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- BlackBerry must focus on offsetting its declining SAF revenue with BES sales. Value added services do not contribute much to revenue growth, but they don't need to either.
- Device margins need to be kept at 25% to 30% and BES + other software margins should stay around 60% to 70%. Margins are in line with that of competitors.
- Recent acquisitions in Movirtu and Secusmart are great growth plays with a lot of product synergy but do little for top line growth. Helpful for BlackBerry's brand recovery.
- Stock is heavily discounted due to investors viewing the company's future plans as high risk with high growth potential. Beta climbed from 0.9 to 1.37 in half a year.
- BlackBerry is fairly valued around $10.28 if modeled according to Chen's projections at a slight discount. Can easily trade at $10 to $14 in 2015.
BlackBerry: Buyout Rumors 2.0, Don't Get Sucked In Yet Again
- Noise about a deepening BlackBerry/Samsung partnership and another potential buyout are sending BlackBerry's shares up in early trading Thursday.
- Nothing substantive has been reported, which makes BlackBerry's share price increase purely speculative.
- Samsung doesn't need BlackBerry's patent portfolio.
- I think there are still a lot of investors out there who hope that BlackBerry will be bought out by Samsung (or another player).
- Don't invest based on hopes or rumors.
- Canada's Financial Post is reporting Evercore Partners has outlined a case for Samsung to acquire BlackBerry.
- BlackBerry was up over 7% after-hours Wednesday on the news.
- The rumor comes as Samsung's smartphone sales are in free fall.
- In my opinion, BlackBerry can offer superior returns to investors on its own.
- Any potential deal would come at a huge premium to BlackBerry's current price of $9.93 per share.
- BlackBerry won't get bought out by Samsung.
- But it at least proves that management is confident in its own turnaround efforts.
- There's much more upside in the core business, assuming Passport and BES 12 surprise to the upside in FY 2016.
- The market for work-oriented handsets is large, and assuming BlackBerry can appeal to this market, the device division could experience a massive turnaround.
- Admittedly, competition will be fierce, as Microsoft is also targeting the exact same market.
Why Acquiring BlackBerry Would Make Sense For Samsung
- By acquiring BlackBerry, Samsung could find new avenues for growth, gaining credibility and deeper relationships with enterprise customers and users in highly regulated verticals.
- BlackBerry could help to give Samsung a leg up over Apple and Android devices, which still trails behind BlackBerry in terms of security.
- BlackBerry’s basic patents, which are likely to cover some foundation mobile communication technologies, could prove useful as a bargaining chip for Samsung in the event of litigation with rival manufacturers.
- BlackBerry appears to be refocusing its efforts toward serving the enterprise market with software and services.
- Windows is likely to emerge as a real alternative to the Android/iOS mobile duopoly in enterprise.
- Conservative investors should consider selling out of BlackBerry positions.
- Weak performance in enterprise may expand BlackBerry's bottom line losses.
BlackBerry: Why Do Investors Never Learn From Buyout Rumors?
- Samsung was rumored to be interested in BlackBerry's patent portfolio and was apparently considering a $7.5 billion buyout of the smartphone company.
- Investors need to be careful when buyout rumors circulate and should not buy a stock based on unsubstantiated information.
- BlackBerry is regularly thrown around as a buyout target, the last time as a target for Lenovo.
- Rumors are mostly NOT true and should NOT be acted upon.
BlackBerry Has Turned Down Multiple Buyout Offers?
- BlackBerry was up nearly 30% Wednesday on a Samsung buyout rumor.
- The rumor has since been denied by both BlackBerry and Samsung.
- What is interesting is that there have been multiple rejected offers recently.
- Rumors hit the wire on Wednesday about a potential bid for BlackBerry by Samsung.
- The stock shot up nearly 30% before losing ground in after-hours trading when BlackBerry denied the rumors.
- Rumors or not, we still think BBRY can head to $15.
BlackBerry Up On Reported Samsung Takeover Interest
- Reports have surfaced that Samsung has approached BlackBerry about a potential takeover. The stock soared 30% on the news.
- The stock fell after hours after BlackBerry denied takeover talks.
- Samsung appears desperate for any solution to its own smartphone woes.
- A deal would be improbable since BlackBerry is months from executing its strategic plan and delivering superior value to shareholders.
- Revenue and user metrics remain in permanent decline.
- Hardware sales remain low.
- Service monetization is not materializing.
- Cash maintenance will become difficult from hereon.
- Substantial dilution by convertible debenture owners looms over shareholders.
BlackBerry: The Ship Is Headed In The Right Direction
- Just two years ago, the Blackberry ship was full of water, slightly submerged and headed in the wrong direction.
- Since then, however, new leadership has drained the water from the ship and directed it in a new, promising direction.
- The market seems not to reflect that yet, offering an interesting opportunity for long-term investors.
- Blackberry continues to deliver new technologies.
- Blackberry’s QNX infotainment and telematics systems have found their way to 50 million vehicles.
- Blackberry will combine QNX with its secure NOC network to create the next generation of connected vehicles.
- Blackberry is turning its NOC network into a secured IoT hub.
- Blackberry’s telecom relationships put it in an ideal position to commercialize its next-generation IoT platform.
BlackBerry: Digital Money Transfer, Not Advertising Is BBM's Best Hope
- BlackBerry investors should not rest too much hope on BBM for Android Wear.
- Mobile advertising is also weak for BBM monetization.
- Digital money transfer/payment is the best channel for monetizing BBM and BlackBerry phones.
- High short interest and declining operating revenue are two headwinds for BBRY this year.
- QNX now running in 50 million cars.
- New Passport launched with AT&T.
- Software revenue growing rapidly.
- Expect 2015 to show the first signs of a return to growth.
Ignore The Analysts, BlackBerry Is Looking Good
- A Wells Fargo analyst rains on BlackBerry's parade, but we added shares.
- BlackBerry moving forward with BBM and the Internet of Things.
- BlackBerry phones will be back in AT&T stores.
- Our price target remains $15 by mid-2015.
- BlackBerry shareholders are now exposed to massive dilution in the form of $1.25 billion in convertible bonds.
- Interest rate charges and fair value adjustments related to the $1.25 billion in convertible bonds may adversely affect BlackBerry cash flow and bottom line profitability.
- BlackBerry shares are deserving of a sell rating.
Thu, Jan. 22, 9:15 AM
Wed, Jan. 21, 7:29 PM
- Though both companies have issued statements denying M&A talks, Samsung (OTC:SSNLF) is "actively pursuing a plan to take over or buy a significant stake in BlackBerry (NASDAQ:BBRY)," Canada's Financial Post reports.
- The paper has obtained a document prepped for Samsung by i-bank Evercore that "outlines the case for, and the potential structure of a possible purchase of BlackBerry." Though the doc was created in Q4 2014, a source says Samsung remains interested. “I can tell you Samsung is contemplating a purchase. It’s still being pursued right now. Samsung is still evaluating their options."
- BlackBerry soared a week ago after Reuters reported Samsung had proposed buying the company for a price between $13.35-$15.49/share. Shares quickly gave back most of their gains after BlackBerry denied having talked with Samsung about a buyout offer. Samsung later provided its own denial.
- BlackBerry has jumped in AH trading to $10.65.
Thu, Jan. 15, 12:45 PM
Thu, Jan. 15, 9:16 AM
Wed, Jan. 14, 5:38 PM
- In response to Reuters' report, BlackBerry (NASDAQ:BBRY) says it "has not engaged in discussions with Samsung (OTC:SSNLF) with respect to any possible offer to purchase BlackBerry."
- BBRY -11.2% AH. Shares are still up 15% from yesterday's close.
- Update: The Globe and Mail reports BlackBerry has "shunned a handful of takeover overtures in recent months as its board of directors and largest investor continues to support a restructuring strategy that they expect will deliver greater shareholder value than current acquisition offers."
Wed, Jan. 14, 4:14 PM
- Samsung (OTC:SSNLF) proposed acquiring BlackBerry (BBRY +29.8%) for a price between $13.35-$15.49/share, according to a Reuters source. BlackBerry closed yesterday at $9.71, and has closed today at $12.60. Shares are up another 3.2% AH to $13.02.
- According to documents, Samsung's proposed acquisition range implies an enterprise value of $6B-$7.5B, after factoring $1.25B in convertible debt. Execs from both companies reportedly met last week.
- Reuters states Samsung is interested in BlackBerry's patent portfolio. BlackBerry could also mesh with Samsung's efforts to grow its enterprise presence, strengthen its embedded/IoT offerings, and (though this is easier said than done) lower its Google dependence. The companies announced a BES12-focused enterprise partnership in November.
- Previously: Samsung reportedly approached BlackBerry about acquisition
- Update: BlackBerry denies having talked with Samsung about a buyout offer.
Wed, Jan. 14, 3:50 PM| 140 Comments
Tue, Jan. 13, 4:05 PM
- Believing near-term Classic sales are lower than previously expected, Baird's William Power has cut his FQ4 (Feb. quarter) BlackBerry (NASDAQ:BBRY) revenue and EPS estimates to $746.3M and -$0.03 from $937.3M and $0.00. Consensus is at $860.1M and -$0.03.
- Power: "We had previously assumed greater Classic device contribution in fiscal Q4, though following conversations at CES, it appears that much of that revenue may not be recognized until fiscal Q1." He now expects just 1.6M FQ4 phone sales; BlackBerry recognized revenue on 2M phones in FQ3, and had end-user phone sales of 1.9M.
- Meanwhile, Canaccord's Mike Walkley has lowered his FY15 BlackBerry sales and EPS estimates to $3.4B and -$0.21 from $3.45B and -$0.18. Regarding the Classic, he reports seeing "pockets of solid sales offset by soft initial sales in the U.S. market."
- Walkley does think FQ4 could "mark the low point for hardware sales." But he also expects BlackBerry "will continue to post operating losses through [FY16] given the steep decline in the higher margin Services business only partially offset by growing Software sales."
- Shares fell 4.2% in regular trading to $9.70.
Thu, Jan. 8, 2:51 PM
- Following a talk with management, Wells Fargo's Maynard Um has slashed his FQ4 BlackBerry (BBRY -0.4%) revenue and EPS estimates to $721.1M and -$0.05 from $783.8M and -$0.03. Consensus is at $845.6M and -$0.03.
- Um, who maintains a Market Perform rating, does think "management continues down the right path having refocused the company, renewed its portfolio and now focusing on rebuilding distribution." However, he also believes software revenue will take time to ramp, and that product visibility remains low.
- Um's note follows the launch BlackBerry's IoT Platform at CES, as well as remarks from John Chen stating BBM could produce $100M in revenue in FY16 (ends Feb. '16). New premium BBM features were rolled out in October, and enterprise bundles containing BBM services (among other things) were launched in December.
- Shares are off slightly on a day the Nasdaq is up 1.9%.
Wed, Jan. 7, 2:42 PM
- BlackBerry's (BBRY - unchanged) IoT Platform, launched today at CES, pairs the company's QNX OS with its network infrastructure and management software. The solution is initially targeted at the automotive and asset-tracking industries.
- Features include software modules that enable data collection and device management, and a messaging system that "serves as the message bus for additional platform modules by delivering reusable services" such as security, data indexing/storage, and analytics.
- The IoT Platform has its roots in BlackBerry's Project Ion, launched last year with the goal of creating an analytics/data collection infrastructure for embedded devices. Last summer, BlackBerry announced plans to provide a healthcare service that would rely on data from medical devices to enable the early detection of illnesses. Cisco, Intel, AT&T, and Verizon are among the other companies with a strong interest in enabling IoT service infrastructures.
- Speaking of AT&T, BlackBerry has announced a slightly redesigned version of the Passport (it has rounded corners) will exclusively be sold in the U.S. by Ma Bell. John Chen: "AT&T wanted rounded corners. Some of us are more square. No other reason than that." AT&T will also soon begin selling the BlackBerry Classic.
Dec. 22, 2014, 9:48 AM
- "BlackBerry is effectively transitioning to a cross-platform software/services company. In this context, the device business should not be banked on to generate profit," says TD Securities, upgrading BlackBerry (NASDAQ:BBRY) to Buy after the company reported mixed FQ3 results, a 56% Y/Y drop in end-user phone sales, and a ~100% Q/Q increase in BES10 licenses.
- TD sees BlackBerry shipping 8.9M phones in FY16 (ends Feb. '16) - less than the 10M the company has said it needs to turn a profit on hardware - at a 15% gross margin. ~75% of FY16 gross profit is expected to come from software and legacy services.
- BlackBerry has forecast its software revenue will double in FY16, and that its services revenue will fall by 50%. Shares are now above where they traded prior to the FQ3 report.
- Also: BlackBerry has disclosed it's partnering with Boeing to "provide a secure mobile solution for Android devices" that leverages BES12. The solution is tied to Boeing's ultra-secure Black phone (meant for U.S. defense/security clients).
- BlackBerry earnings coverage
Dec. 19, 2014, 2:43 PM
- Deja vu: Three months after gradually moving higher after posting an FQ2 revenue miss and EPS beat, BlackBerry (BBRY -1.4%) is doing the same after delivering a similar FQ3 performance.
- An improving gross margin contributed to the EPS beat: GM rose to 51.7% from 46.4% in FQ2. GM was at -106% a year ago (the result of a massive phone inventory charge).
- Cost cuts also helped: GAAP R&D spend fell 17% Q/Q and 48% Y/Y to $154M; SG&A spend fell 12% Q/Q and 68% Y/Y to $538M. BlackBerry "continues to target sustainable non-GAAP profitability some time in fiscal 2016." The FY16 (ends Feb. '16) EPS consensus is at -$0.20.
- Hardware was 46% of revenue, services 46%, and software/other 8% - the same as FQ2. End-user phone sales fell to 1.9M from 2.4M in FQ2 and 4.3M a year earlier. BlackBerry has said it needs to sell 10M phones annually to break even on hardware.
- Cowen (Market Perform) likes BlackBerry's margin improvement and BES license growth - ahead of the BES12 launch, BES10 licenses roughly doubled Q/Q to 6.8M, aided by the EZ Pass migration program (to be ended soon). "Software growth remains the critical driver of the long-term turnaround."
- S&P (Hold): "We are encouraged by a return to positive cash flow, reflecting margin improvement from cost cutting efforts. We see BBRY growing its mobile device management business ... We anticipate BBRY focusing on growing its software offerings and expect its hardware business to remain at depressed levels." MDM software rival MobileIron (MOBL +6.6%) is up strongly.
- FQ3 results, details
Dec. 19, 2014, 9:11 AM
Dec. 19, 2014, 7:39 AM
- FQ3 non-GAAP EPS of $0.01 vs. a loss of $0.02 the previous quarter.
- Normalized positive cash flow of $43M vs. cash use of $36M previously.
- No details on how the Passport is faring, but hardware revenue was about $365M, down 12% Q/Q. The company recognized hardware revenue on about 2M units, suggesting an ASP of roughly $182, down 27% Y/Y. 1.9M phones were sold through to end customers.
- Conference call at 8 ET
- Previously: BlackBerry beats by $0.06, misses on revenue
- BBRY -4.7% premarket
Dec. 19, 2014, 7:02 AM
Dec. 18, 2014, 5:30 PM
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