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  • BlackBerry Heading Below $7 Per Share Again [View article]
    RJ said patents are worth closer to 1.5 billion not 4.5 billion ..Here is latest sum of the parts from RJ

    BBRY Sum-of-the-parts Valuation
    ($mln) Low Base High
    Patents 1,607 1,607 1,607
    As per 10Q filings. Includes BBRY's ownership in syndicate that acquired
    Nortel's patents.
    Licenses 0 412 824
    There is defensive value in licenses but it may not carry the same value
    for an acquirer. We use a zero value in a worst case.
    BlackBerry NOCs 550 825 1,100
    BBRY has spent $2.3bln+ building out its Network Operating Centres
    (NOCs) and nodes - most of them less than 3 years old. For the high end,
    we value BBRY's NOCs at a 50% discount. For the low end, we apply a
    75% discount.
    Cash 800 800 800
    Cash on hand $2.6bln as of Aug. We estimate current round of
    restructuring to cost ~$300mln and BBRY to burn another $500mln
    through F2015. We factor $1bln to wind down operations
    Services 0 0 2,553
    For the low end, we assume BBRY's hardware business operating losses
    offset its Services cash flows - so zero value. For the high end, we use
    our DCF of BBRY's services business (15% wacc, -35% decline Y/Y,
    declining profitability profile)
    2,957 3,644 6,884
    s/o (mln) 524 524 524
    Per Share Value $5.64 $6.95 $13.13
    Book Value $17.93 As of May 2013
    Tangible Book + Patents $14.30 As of May 2013
    Sep 23, 2013. 08:50 AM | 1 Like Like |Link to Comment
  • Fairfax Financial Might Be The Best Play On BlackBerry [View article]
    I agree with mcarp comments on the MDM biz . I'm not even sure BB is doing 100 million in sales , it's pretty much a startup at this point. Even , giving it 1 billion valuation at this point is generous . There is ZERO motivation for anyone including Prem Watsa to pay up for a business losing money and hoping that it can be turned around . You have to assume that anyone looking at buying BB or taking it private would only do so if they can get it at a discount to a theoretical intrinisac value. Investors need to be more realistic about the valuation. Potential buyers are really going to haircut everything . What kind of discount do you put on a business rapidly losing share and bleeding cash ? Tough to say. We'll have a better idea after the q .
    Sep 9, 2013. 11:01 PM | 1 Like Like |Link to Comment
  • Watsa puts together funding for BlackBerry bid [View news story]
    Stating the obvious - The lower the price the higher the IRR for anyone taking it private. As the price moves up and the potential IRR goes down it becomes less attractive as there is less wiggle room to make positive returns . In my opinion you need the entire business intact as a going concern to maximize the value of the shares. No one is going to pay up just to get the patents.( worth about $3 / share ) it's got to be for the whole business. Possible , but Not a likely scenario.
    Sep 9, 2013. 10:21 AM | Likes Like |Link to Comment
  • Watsa puts together funding for BlackBerry bid [View news story]
    Assuming Prem is not a dumb guy ( buy low sell high ) I cant imagine the bid being over 10$ . Recall he is still looking to get his average cost down not squeeze the short sellers ! Of course the price will depend on how many bids are at the table . Less interest means a lower price . Stating the obvious .
    Sep 9, 2013. 08:48 AM | 2 Likes Like |Link to Comment
  • BlackBerry "savior" device hits the ground and dies [View news story]
    retaliation for the lenovo rumor yesterday perhaps ! lets stick to facts and original research please
    Aug 29, 2013. 07:44 AM | 5 Likes Like |Link to Comment
  • BlackBerry: It's All About The Valuation [View article]
    Another uninspiring quarter is coming that won’t inspire anyone to pay up

    Cash is burning - so combined with point above your sum of the parts continues to shrink.

    Hardware business will cost money to shut down – estimates range from 500 million to 2 billion . If Someone buys them and keeps everything intact maybe it’s worth 1 billion but certainly not in its current state.

    Software and Services is a melting Iceberg . I would argue that a potential buyer assumes worst case that it goes to zero over time – not 2 to 4 billion . You are certainly not paying up for it. Recall that all the way down analysts kept flagging the enterprise biz as floor value support for the shares . I remember reading analyst’s reports when it had over $50.00 floor value - It’s been shrinking every quarter for a long time and pretty close to zero now. ( low single digits at best )

    If the enterprise biz was still sticky and recurring cash flow stable the lbo model would make more sense – it doesn’t anymore – Prem Watsa and the other Canadian investors involved in the LBO chatter are NOT Technology Experts so won’t immediately be bringing anything to the table except money . Which is nice and buys them time but if bb10 traction continues to underwhelm relative to the competition they won’t have the scale to become profitable and the cash burn will suck everyone dry eventually. I doubt that after Prem and the Canadian Pension Club comb through the financials they won’t be excited about spending the kind of money necessary to potentially resurrect this brand. If they are prepared to be patient and pump several billion into Blackberry and hire a tech dream team to jumpstart innovation , come up with the next big thing etc then they have a chance. My guess is they will come to the conclusion there are better risk / reward situations out there . The Wildcard for me is Prem Watsa’s Hubris and the Patriotism angle. It’s certainly possible that a Canadian bailout happens. From Misek ( one of the few remaining bulls ) We believe Fairfax along with other Canadian pension funds and banks are considering taking BlackBerry private. The following Canadian Pension Funds currently have a stake in BlackBerry: Ontario Teachers’ Pension Plan Board (0.4%), The Public Sector Pension Investment Board (0.4%), Canada Pension Plan Investment Board (0.2%), The OPSEU Pension Trust (0.1%), and OMERS Administration Corporation (0.1%). Additionally we believe Canadian banks such as BMO, CIBC, and RBC could be involved as well. In total, these institutions control ~17% of BlackBerry’s shares outstanding. In total, current BlackBerry holdings represent 0.3% of the groups’ equity assets, leaving plenty of headroom if they would like to increase their investments.

    I don’t think a strategic is in the cards either ….they’ve been informally for sale and had advisors working the file for over a year with no bites ..what’s changed since they first hired advisors ? New O/S launched and not really creating a buzz.. In order to win back customers and gain important mindshare that could translate into success they needed something that would differentiate themselves from the Competition . It’s a competitive product but they failed to create the kind of excitement necessary to get people talking about the brand again. Walk into any carrier and almost universally , no one is pushing their phones.

    The device management software, which everyone is assuming is worth something, is technically pretty much a startup. I am not sure it is even $100MM in revenues at this point. Citrix gaining traction is not a positive development. As per comments from an IDC Analyst recently , they may even miss the boat on MDM Trends and get that wrong too ( trend towards managing applications not devices ? ) or like their smartphone business be too late .

    The noc’s are worth something but If the core business continues to deteriorate they’ll have a harder time extracting maximum value if BB is broken up and they are negotiating from a position of weakness. Same comment applies to the patents

    The patent value is a big question mark given they have never (to my knowledge) gotten a single injunction or have any significant royalty streams. If it was a purely defensive move. ( as Balsillie described the Nortel patents ) It’s hard to predict what they are worth. Whether it’s a billion or 3 billion may become a moot point depending on what kind of deal , if any, is struck . The patents are certainly worth something but if you are a blackberry shareholder you are more concerned with the value of the ongoing business than you are with the patents. In my opinion if your core business is unattractive , it will be harder to extract the maximum value for anything else. You are in a position of weakness.

    If something happens the price will be determined by the number of buyers at the table and how bad they want it – I can’t imagine the list being that long , especially since they informally went through this process already. What’s changed ? BB10 was launched to underwhelming success, lots of exec departures , and no more guidance . The commentary around any kind of deal being primarily to accelerate BB10 adoption suggests sales are still very lackluster . The announcement to me reflects on mgmts. outlook for the future.

    The stock has looked cheap all the way down but it depends on how you look at it . I recall hearing an argument with a portfolio manager in 2012 about a 4.50 consensus earnings estimate for 2013 . He argues the stock was actually cheaper than it looked b/c he thought they could do well north of 6$. The opposing side argued that with a slew of really compelling competing offerings and a stale product lineup from Blackberry the $4.50 number could look more like $2.00 not $6.00 and emphasized how fast the Business could go from making money to losing money given the operating structure .The downward trajectory was in fact conservative . I think the numbers people are throwing around are still not realistic enough. Investors might be shocked at how fast the business deteriorates.

    The recent announcement of a formal strategic review may make many decision makers think twice before adopting the new platform or at least cause delays which prevents them from gaining the kind of traction necessary to regain customers and investor’s confidence . The ecosystem does not like this announcement either. Are you going to develop an app for a company with a rapidly declining installed base and uncertain future ? Even if a deal is announced , how long will it take to get everyone aligned and supportive ?

    A lot of so called smart money has been burned trying to catch a falling knife as the valuation case has always looked interesting . As tempting as it may seem to get involved on the long side , especially given the high short interest and potential for positive surprises , I would be inclined to wait until there is evidence of a positive shift in fundamentals before getting involved. There will be plenty of time to establish a position if they regain momentum. I’d rather wait until this car stops spinning and find out which direction its going first before I hitch a ride.

    In the meantime it’s a Melting Iceberg .
    Aug 23, 2013. 09:34 AM | 2 Likes Like |Link to Comment
  • The Secret Plan To Take Over BlackBerry Is Positive, Not Negative [View article]
    breaking it up certainly would be a challenge as anyone contemplating shuddering the hardware biz will not like the off balance sheet committments ..

    Pacific Crest’s James Faucette reiterates an Underperform rating on the stock, writes he see little prospect for a take-out, even by investor Prem Watsa of Fairfax, who used to sit on the board. Faucette warns of off-balance sheet obligations: “We believe that many may have failed to take note that BlackBerry disclosed in its 6-K filing from June 28, 2013, that it has $5.3 billion in off-balance sheet purchase obligations, including $4.3 billion in purchase order commitments with contract manufacturers and an estimated $800 million in purchase commitments for component suppliers.”
    Aug 19, 2013. 11:11 AM | 2 Likes Like |Link to Comment
  • The Importance Of The Department Of Defense Contract For BlackBerry [View article]
    The first yes , but my guess is android and IOS is not far behind. ( see links below ) and since there is pent up demand to switch I think this announcement is a bit hollow. Furthermore, it would blackberry's market to lose not win per se given they are the incumbent ..( 470k blackberry's , 41k IOS , 8700 Android was last stat i saw - ) The govt has made it clear they want to "validate a range of devices that meet DOD security standards so the best technology is available to meet mission requirements "

    To the extent that Android and IOS have been satisfying enterprises security requirements and employees have been voting Blackberry OUT out with BYOD , govt employees likley wont be far behind once other platforms get approval. I'm rooting for blackberry to make a comeback but it feels like a melting iceberg

    DISA opens a path for iOS, Android devices in military

    U.S. approves Apple iOS devices for use on Defense Department networks
    Aug 8, 2013. 04:02 PM | 2 Likes Like |Link to Comment
  • ARM Holdings Starts To Sound Desperate [View article]
    The slide you show that compares tablet performance vs. Silvermont has a disclosure by it. It reads as below.

    “Based on a geometric mean of the projected power and performance of SPECint* rate_base2000 on Silvermont compared to expected configurations of main ARM*-based mobile competitors using descriptions of the architectures; assumes similar configurations. Numbers may be subject to change once verified with the actual parts. Individual results will vary. SPEC* CPU2000* is a retired benchmark; results are estimates. * Other names and brands may be claimed as the property of others.”

    So, this is based on expected configurations on parts they don’t have that compared one benchmark. Shocker.

    The comparison doesn’t actually dictate what the competition truly is. It could be Tegra-2 for all we know.

    The comment about ARM making unsubstantiated claims is a bit harsh !
    Jun 5, 2013. 09:16 AM | 8 Likes Like |Link to Comment
  • The Cigar Butt That Turned Into A Cigar: Say Goodbye To RIM's Hardware Division [View article]
    I have to disagree .The BES decommissioning trend is almost impossible to stop as BYOD is where the majority of enterprises are going. Although RIM plans to offer its enterprise customers more flexibility through a menu of services (different levels of security ranging from free to higher feature options, including MDM and/or other communication services)based on their needs, it's likely this eventually shrinks RIM’s revenue opportunity as not
    every enterprise customer opts for the highest level of security. On the consumer side, RIM actually currently generates services revenues from EVERY consumer (even in emerging
    markets), the consumer revenue opportunity becomes limited to only those consumers that bring their own BB to work and is connected to the BES. Potentially offsetting those
    would be RIM’s nascent MDM opportunity (managing non-BB devices) and the potential monetization of BBM. Here is a good article on what the Enterprise is thinking.
    Feb 7, 2013. 10:53 AM | Likes Like |Link to Comment
  • The Cigar Butt That Turned Into A Cigar: Say Goodbye To RIM's Hardware Division [View article]
    BB10 generates no service rev. Service rev is roughly 1/3 of their sales now and generates 90% of profits . To the extent that service rev grinds lower over the long term that's not good . If you look at service rev over the last few years it's gone from providing a floor value of $ 50 to less than $3. More importantly , longer term it eventually goes to zero .
    Jan 31, 2013. 04:09 PM | 2 Likes Like |Link to Comment