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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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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....


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














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