Investing Requires Risk

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I am long on BlackBerry.  With the stock losing near 30% on Friday, June 28, 2013, closing at $10.46 on NASDAQ,  because of many reasons that were listed in the links below,  I lost whatever gains I had made.  Since I bought a good bulk of my shares in September of 2012, when BBRY was near $6, and overall my stock purchases were with a weighted average of about $10.4, I am not really losing money.  Yet, it hurts to give up the thousands of dollars gained.  Some would say, I should have sold it before the Friday Q1-2014 earnings report. Betting on the stock market is like gambling, you have to be willing to set aside a given dollar amount that you can risk losing intelligently.  I have faith that the bad days for BBRY are behind them, and I am optimistic that in the long term I can make money.  Now is a good time to get more stock! Sure, I am not happy with the decision, at this time, that the PlayBook is now not getting BB10, but I think that the CEO, Thorsten Heins,  is sure and steady and has conviction to take the company to profitability with good earnings for the share holders.

Now might be a good time to take a risk on BBRY since the Q10 is now in late June in the market in the USA where the Z10 has set the standard for a new mobile OS, the Q5 is about to be launched world-wide, a lower priced OS10 model, the A10 phablet is rumored to be launching this Fall, a new OS 7.2 phone leveraging BBM with BIS in developing and other markets will add to revenue while OS 10 marketing and placement in developed markets is ramped up.  Let’s not forget that the QNX based BB10 OS is a unique platform for machine to machine telematics.

I still hope that eventually the PlayBook will get a version of OS10. Come on Thor, 10.0.10.648 on the PlayBook, that would be a way better experience than the current QNX OS 2.x on the PlayBook.  You can do it!  Nothing in life is perfect.

Links reviewing the June 28, 2013 earning call:

Marketing Needs to Be Holistic

https://pfcsystems.wordpress.com/2013/06/28/marketing-needs-to-be-holistic/

BlackBerry Stock Down 30%

https://pfcsystems.wordpress.com/2013/06/28/blackberry-stock-down-30/

No article or post on this site should be viewed as recommendation for a particular stock purchase.  Betting on the stock market comes with a risk of losing money!

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Marketing Needs to Be Holistic

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ho·lis·tic

/hōˈlistik/

Adjective
  1. Characterized by comprehension of the parts of something as intimately interconnected and explicable only by reference to the whole.

After today’s earning report debacle, I am left asking what role BlacKBerry marketing plays in the messaging component of an earnings call?  Are they there to make sure that what the CEO says won’t compromise the marketing effort? Is the messaging measured and adjusted against the global goals to grow the product offering?  Is the branding image considered, is the value on OS 10 considered? Is scripting provided/suggested to stay on point in a way that the message does not negatively impact the stock value? I alluded to much of this in my other post today:

BlackBerry Stock Down 30%

https://pfcsystems.wordpress.com/2013/06/28/blackberry-stock-down-30/

Being on point at an earnings call and in line with marketing is critical to minimize negative impact on a stock.  The messaging today should have been:

The premium OS is OS 10, but we need to put out OS7 devices for emerging markets to help with our global sales numbers around the world, as we ramp up our efforts in the USA.  

Instead, the PlayBook has become an issue and surrounding this the value that the executives are placing on OS10.  There are enough PlayBooks out there to use in a marketing effort by updating to OS10–some version of it.  I want to know what is really going on here?

My take:

As for the PlayBook either don’t mention it or leave developing the OS further/porting BB10 to it an option or explain why it is not an option, at this point.  Personally, I don’t buy into not having enough RAM for BB10, as I run OS10.0.10.648 full on on my Dev Alpha A with 1GB of RAM and similar specs to the legacy PlayBook.  It is, even if limited as some claim in a very subjective way, a better experience for me than the PlayBook OS 2.x.]

I paid $399 for the 32GB back in the day when no one in the USA had a clue, believing/evangelizing on the OS 10 to come. Do they,BBRY, have a deal with SONY or the like to stay out of the tablet space for licensing the OS10? What is really going on? I believe that HP got in trouble with Microsoft when their tablet debacle occurred. It is time for transparency and to hold the BlackBerry executives accountable for the blood letting of the stock today! I lost $3-4 per share today–awful! Thousands of dollars,but I am long on BBRY and the stock market is a gamble where you have to be ready to lose it all! I hope this won’t happen and that the BlackBerry/RIM board has a good chat with Thor and the others on what they say in public and the ramifications. I am not impressed on the execution of many of the marketing aspects of a product/image/brand–the approach has to be holistic!  One only need look at what happened to HP while under Leo Apotheker and what appeared to be mixed messaging.  BlackBerry is not HP, and cannot survive such errors in messaging. Marketing is about perception and creating a reality. After this call things don’t look good. Are the executives looking to sell the company and exit with golden parachutes on the backs of the stock holders?  Come on guys, you can move BlackBerry forward and do better!

Posted via CB10

BlackBerry Stock Down 30%

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I wonder how much of today’s stock plunge was due to mis- handling, mis -wording, mis- marketing, mis-spinning of the Q1 earnings report.  Are these reports rehearsed at all with the marketing people?  I am there with everyone that bad numbers lead to a plunge, but can what the CEO of a company says exasperate this by the spin the press/media makes of what is said?  The old adage holds true that if you have nothing good to say, it is better not to say anything at all, or limit what you say, within the confines of what is required.  A statement that BlackBerry 10 is not coming to PlayBook while stating that a new BB OS 7 phone is coming seems odd.  It says better to have resources in an old platform than in a new one that loyal people bought into at a premium.  Even if this is a thought–no need to say so, if there is no obvious rationale for such a statement, or if it is not relevant with so few PlayBook users. I understand the math/rationale, that there are tens of millions of BB OS 7 users, and only tens of thousands of PlayBook users; more low end BBOS7 market users than high end BB10 market share, and the rate of increase in BB10 market share is not enough to offset the declining BBOS 7 sales due to a shift in “NEW” devices.  Yes, we need another BBOS7 device to help us with our sales numbers in developing markets. Maybe the CEO knows something else we don’t.  Transparency is key or don’t open a can of worms that starts a downward marketing spiral and adds to the stock decline of near 30% today.  Here is some of the back and forth on today’s noon CBS 2 NYC newscast, originated by Mary Cristoforis’ Business Report which included the fact that BBRY is down near 30% by noon EST:

“I miss my old BlackBerry, but … BlackBerry… who has a BlackBerry anymore–everyone has IPhones”, Alice Gainer.  “I wouldn’t say that, many people still have BlackBerry phones”, Chris Wragge. “Yes, they are an IPhone competitor”, Maria Cristoferis”!

That there was no mention of the Z10/Q10/Q5 speaks volumes to the marketing work ahead for BBRY, especially in the USA market. (BlackBerry, this is your cue to send Chris Wragge, and the CBS 2 crew a mix of Z10 and Q10 devices!) I was watching the mid-day CBS 2 News in NYC while reading the posts on CrackBerry, specifically the one with all the irate PlayBook owners which did not need to happen or be the media focus on CrackBerry due to the statements made at the earnings report:

BlackBerry announces BB10 is not coming to PlayBook

http://crackberry.com/blackberry-announces-bb10-not-coming-playbook

As a stock owner, I am not pleased, with today’s downward spiral, and with the way the call went with what was said that was not of major relevance to the numbers at hand.  Sticking to a script might be the way to go in the future!  It is enough of an uphill battle to gain market share in the USA and around the world with marketing campaigns, this sort of unfocused reporting leads to a demise of any gains, and provides fodder to the nay sayers! I like Thorsten Heins, and I believe he is doing a lot of good, but he needs to watch what he says, as it carries serious repercussions with the stock.  One only need look at what happened to HP while under Leo Apotheker and what appeared to be mixed messaging. Being on point at an earnings call and in line with marketing is critical to minimize negative impact on a stock.  The messaging:

The premium OS is OS 10, but we need to put out OS7 devices for emerging markets to help with our global sales numbers around the world, as we ramp up our efforts in the USA.  

[Off message and therefore an earnings call is not the place for thoughts on the PlayBook, but since it was brought up my take follows:

As for the PlayBook either don’t mention it or leave developing the OS further/porting BB10 to it an option or explain why it is not an option, at this point.  Personally, I don’t buy into not having enough RAM for BB10, as I run OS10.0.10.648 full on on my Dev Alpha A with 1GB of RAM and similar specs to the legacy PlayBook.  It is, even if limited as some claim in a very subjective way, a better experience for me than the PlayBook OS 2.x.]

How is BBRY Stock Fairing Before The Upcoming Earnings Call?

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by Fernando Commodari, Ph.D.

Two days ago when the markets were down (NASDAQ), BBRY was bucking the trend and was up.  Today it is closing on NASDAQ up at $14.91 and on the TSE up at $15.63.  I believe that the next earnings report will be a pivotal turn-around moment for the stock and the shorts will begin to get squeezed. Today  Zacks Equity Research reports that BBRY is likely to top its earnings when it reports first-quarter fiscal 2014 results before the opening bell on Jun 28, 2013. They state:”The combination of BBRY’s Zacks Rank #3 (Hold) and +100.00% ESP makes us confident of a positive earnings beat on Jun 28, 2013.”

The report can be found here:

BlackBerry Likely to Top Earnings

On Seeking Alpha, Steve “Ziffster” discusses:  “The Longs & Shorts On BlackBerry”.  In an attempt to be analytical about trying to predict a turn around for BBRY he discusses key factors for a  BBRY turn around:

“Turnarounds are a slow processes and success is difficult to predict. However, below are the indicators worth watching and how BlackBerry currently fairs.

  • Profitability – Although one quarter is not enough to establish a trend, another positive quarter should demonstrate BlackBerry’s ability to earn a profit.
  • Cash Flow and Reserves – This was never an issue for BlackBerry.
  • Gross Sales – Unfortunately for BlackBerry, sales as currently reported are still declining quarter over quarter and this will continue if BB7 sales decrease faster than BB10 sales increase.
  • Turnover – Financial statements have never shown problems with accounts payable or receivable turnover. Inventory turnover (once channel stuffing is calculated in), which was a problem, improved as of the last quarterly.
  • Market Share – Hard numbers provided in previous financial statements confirmed that market share was still dropping and information reported since then has been mixed.
  • Resource Optimization / Overhead – BlackBerry has taken significant steps to optimize efficiency. The last quarterly report suggested margins were now among the highest in the industry. Some analysts have questioned if these gains were real or if they were artificial due to one-time adjustments so this point is worth watching.
  • Research & Development – BlackBerry is in the midst of its largest roll-out ever including transitioning to an entirely new platform (BB7 to BB10), multiple new devices, transitioning its services platform to multivendor and expanding QNX functionality to include paid services. So far all of these initiatives seem to be proceeding smoothly.
  • Financial Stability – BlackBerry has never had problems repaying debt, paying employee benefits, performing plant maintenance, or replacing manufacturing machinery in a timely fashion.
  • Corporate Moral – Staff is much more upbeat lately. Employees of all levels are encouraged to voice their ideas openly and a slew of new social activities are being offered to employees by the company. This time last year staff was depressed about the future of the company and felt left out.
  • Clear Vision – Thorsten Heins has clearly articulated where he sees the company headed, and has done a good job selling his vision. However, what’s missing are the details of how the changes will contribute to the bottom line.”

and surmises:

“Overall signs are positive, but there are enough concerns to warrant caution until more information is available. Things to watch for in the June 28, quarterly report are:

  • Has the decline in gross revenue stopped?
  • Has the decline in market share stopped?
  • Has cash flow remained positive?
  • Have cash reserves been preserved?
  • Have gross margins been maintained?
  • Have clues been provided regarding how BlackBerry intends to monetize ‘Free’ multi-platform BBM?

Earnings per Share (EPS) is of course important, and may have a significant impact on the market short term, but from a long-term perspective the above points will provide better insight into the status of the turnaround.

Subscriber base has long been suggested as a good indicator of BlackBerry’s health. However, due to changes in BlackBerry’s service model, this is no longer the case. Value will be limited to primarily just indicating the number of subscribers still with BB7 devices.”

He then states:

“In a bid to resolve this conundrum, NYU Professor Edward Altman introduced the Z-score formula in the late 1960s. Rather than search for a single best ratio, Altman built a model that distills five key performance ratios into a single score. As it turns out, the Z-score gives investors a pretty good snapshot of corporate financial health. Here we look at how to calculate the Z-score and how investors can use it to help make buy and sell decisions.

Here is the formula (for manufacturing firms), which is built out of the five weighted financial ratios:

Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Where:

A = Working Capital / Total Assets
B = Retained Earnings / Total Assets
C = Earnings Before Interest & Tax / Total Assets
D = Market Value of Equity / Total Liabilities
E = Sales / Total Assets”

BlackBerry’s current Z Score works out to around 2.5, which indicates a company could go either way.  He concludes:

“Although midterm prospects are definitely looking up for BlackBerry, it is too early to call what will happen longer term as signs are mixed. If the next few quarters are positive, most of the naysayer’s should stop questioning if the turnaround can be sustained and share price should stabilize.

The gamble every investor makes standing on the sidelines until the future is known is that they miss out on the substantial gains possible with speculative stock. BlackBerry could end up being the most undervalued stock of the year… or then again might not.

Although I remain long, I appreciate why BlackBerry is so highly shorted.”

The Ziffster story is here:

BlackBerry Longs Versus Shorts 

Kofi Bofha, this morning presented a good case for not shorting BBRY, in reviewing where the stock has gone since its low of $6.22 on September 24, 2012.

The Boha article is here:

BlackBerry: Prepare For A Short Squeeze 

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In another post, on June 23, 2013:

Channel Checks for Research In Motion Ltd (BBRY) Look Very Good Pre-Earnings: Misek

“Peter Misek, CFA, CPA at Jefferies thinks that in the near term, Research In Motion Ltd (BBRY) may deliver a surprise. Results from suppliers Jabil/Wistron and another round of UK store checks lend continued confidence in their far above Street estimates. Misek expects limited Aug Q guidance details but thinks sell-through will ultimately prove that BB10 is not just a one quarter channel fill phenomenon”

Todd McDonald, also weighed in this morning with his valuation and concluding analysis:

“Technical Review

BlackBerry shares have formed a symmetrical triangle, trading around the 50-day SMA throughout the year. The consolidation pattern indicates that a breakout could happen either way, making the upcoming report crucial if it breaks. Should earnings surprise to the upside, look for initial resistance at the $15-level, followed by the descending trend line near $15.50. If earnings disappoint, potential support is near $13.50, followed by the 200-day SMA near $12.50.”

The McDonald article is here:

BlackBerry Earnings Preview: Q1 2014

As mentioned above, I believe that the next earnings report will be a pivotal turn-around moment for the stock and the shorts will begin to get squeezed, based on an objective review of the available data. This will be especially the case if BBRY meets or exceeds anticipated earnings. The comments in the above referenced articles/posts, are also worth reviewing.  Based on a review of the trends over the last year and the momentum going forward, I expect the stock to begin to move away, in an upward direction, from the $13-$14 mark it has been hovering at during this period of adjustment with the the Z10 and Q10 launch and re-invention.  I expect, with a positive earnings call, that the stock will approach the $20 mark by the Fall, with the launch of multiple new OS 10 devices, including the A10 and Q5.  This is what I see in MY crystal ball, but if the numbers aren’t there, things can move in the opposite direction, in the short term.

I am long on BBRY.  Nothing written on this site should be viewed as an endorsement of any stock or any stock over another; we cannot predict the market!

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Our New App is Now Available for All BlackBerry Devices

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On Cell Phones (including  OS 5.x to 7.x and OS10)

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On the playbook tablet:

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Release 1.0 (Approved)
File Bundle Name Platform Min OS Files Devices
OS5 and OS6 BBOS 5.0.0 12 19
OS7 BBOS 7.0.0 12 14
Playbook QNX 1.0.7 1 1
OS10 QNX 10.0.0 1 3

 

Download the “PFCSystems” app on BlackBerry World:

http://appworld.blackberry.com/webstore/content/24419891/?countrycode=US

Personal and Work With Same Native User Experience

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John demos live BES 10 system on stage at the NYC BlackBerry Experience Forum.”I notice IOS device is being left out, Greg, “good idea, don’ t want to take down the mail server in Waterloo.”

How to provision an app in the work space that an employee wants:  BES 10 allows for optional work apps to be set for a specific user. Copy an app from BlackBerry world and paste it to the admin console and it becomes available for use.

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Security is built into the DNA of BES and BB10.  The message we got from Wall St., Bay St., hospitals etc, is that it does not matter how sexy the new platform is, but if it is not secure to the core, “I don’t want it!”

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How do we provide control to the enterprise and yet privacy to the end user? I ‘m a hockey dad, but I need to have one view on the calendar, but separate and secure. Personal apps are in personal sandbox.  The result is one device with the same native experience for work and personal.

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“Secure Workspace” is a new product within BES 10. Can manage and secure IOS and Android devices.

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4200 unique enterprise and government entities already signed up in North America for the “Enterprise Ready” Transition programme.

 

If this blog makes your life more fun, download the “PFCSystems” app on BlackBerry World:

http://appworld.blackberry.com/webstore/content/24419891/?countrycode=US

Demo of Devices

Gregg Ostrownoski is demonstrating the Z10, in the US market, here in NYC as we  get closer to the USA launch.  This is not new for developers having had the luxury of having a Dev Alpha device, but the full house audience is very attentive.  This is new for many of the audience members. Gregg taking a photo of the VP and putting a funky grin on his face with time shift, before tweeting it out…

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