BlackBerry turns negative; Chen promises QWERTY phone push


Initially up sharply following after posting a big FQ4 EPS beat to go with an (also large) revenue miss, BlackBerry (BBRY -2.2%) has reversed course.

Analysts are worried the cost cuts that drove the EPS beat - R&D/SG&A spend fell 34% Y/Y to $601M - will only do so much. "John Chen did what John Chen is known for. He came in and he's cut the cost base," says BGC's Colin Gillis.

On the CC, Chen said BlackBerry plans to re-launch BB7-based Bold phones that have seen strong demand. He also stated three new high-end QWERTY BlackBerrys would likely arrive in the next 18 months. "I hope nobody thinks we don’t take seriously the handset business."

Sales of the high-end/QWERTY Q10 fell flat last year, as the iPhone and Samsung's Galaxy line continued dominating the high-end. BlackBerry recently unveiled the Q20, a new QWERTY flagship.

Chen also reiterated BlackBerry aims to be profitable in FY16 (ends Feb. '16), and said the company will "take a very serious look" at bringing BBM to PCs. BBM's active user base has surged past 85M since Android/iOS apps launched last fall.

3.4M BlackBerrys were sold to end-users in FQ4, down from 4.3M in FQ3 and 5.9M in FQ2. Due to inventory-clearing, BlackBerry only recognized revenue on 1.3M shipments.

Previous: BlackBerry's results, details

This was corrected on 03/28/2014 at 02:26 PM.
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Comments (19)
  • mrabody
    , contributor
    Comments (240) | Send Message
     
    Oh dear, the Q20 isn't a low-cost phone, and it hasn't even launched yet.
    28 Mar 2014, 02:12 PM Reply Like
  • Randal James
    , contributor
    Comments (4420) | Send Message
     
    Not to worry, it will be low-cost soon enough. :)
    28 Mar 2014, 02:33 PM Reply Like
  • gwynfryn
    , contributor
    Comments (6479) | Send Message
     
    Hey RJ, I gave you a like, but it's not showing!
    29 Mar 2014, 12:24 PM Reply Like
  • Randal James
    , contributor
    Comments (4420) | Send Message
     
    I like you too, Gwyn. Hope all is well in P'ain de But' FR.
    :)
    29 Mar 2014, 02:19 PM Reply Like
  • David653
    , contributor
    Comments (5532) | Send Message
     
    I am not trying to be rude, but the Q20 will flop exactly as the Q10 and the low cost Q5 did.
    28 Mar 2014, 02:52 PM Reply Like
  • ELLAS
    , contributor
    Comments (2709) | Send Message
     
    David653
    """I am not trying to be rude, but the Q20 will flop exactly as the Q10 and the low cost Q5 did."""

     

    The Q10 and the Q5 did not flop. Not sure where you are getting this false information from, but I advise you look elsewhere for BBRY research.

     

    The Q20 is targeting a huge amount of people that refuse to let there BBOS BOLD phones go, but are willing to jump onto the Q20.

     

    The Q20 is being designed to bridge the GAP between BBOS & BB10. The same goes with BES12.

     

    Had BBRY launched these at the start, even with terrible marketing efforts, Bb10 would have sold much better.

     

    Understand the simple logic behind John Chen's thinking. The Q20 is not for everybody but is available if need be.

     

    Thanks for the comment David.
    28 Mar 2014, 04:30 PM Reply Like
  • anubis44
    , contributor
    Comments (582) | Send Message
     
    The irony is that the BlackBerry Z30 is a kick-ass 5" touch screen smartphone with excellent battery life and Android app compatibility. My wife just bought one because she was blown away by my Z10's unified inbox, flick-to-type, and many other things. If BlackBerry just keeps going with BB10 and continues to refine the OS, their app store will reach that critical mass very shortly that gives them functional equivalency with iOS and Android, while still handily beating both on the security front.

     

    BlackBerry isn't going anywhere, so investors might as well buy in for the long haul.
    28 Mar 2014, 03:02 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1379) | Send Message
     
    I've said this before, and frankly history is one my side with this argument (even thought the BBRY enthusiasts refuse to admit this) but having a superior product is NOT a guarantee of a company's success. BBRY is cutting costs all over the place and still can't make their revenue projections. They are burning cash and losing customers. Add to that stories of the company recently trying to sell themselves to Chinese phone manufactures (blocked by the Canadian government) and you can see that even BBRY execs realize the writing is on the wall for the company as it now operates.

     

    So basically, BBRY is a trade in a range of $8 to $11 on the high side. I've been playing this though options very profitably for months. However, I wouldn't buy BBRY "for the long haul" as you mention if I were using YOUR money. That is about the worst advice you could give someone IMO.
    28 Mar 2014, 09:41 PM Reply Like
  • LYogi
    , contributor
    Comments (3168) | Send Message
     
    C'mon people, nobody is expecting the turnaround to happen in 2Q, everything in on track, exercise patience.
    28 Mar 2014, 03:14 PM Reply Like
  • Randal James
    , contributor
    Comments (4420) | Send Message
     
    anubis

     

    The problem is they are not going anywhere and that becomes the greatest risk of all. We don't know how large a pile of money is out they for secure corporate and government computing/communications. BBRY believes enough to live on but isn't mining it well right now. Probably the richest market is No. America/EU and that would favor BB, MS and APPL over the also envious Samsung and Lenovo types.

     

    But the communications aspect would only be a part of what would interest Microsoft or Apple, so their interest is at least as keen as BBRY's although not nearly so life-sustaining. If you believe BBRY wins that race your argument on buying now and waiting is valid. But if between now and point P down the road the market gets highjacked by the larger, wealthier and healthier sharks in this pond, then the hold strategy may look hasty.

     

    Odd at this point that Microsoft seems to be out doing windsprints and Apple and BBRY are on the bench, waiting and plotting.
    28 Mar 2014, 03:26 PM Reply Like
  • ELLAS
    , contributor
    Comments (2709) | Send Message
     
    QUOTE:
    Here's my take:
    - BlackBerry still has a significant amount of BBOS users that have not yet upgraded to BB10. I would estimate approx: 25M refuse to upgrade to anything but a BBRY Physical Keyboard Device. The Q20 will cater to this unique BOLD lovers.
    - Low BB10 device sales are contributed due to ZERO Marketing and Cash Efforts. Quite understanding. John Chen realizes he needs to 1) Build Carrier Relations and 2) Re-Build the BBRY image. No point in throwing good money into a Black Hole.
    - Regarding point two, BBRY will eventually know the right time to start building it's Marketing Efforts. And John Chen is leading to this by trimming the company fat, building up the Enterprise business and eventually breaking even/profit and with the assistance of the Emerging Market strategy.
    - Regarding the 3 x QWERTY devices, one being the Q20, John Chen clearly gave me the impression that there is a market for such devices. So I agree with his decision, despite many thinking that this may not be a good move. Remember John Chen spoke in person with the Pentagon along with many Enterprise Companies. John Knows what they want and he aims to deliver.
    - FULL TOUCH DEVICE? Yes, it's coming, according to John Chen at the Mobile World Congress 2014. This Unique device he briefly mentioned was being designed for the sole purpose to attract NEW CUSTOMERS. In My Honest Opinion, this special device is the rumoured Z50 1920x1080p 5.2” diagonal Super AMOLED w/500+ ppi.
    Quad-Graphics and Quad/Octa-Core 64-Bit etc.,

     

    He clearly stated that he wants to attract New Customers. And he hopes this special device is released by SEPT 2014. If not by the end of 2014.

     

    And it's got to be a full touch, because he's not going to do it with a QWERTY Physical Keyboard right? So it's all touch and sources confirm this.

     

    http://bit.ly/MdOCNQ

     

    Typed on my Superior BlackBerry Q5 Smartphone.
    ATInsider - Industry Insider and Tech. Junkie.
    28 Mar 2014, 04:21 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (7575) | Send Message
     
    "He clearly stated that he wants to attract New Customers. And he hopes this special device is released by SEPT 2014. If not by the end of 2014."

     

    Let's be realistic, it's over. HTC, SNE and other smaller vendors have great phones available today and still struggle against Samsung and AAPL.

     

    Only Samsung, AAPl (and maybe MSFT once they got NOK) have the marketing money to get or keep high marketshare and profits in handsets today, a good product isn't enough.

     

    BBRY has no marketing presence among endusers, it's delisted in many telecom shops globally; it will be very hard to come back into carrier distribution.

     

    I see no upside in phone hardware, BBRY will be a smaller, mainly B2B company going forward.
    29 Mar 2014, 02:11 AM Reply Like
  • LYogi
    , contributor
    Comments (3168) | Send Message
     
    Emerging markets and Foxconn give Blackberry a shot to remain in the hardware/handset business.
    29 Mar 2014, 10:36 AM Reply Like
  • ELLAS
    , contributor
    Comments (2709) | Send Message
     
    Tales From The Future
    """Let's be realistic, it's over. HTC, SNE and other smaller vendors have great phones available today and still struggle against Samsung and AAPL."""

     

    Yes lets be realistic, you are comparing Android/iOS to BB10? BlackBerry 10 is far superior. It's all about how well John Chen can market BB10 and to once and for all de-brainwash the brainwashed.
    1 Apr 2014, 07:51 AM Reply Like
  • gladtidings
    , contributor
    Comments (261) | Send Message
     
    If we care to read carefully John Chen's down to earth business model in his Conference call today, it is very clear that he knows where to take BB to. To wit, he said that BB will be cash flow neutral by end fiscal 2015, and profitable in fiscal 2016. He has carved out the BB global market into two broad categories - the emerging market (with attendant lower priced devices) and the developed market (with attendant Classic, Z30 devices) for the new fiscal year. The Classic is targeted towards existing governmental, Financial and large corporations with an all encompassing software integration of EBBM coupled to a new BES12 that will unify cross-platform links to IOS, Androids, Windows. The Classic is set to deliver in Q4 this fiscal 2015 year and there is no doubt where Chen is aiming at. In 5 short months since coming on the helm, he has achieved a lot and stabilized the ship which is now set to move forward. It is clear that BBM and its monetizing opportunity looms large on John Chen's plans. He states that the BBM has opened doors to new channels being added daily with a total of 1 million registrants to date and growing fast, this, from a total of 200,000 only 4 months ago when he came to the helm.
    New go-to-market strategy initiatives are in place with direct-to-enterprise models, direct support for carrier channels (which have been weak links hitherto), e-commerce sales channels for unlocked Z10,Z30,Q10 and Q5 are in progress which will add to more sales of inventories and likely take the rest of the new year or possibly earlier if the new vertical sales staff already engaged to get things moving in this area succeeds as they are expected to. So overall there is a simultaneous cleaning up of existing inventories, while developing new markets as well as anchoring existing clients. I cannot see anything amiss in John Chen's all embracing approach. One has only to wait for the fruits to ripen before the harvest. Any more pushing down of the share price represents a great opportunity for entry. Additionally, there are not many corporations that can lay claim to have $2.7 billion cash on their Balance Sheet. Best to all longs.
    28 Mar 2014, 07:51 PM Reply Like
  • juliano trader
    , contributor
    Comments (6) | Send Message
     
    I don't sell my shares.
    30 Mar 2014, 02:52 AM Reply Like
  • blue-light
    , contributor
    Comment (1) | Send Message
     
    i agree the Q20 will be hot, can't wait to get one, there are millions like me who hate and returned the Q10. i have an old curve, waiting for this Q20. exactly what
    the market wants. it will be more than hot!
    30 Mar 2014, 03:18 AM Reply Like
  • Energysystems
    , contributor
    Comments (2112) | Send Message
     
    The Q20 will be a blue-light special in no time.
    31 Mar 2014, 11:05 AM Reply Like
  • Dale2100
    , contributor
    Comments (124) | Send Message
     
    QNX sounds a lot like OS2 on many different fronts. One could also substitute CP/M in lieu of OS2 ! Both were superior, yet failed in the marketplace. Much to be learned from history.

     

    OS2 clearly better than DOS - check
    OS2 better security - check
    OS2 multitasking - check
    OS2 backed by a huge company - check
    OS2 in the hearts of and targeted for the enterprise - check
    OS2 open API for developers - check

     

    OS2 - better, yet withered on the vine - check

     

    OS2 - DEAD - check
    30 Mar 2014, 09:12 AM Reply Like
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