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  (Source: WSJ)
Shareholder meeting is expected to be a roast of management, as shareholders bemoan stock plunge

New name, same old company; that's look of BlackBerry Ltd.'s (TSE:BB"surprise" Q2 2013 loss.  It appears that the company's long-delayed modern operating system makeover, BlackBerry 10 (BB10), has been largely met with customer apathy and CEO Thorsten Heins bold claims of a recovery crumbling.

I. Investors Rebuke CEO Heins

Shares of BB had peaked back in January 2013 amid hope that BB10 could reverse RIM/BB's slide.  Stock prices hit a high of $18.49 USD, a three-fold increase from around $6 in late 2012.  But since share prices have started to plummet back downward, hovering around $10 USD this week.

The flop may cost Mr. Heins his job, and at the least is expected to trigger big changes as investor rage quietly boils ahead of the annual shareholder meeting.  John Goldsmith, the deputy head of equities at Montrusco Bolton (MUTF_CA:SSQ0638), holds 1.5m shares of BB -- roughly $15M USD of total investment.  He angrily commented to Reuters on the Q2 loss, "The results were a quasi death knell for BlackBerry.  The share move last week was very violent. I think you are going to get people standing up and making their voices heard at the AGM."

BB10 phones
Investors like the Q10 (left) and Z10 (right), but fear they can't compete w/ Apple and Samsung

Mr. Goldsmith says he loves the BB10 devices and thinks they could in theory do great -- just not in the hands of BB.  He says compared to Apple, Inc. (AAPL) and Samsung Electronics Comp., Ltd. (KSC:005930) BB is fish in a shark tank.  

He comments, "The problem here is they are facing Goliaths like Apple and Samsung, forget about the other Android devices. With a research and development budget that is a fraction of that of those two companies, how on earth can they compete?  I love fairy tale endings as much as the next person, but this is David versus two Goliaths, so good luck."

CEO Thorsten Heins admitted that BB will likely post another loss in Q3 2013, but insists that the gadget maker is "on the right track".  He stated in the earnings call, "We stay the course. This is the course that management has created and it is course that the board has accepted."
 

The BB10 flop may cost CEO Thorsten Heins his job. [Image Source: Reuters]

And he comments to Reuters, "This is a year of investment. We have managed our cash carefully and prudently, and we now have the funds to invest, so this is the 'create the future' year."

II. Investors Maul Butchering BlackBerry, Selling Off Units Separately

Investors appear to be taking issue, though with his views of prudence, which include monetary losses.

Investors aren't quite united, though, in what they want to see done.  Some want management change; others are renewing cries for a sale -- either as a whole entity or in parts.  The latter plan could involve individual sales of RIM's device and services units, as well as its patent portfolio.  But some aren't convinced there's much to recover from such a butchering of the BB carcass.  Comments on top-20 RIM shareholder who spoke anonymously due to company policies, "I think the pieces were worth more than the whole a year or two ago, but that's becoming less of a convincing argument and I am not sure it is true."

BB10
Talk of chopping up BlackBerry is picking back up.  [Image Source: Unknown]

But Canadian officials have already given preliminary clearance to the possibility of a sale, should it need to happen.

Whether its a sale or a leadership shakeup, shareholders do seem united that a big change is needed to save any part of BB.  And they're willing to put pressure on the board.  Yacktman Asset Management (YACKX) -- which owns 5.8m shares (~$58M USD) -- is among those looking forward to the chance to press the issue at the annual general shareholder meeting.

RIMdenberg
The RIMdenberg can't seem to catch a break.

He warns, "It is the board's job to deal with this objectively, and we hope they would be objective enough to do the best thing for the shareholders."

Source: Reuters



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Just make BBM an app and be done with it.
By quiksilvr on 7/8/2013 2:52:10 PM , Rating: 2
There is no point to make hardware anymore for RIM. They have a killer app; they should make it available to everyone.




By quiksilvr on 7/8/2013 2:53:23 PM , Rating: 2
RE: Just make BBM an app and be done with it.
By Flunk on 7/8/2013 3:19:47 PM , Rating: 2
Truthfully, a lot of people are dropping BBM too.


RE: Just make BBM an app and be done with it.
By AntiM on 7/8/2013 3:43:36 PM , Rating: 3
As a desktop support person, I don't care if I ever seen another BB device. BES is a twisted nightmare. I will breathe a sigh of relief when they stop making those devices.


RE: Just make BBM an app and be done with it.
By SAN-Man on 7/8/2013 3:59:01 PM , Rating: 2
I actually had to deploy and support it from the systems side. Something I will not willingly do again.


RE: Just make BBM an app and be done with it.
By retrospooty on 7/8/2013 5:36:12 PM , Rating: 5
Yup. The BES model is pretty much useless.

EAS model (Any Android, IOS, WP, even Palm OS supports it)
Exchange server > Internet > your phone.
Cost = no additional charge beyond exchange license.

BES model
Exchange server > BES Server onsite > Internet > Blackberry network server > Internet > your phone.
Cost = $20 per user per month beyond exchange license.

Disadvantages.
- 1 more server to support and a potential failure point.
- 1 more network stop and potential fail point
- Per user Cost
- IT cost to support.

Advantage.
- More secure (but no mobile phone is secure, so its kind of pointless)


RE: Just make BBM an app and be done with it.
By Nutzo on 7/9/2013 10:58:54 AM , Rating: 2
Rim made the BES server available for free a few years ago, so my cost per BES user per month is zero.

Most the phone providers charge an extra $10 for the BES service, but then company pays people a set amount for thier phone service, so it doesn't change our costs.

I have BES running as a virtual server, so my costs is almost nothing to support the few Blackberry users I have left.


RE: Just make BBM an app and be done with it.
By retrospooty on 7/9/2013 11:40:18 AM , Rating: 2
"my costs is almost nothing to support the few Blackberry users I have left ."

Exactly. ;)


RE: Just make BBM an app and be done with it.
By retrospooty on 7/9/2013 11:43:11 AM , Rating: 2
I meant to add...

Exactly ;) ... We are in the same boat and as our users get new phones the official policy is "you can get any phone you want that isnt a Blackberry" and we will shut it down. Since its a planned obsolescence, we arent bothering to visualize it. We have 8 or 9 people left, and when they are upgraded, we turn the wretched thing off permanently.


RE: Just make BBM an app and be done with it.
By Gwalachmai on 7/9/2013 9:11:00 PM , Rating: 2
You can do that with blackberry 10, as long as you don't mind the insecurity and poor management of activesync which you've already accepted for the idrones and fandroids.


By retrospooty on 7/10/2013 8:20:49 PM , Rating: 2
Yeah, well it beats the two additional failure points and the extra charge for a service that is a decade past its prime... Right, everyone is idrones and fandroids. BlackBerry is where its at. LOL.


RE: Just make BBM an app and be done with it.
By Gwalachmai on 7/9/2013 9:04:16 PM , Rating: 2
Not really, as the blackberry infrastructure is plumbed directly into the hundreds of phone companies, it doesn't go back across the internet.
BES has also been free for small companies for years.

Then there's also the BlackBerry 10 model, where you can choose what you call "EAS model" if you want, and if you've already accepted the insecurity of exposing your Exchange server to the internet, or the "BES model" if you ant better security, management, and compression.


By retrospooty on 7/10/2013 8:22:48 PM , Rating: 2
Move on dude, the rest of planet Earth already has. BlackBerry is over.


By retrospooty on 7/8/2013 3:59:26 PM , Rating: 3
How is it a "killer app" ? Its just another messaging service on top of the several everyone already has.

Another messaging app or not, how will that help rim? No-one is going to pay for it.


RE: Just make BBM an app and be done with it.
By BillyBatson on 7/8/2013 9:06:58 PM , Rating: 2
BBM IS now an app available on iOS and android.
However BBM isn't popular anymore, those who made the switch to iOS have grown to love imessenger, and those on android now have realized they never needed BBM to begin with. It's only plus was to stalkers wanting to see if you have read but not replied to their message. The number scheme is also ridiculous it's harder to remember than your phone number.


By Gwalachmai on 7/9/2013 9:31:06 PM , Rating: 2
"The number scheme"? You haven't needed PIN since about 2005 when you were able to invite by email, SMS, or more recently QR codes or NFC.


The problem
By Rage187 on 7/8/2013 3:41:59 PM , Rating: 2
The problem is, they missed 2 phone upgrade cycles. We were a Blackberry company, we made it through the first two years, and when they had nothing ready that could compete, we switched to iPhones, thousands of them.




RE: The problem
By Argon18 on 7/8/2013 3:52:40 PM , Rating: 2
Missing upgrade cycles isn't such a problem when you offer an exclusive product. Only a few years ago, government agencies and fortune 500 companies wouldn't even consider a non-Blackberry device. It was the only option for hand-held corporate messaging. Remember, Blackberry offered "secure email in your pocket" over a decade ago. I know, I had a blackberry in 2001. It was an exclusive thing that no other company offered.

Demand from end users who are more familiar with Apple's consumer devices, combined with encrypted email capability on iOS and Android is what put BB under.

In other words, plain old market competition. RIM was foolish if they thought they'd be the exclusive provider forever. Sounds like they did think that, and their strategy depended on it. Poor management decisions.


RE: The problem
By retrospooty on 7/8/2013 4:04:18 PM , Rating: 2
" RIM was foolish if they thought they'd be the exclusive provider forever. Sounds like they did think that, and their strategy depended on it. Poor management decisions."

That is exactly what happened. Ex ceo Lazardis was quoted many times saying things like "Our customers dont want large screen multitouch displays, they want real keyboards". They sat by and did nothing for years.

Finally in 2010 they got in line and partnered up with QNX (and later bought the company). From an already good OS it took 3 full years to release a phone... 3 years. Then, when it came this year, it was equal to last years high end phones. There is just no way they can compete. Bad decisions + slow reactions just wont cut it in todays smartphone market.


RE: The problem
By Chadder007 on 7/8/2013 5:52:14 PM , Rating: 2
After having tried Windows phone for two weeks along with BB10....I like BB10 better as an OS. Just more so worried about future support.


RE: The problem
By retrospooty on 7/9/2013 7:55:44 AM , Rating: 2
It is a decent OS. Had they released it a few years earlier they could have had something. But... Too slow to decide and too slow to produce once decided.


RE: The problem
By Nutzo on 7/9/2013 10:52:56 AM , Rating: 2
One of my last Blackberry users receintly bought a new phone. They stuck with a Blackberry because the like the keyboard. Seems to be the main reason for the last couple holdouts.

I setup the new phone to use active sync, so that's one less on my old Blackberry server. Now if I can only get the last 2 users to upgrade....


Abort!!
By RaistlinZ on 7/8/2013 10:09:50 PM , Rating: 2
"Stay the course" is usually uttered when ego outweighs common sense.

When you see an iceberg approaching, you don't "stay the course". You acknowledge that the course you're on is headed for disaster, and you alter course to avoid calamity.

It seems these big CEO's would rather their company sink than admit a change in vision is needed.




RE: Abort!!
By Guspaz on 7/9/2013 10:23:11 AM , Rating: 2
Actually, all evidence is that Titanic would have survived a head-on collision with the iceberg (had it stayed the course). The bow would have crumpled, but a limited number of watertight compartments would have flooded, maintaining buoyancy. It was the huge gouge in the side of the ship that sank it; too many compartments flooded. Trying to change course sunk the Titanic.


RE: Abort!!
By retrospooty on 7/9/2013 11:47:39 AM , Rating: 2
Also, watching where the f$%k you are going would have worked for both situations ;)


sad
By crispbp04 on 7/9/2013 8:46:16 AM , Rating: 2
I've said it before I'll say it again, they should be in bed with MSFT & NOK, that threesome would have been great for everybody... hopefully this doesn't mean the death of BBRY




RE: sad
By retrospooty on 7/9/2013 9:09:21 AM , Rating: 2
LOL. True... But the lethal shot was fired 4-5 years ago, they have just been bleeding to death ever since.


RE: sad
By fteoath64 on 7/9/2013 9:16:53 AM , Rating: 2
"they should be in bed with MSFT & NOK". If they had, it would have saved their enterprise business and things would not be been so grim for BB. Even now, Samsung is not really interested in buying BB anymore. They would rather tough it up with Tizen (another doomed effort of Intel..) but at least Android 4.2.2 is still a sure thing for them and 4.3 is coming while 5.0 is delayed.


It's time for an Elop
By YearOfTheDingo on 7/8/2013 4:49:07 PM , Rating: 2
I would spin off software and services to a separate company and solicit a large investment from Microsoft in the remaining hardware business (which would go Windows, naturally). Probably the best way to secure shareholder value at this point.




Negative press
By Zingam on 7/9/2013 2:48:36 PM , Rating: 2
Is writing negative press a paid business? I mean did it take for Apple 1 month or 2 month or 3 months for Google to become a success and to sell 20 000 000 devices?

Things might not be rosy but to say that it is a flop... already... well is Windows Phone a flop? I don't nearly see the amount of negative press about Windows Phone.




"Folks that want porn can buy an Android phone." -- Steve Jobs














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