two year wait. Market cap close to cash on hand! Anyone know of a similar situation in the past?
    4 Nov 2013, 11:06 PM Reply Like
  • hz06
    , contributor
    Comments (876) | Send Message
     
    @LYogi - man, you are tougher than me... hats off to you.

     

    this move is a surprise to me. i was thinking it's only a matter of price, not that at the last minute, Wasta showed his hand of this. he's far smarter than any of us thought he was.

     

    i don't believe they called up John Chen first time last weekend and offered him chairman and interim CEO title and he fell off his chair and took it. it's more like the other way around that the offer had been on the table for a while and at the last minute John Chen said that's do it so they said screwed the sale and told all the suitors go take a hike.

     

    the first thing, of borrowing 1B bucks, i believe this is john chen' first move. it's not how much bb borrows, it's who they borrow from. once bb has blessing of these big guys, 1/4 B a piece, for example, these bankers can tell those analysts shut the f' up because bb is now their customer. and bb can show to its own customers that these four banks stand by their plan of turnaround and bb will be around for a long time to stand by its products and services. that's what this 1B bucks of convertible debt really means. back in 2011, BAC stock's turning point was Buffet's plowing 5 billion bucks for its preferred and 700 million warrants at $7.14 apiece, this is a similar move of that. or at least meant to be like that. imho.

     

    next i think we will see john chen carry out the 40% layoff (downsizing), and probably more than that, selling off non-core businesses, selling non-productive assets, to raise cash and shrink cost base, and refocus on enterprise and government business. i will watch bb's cash level in the next a few quarters, or even years, along with sales on the business customer side, plus software development, like BBM, BES, and new QNX applications. as long as these things are going well, i will stick with it, through thick and thin.

     

    Louis Gerstner was hired to turn around IBM, 9 years later the stock went up 40 folds. with john chen's records and Wasta with him this is my best bet to get my money back, and then some.
    5 Nov 2013, 12:38 AM Reply Like
  • DumpsterDiver
    , contributor
    Comments (328) | Send Message
     
    This is no lifeline to BB10. Can anyone even find the actual quote where he said they'd keep making phones?

     

    (If his quote was "There are no plans"...well, ask Bill Clinton about the wiggle-enabling power of phrasing all your statements in judicious present tense.)

     

    That technicality aside, though, I agree that this is the best possible outcome for BBRY longs -- at least those who are willing to exemplify the "long" part as Yogi's describing. The biggest immediate danger you guys faced was getting involuntarily fire-saled right at the bottom. That worry seems off the table now, and better still, BBRY's colossal boob of a CEO is accompanying it offstage. Not a bad day for long-term thinkers, really.
    5 Nov 2013, 03:30 AM Reply Like
  • KIA Investment Research
    , contributor
    , BBRY PRO Alerts subscriber
    Comments (9280) | Send Message
     
    That's a great point DumpsterDiver regarding "There are no plans"

     

    BlackBerry could begin killing off BB10 devices tomorrow by simply introducing a plan to do so.
    5 Nov 2013, 07:38 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    rock and roll Yogi!
    4 Nov 2013, 03:58 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    none of the pundits called this one nor will they call the next year!!
    they were shouting buy in June and now a sell with a rock star for a leader--go figure
    4 Nov 2013, 04:00 PM Reply Like
  • sfinvestor
    , contributor
    Comments (987) | Send Message
     
    not shuttering handset does not mean they can maintain both BB10 and BB7. My guess is since the NOC is tied to BB7, they will shutter BB10 and BES10. That was TH baby so naturally Chen will just blame it on the past regime.

     

    The biggest risk factor has always been how they can maintain SAF without the benefit of bb7 and BYOD movement erdoing market share. As we continue to see 15% Q/Q decline, what is the roadmap to replace and turnaround that business. SAF are 100% dependent on bb7.

     

    There are lot of question of why they need 1B dollar warrant. Twofolds, first, when it is said and done, BBRY has a lot less cash than 2.5B. They probably will burn 2B in the next three quarters alone to restructure. Second, If I was John Chen or any oustide executive, I would not take this job without some money to work with (to actually have a chance and ensure that me and the people I bring in will have their guaranteed payday no matter what.) You hired pay merceneraries so they will have huge guarenteed pay first and they will want shareholder money as insurance.
    4 Nov 2013, 04:01 PM Reply Like
  • KIA Investment Research
    , contributor
    , BBRY PRO Alerts subscriber
    Comments (9280) | Send Message
     
    If there was ever a time the Sh!tcan BB10 and switch to Android, this is it.
    Stock would see $12 over night.

     

    Heck, even I would go long.
    4 Nov 2013, 05:35 PM Reply Like
  • sfinvestor
    , contributor
    Comments (987) | Send Message
     
    There is the issue of what to do with the existing and committed inventory now. The minuet you shi!can bb10 is the minute you lost $3 billion instead of $2B.
    5 Nov 2013, 03:23 AM Reply Like
  • KIA Investment Research
    , contributor
    , BBRY PRO Alerts subscriber
    Comments (9280) | Send Message
     
    Couldn't you:
    1. firesale those devices like HP did with all those tablets?
    2. Re flash them with the new OS?

     

    But yeah, current inventory is a problem.
    5 Nov 2013, 07:41 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    I think I'm going to buy a Z30 for Christmas to celebrate this excellent news!!! Prem says blackberry is here to stay!!!!--not going anywhere!
    4 Nov 2013, 04:10 PM Reply Like
  • sfinvestor
    , contributor
    Comments (987) | Send Message
     
    It's called stringing you along. They have a lot of BB10 phones yet to sell (millions) so of course they said what they said. They can't afford to be like HP and say we will not sell the pad thing and for $99 and be done with it. BBRY has way too much committed still and they need to recover as much as they can. (to people like you apparently)

     

    in the medium future, they will have to go back to old reliable BB7 and NOC which the enterprise prefer.
    4 Nov 2013, 04:13 PM Reply Like
  • ATInsider
    , contributor
    Comments (422) | Send Message
     
    Go back to BB7 over BB10? Not in a million years. BBRY will be fading out BB7, and the sooner the better.
    5 Nov 2013, 02:15 AM Reply Like
  • sfinvestor
    , contributor
    Comments (987) | Send Message
     
    Of course, the firing of TH for Steve Chen already told you the roadmap that BB10 is out. BB10 has been an enterprise disaster for BBRY. Any strategic plans centered on BB10 will just BK them faster.
    5 Nov 2013, 03:19 AM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    can't wait to check out the channels and video not to mention BBM
    4 Nov 2013, 04:16 PM Reply Like
  • mvermaak
    , contributor
    Comments (289) | Send Message
     
    Yogi i enjoy your spirit
    4 Nov 2013, 04:22 PM Reply Like
  • KIA Investment Research
    , contributor
    , BBRY PRO Alerts subscriber
    Comments (9280) | Send Message
     
    "National Bank has cut shares to Underperform, "

     

    Ya think?
    lol
    4 Nov 2013, 05:18 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    wasn't National bank saying buy at $14
    4 Nov 2013, 06:05 PM Reply Like
  • contrarianwise
    , contributor
    Comments (1124) | Send Message
     
    I know most all of the analysts in June had a $20 price target--how smart were they then???
    4 Nov 2013, 10:07 PM Reply Like
  • yongzhou
    , contributor
    Comments (208) | Send Message
     
    Headed to zero! this is P.alm 2.0 all the fantasies will not change the fact that nobody wants the phones and nobody wants the company. Tlhe longs will wish they had got 9 dollars before this is over. Watsa of course was shorting the stock while publicaly touting it. The investors should demand an investigation.
    4 Nov 2013, 11:04 PM Reply Like
  • usajordi
    , contributor
    Comments (207) | Send Message
     
    Honestly I think that PW was the man behind the scenes during the last few months, and what happened Monday was according to his script and according to his plans and wishes.
    This maybe was his second plan!
    How we can explain that suddenly there is no TH and BS and he emerges as the Leading Director.
    Who took the decisions over the weekend and how was negotiated,new position his investment and promissory note!
    So PW is in command right now!
    Had been a real Coup d' Etat without army!
    And were are Mr. Lazaridis and friends including Qualcomm!
    Do they have any comment or anything to say now?
    5 Nov 2013, 03:44 AM Reply Like
  • usajordi
    , contributor
    Comments (207) | Send Message
     
    Really needed now, urgently!
    John Chen to buy 1 Million shares with his own money and go on line to explain his vision of what he will do to achieve a bright future for BBRY!
    As Jamie Dimon did at JP Morgan during the most difficult times during the crisis!
    That would go a long way and appreciated by the current shareholders.
    The sooner that he trays to restore confidence, the better will be!
    5 Nov 2013, 04:40 AM Reply Like
  • mvermaak
    , contributor
    Comments (289) | Send Message
     
    Usajordi cannot agree more!
    5 Nov 2013, 04:31 PM Reply Like
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