BlackBerry Q1 F2014 results: Are they executing?

Following BlackBerry's first quarter fiscal 2014 earnings report and investor call, CrackBerry's in-house analyst Chris Umiastowski weighs in

BlackBerry
By Chris Umiastowski on 28 Jun 2013 10:56 am EDT
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Waterloo is down this morning. BlackBerry reported their results for fiscal Q1 2014, and the stock market isn’t impressed. Quite frankly, I can’t blame anyone for feeling like the results leave a lot to be desired. Last quarter we cheered, and I wrote up my thoughts on the quarter to the AC/DC song “Back in Black”. This time?  I’m up north at the cottage and the power is out. My Wi-Fi is off to preserve what life I’ve got left in my laptop. It seems fitting, considering BlackBerry stock is down more than 25% today. There isn’t much confidence on Wall Street.

As much as it hurts (I’m still a shareholder), we knew going into this set of quarterly results that it would not be a clean quarter, and that we’d need to wait another couple of quarters to see how things really shake out. I’ll elaborate on this below.

First let’s go through some of the basic numbers. Revenue was $3.1 billion, and that’s 15% higher than last quarter. This is the top line figure, but it’s assembled from a bunch of moving parts. We have BlackBerry 10 growing, BlackBerry 7 (legacy BBOS) declining, and we also have service revenue declining.

The company shipped 6.8 million devices in the quarter. That’s up from 6 million last quarter. Under the covers, it works out to be approximately 2.7 million BlackBerry 10 devices and 4.1 million legacy devices. Last quarter, if you recall, they had only one month of BlackBerry 10 shipments under their belt. They shipped approximately one million Z10 units, meaning they sold 5 million legacy devices.

The legacy decline is hitting hard. Gross margin on legacy hardware was running somewhere close to zero, we think. With a 20% decline in shipments and therefore worse economies of scale, I think it’s fair to say this company is losing money on BBOS. We need to see the transition to BB10 happen as quickly as possible.

So how is the ramp up going on BlackBerry 10?  It’s a lot weaker than most analysts expected. 2.7 million units is less than one million per month. The executive commentary around the launch really seems to translate to, “Well, the Z10 proved that we have a good product, but it’s not selling very well. We need to see the Q10 and Q5 hit the global market to really execute a comeback on hardware.”  That’s not what they said, it’s my interpretation - just to be clear.

Q1 ended May. The Z10 launched in the US late March, so there were two full months of availability of BB10 on US soil. And how did things go?  Good, but not great. North American revenue for the company were up 30% sequentially. I think this is an OK start to things, but I believe much of the growth came from Canada, where BlackBerry seems to have experienced a much better upgrade cycle.

Still, you can’t argue with the fact that sales accelerated in every region. Yes, that’s correct - every region. Technically sales fell in Latin America. But this is entirely due to a revenue recognition problem stemming from a political issue in Venezuela. BlackBerry wasn’t able to record $72 million in service revenue. If we add this back, Latin America growth was 15%. Not bad considering the Z10 is a pretty expensive device for that part of the world. It really makes me interested to see how the Q5 does, and this is exactly why we need to be a little bit patient.

Gross margin was another hot topic today. Last quarter we celebrated the return to 40% margin. This quarter?  Anemic at just under 34%. If we add back 2% to ignore the Venezuela service revenue collection problem we get 36%, which is still a huge decline from last quarter. How can we reconcile a declining gross margin given the increasing mix towards what is supposed to be a higher margin hardware rollout?  There seem to be only two possible answers. Either the Z10 is experiencing more aggressive price cuts than anticipated, or the negative contribution margin from declining BBOS sales is driving the margin decrease. Most likely it’s both.

On the balance sheet, BlackBerry has 3.1 billion dollars in cash. They’ll likely consume a good chunk of this over the rest of the year as they invest for growth. They need to invest in growth. They need to get the Q10 and Q5 into as many hands as possible. There are only 72 million BlackBerry subscribers left, down from 76 million last quarter and 79 million the quarter before that. There is no time to delay. I think BlackBerry needs to get BB10 into the emerging markets super fast. They need to stop selling BBOS and support it with a skeleton crew while incentivizing enterprises to move over to BB10 as fast as possible. They shouldn’t be pumping out another new BBOS model in 2013. They’re prolonging the inevitable.

In summary, after digesting the quarterly results for only a few hours (and with not enough coffee since the power is still out), it doesn’t look good. However, as we knew going in, we have to see what happens when the Q10 is in full swing and we have to see what happens in emerging markets when the Q5 hits. This is still a company whose subscribers want plastic keyboards. Until they deliver BB10 to the world (including emerging markets) with such a keyboard, we really don’t know what this company looks like financially.

On top of this, it’s nice to see that most large enterprises are at least testing out BES 10. There is a big opportunity to sell $99 per year licenses (CALs) to iOS and Android users who are on the BYOD model at their place of work. This works out to over $8 per month, which is more than the traditional BES ARPU. Years ago it was rare for people to carry a smartphone unless their work provided one. Now everyone carries one and employers are migrating away from providing one at their cost. So the number of enterprise smartphones is climbing big time. If BlackBerry can keep its lead they have a real chance at making a lot of coin here. But it’s still very early days.

In the mean time, Wall Street wants results yesterday. BlackBerry did not deliver. So the stock will suffer.

More BBRY News and Analysis

Topics: BBRY Editorial

Reader comments

BlackBerry Q1 F2014 results: Are they executing?

368 Comments

Today is the day that sealed the deal. Anyone who was contemplating dropping their apple or android or wp8 for a BlackBerry is gone! The announcement of no support for the PlayBook could not have come at a worst time. What an idiot Heins. The world has now confirmed the end of BlackBerry. Even I see that. What an idiot!

Where's my FULL BRIDGE Mr. Heins? Please return it!

There are 76 M BB subscribers. Only about 2M of them have a BB10 device. So sure - drop almost all support for BBOS. That should make people want to upgrade? Even though a good portion of the subscribers on on a BES and can't upgrade because BES 10.1 has not been fully tested and RSA is not available.

You can only keep shooting yourself so often before blood loss becomes irreversible.

IMHO, the market overreacted today and the shares should not be down by over 25%. Yes it was a terrible, terrible quarter, but blackberry is far from being dead. They still have over 70M subscribers. BES10 roll out is happening and 18,000 companies have already installed/downloaded/purchased it... Q10 has been launched and should fare a little better than Z10... Q5 is starting to be launched... BBM is going across platform and can potentially be a good source for service revenue... there is still a potential for licensing bb10... A10 is on the pipeline...

I am very disappointed with today's earnings results and I'm even ready to admit that Z10 might be dead on arrival. But I don't think this necessarily means blackberry has no chance from here. I still see upside and I will probably be accumulating more shares at this low level just like how I accumulated shares when RIM was trading between $6 and $7. Blackberry is still far from being dead.

It's not a sprint but a longer race. Blackberry has had worse quarters in the past (not so long ago) and I don't think today's results is something that should cause a "jump off the bridge" reaction. Shipping 2.7M bb10 devices is not the end of the world. Revenue was up. Total overall device shipment is up. EPS loss is 13cents...bad but again not the end of the world. I will stay LONG for now.

Q10 being too late in USA is a reason for this, look for second quarter to be much better. People I work with are loving what they see on my Q10 and are likely to be going to a Q or a Z10 soon. This is not the end, folks. Things take time.

Posted via CB10

Yes, but they have nothing stopping them now. BB10 is out in all large markets, and this wasn't captured in Q1/2014, so the next quarter will be huge. The Q5 and Z5 are coming and so is the A10.

Like Chris stated, all too nicely: SCRAP THAT NEW BB7 DEVICE! They need to get the entire company behind BB10. Can't beat a dead horse, teach an old dog new tricks, and you can't give the perception that BlackBerry isn't a new company if they're still dreaming in the past. It's just a bonehead move!

I would love it if they put all the personnel for the new BB7 device on a BB10 upgrade for PlayBook.

Really appreciate the balanced write-up, Chris.

You do yourself a disservice by living in denial. BB10 was out in ALL big markets for Q1. The Z10 was out...is it not a BB10 model again?

Next quarter, huge? lol. The Q5 is overpriced for what it's meant to do (shore the market up against cheap Android phones). BBM on Android and iOS will only serve to further weaken the sales of BBOS phones and is bound to steal lots of customers from BlackBerry.

Even fanboys need to get realistic once in a while.

Totally agree, I am/was a fanboy for years but I think this is the beginning of the end for me as a BlackBerry user. This was their big shot and it seems as though they missed it...again. I'll be hanging on to my Z10 in hopes of a miracle in the next 6 mths to one year, but it looks like it's time to jump ship. This disappointment will only give more argument for app developers to not support BlackBerry and in turn losses of subscribers will follow. Very unfortunate.

Posted via CB10

600 new malware programs on Android last year alone and growing. They can have their cheap malware phones. Is the R10 just fiction that someone dreamed up.

Totally disagree with you. BB10 was not out in all large markets for the quarter. The Q just recently came out on Verizon and my local store just got it is stock about two weeks ago. I have been waiting to hold the Q before deciding if I wanted to go with the Q or Z and I know a lot of other people are in the same boat.

Nothing stopping them except for people's phone contracts. This could be a two year process for BB as those contracts expire.

None of the US carriers gave a damn about BB10... they put no effort in promoting it and updating the software like everyone else.

Exactly and that's why most ppl don't know about how good the new BB z10 and Q10 are. Most ppl who are buying are ppl upgrading or from word of mouth not from any advertising. Otherwise I'm sure if the carriers did a much better job of promoting them more ppl would be aware

Posted via CB10

I love my Z10, but to be honest, they aren't that good. They still lack apps that many people want and mine has the old reset bug. I downgraded last night to try to get the official Verizon release (update is not available yet though), and after being on 10.0.9 for less than an hour, i already had a random reboot. It hasn't been a flawless experience to say the least.

Ya that's unfortunate. Your right the random reboot issue is definitely not a pleasant experience and I don't blame you and everyone else who are very annoyed or pissed. I would be so pissed off. And of course the 10.1 update beingdelayed is so not helping either. Even though I never experienced the reboot issue I had my share of issues with my first z10. It was freezing at the lock screen. Eventually I got it replaced and my experience has been better since.

Posted via CB10

Agreed, and one example being Sprint refused to sell the Z10. Interesting because they did not want the Z10 to prevent people from buying the iPhone which they've over-ordered and needed to get rid of them.

No because the Z10 didnt pass muster with Sprint or with US Cellular. Look at the issue Verizon customers have had.

"None of the US carriers gave a damn about BB10."

The US carriers are holding too much inventory of other devices. They're hardly likely to push a phone when their warehouses (and therefore their balance sheets) are full of the competitions devices.

No. U.S. carriers hesitate to support BB 10 because "reboot/reliability" problem with BB 7. BB 7 phones had highest return rate because of "reboot/reliability".

Yet, RIM planted "reboot" again in BB 10. Those in RIM who cannot learn from past mistakes should be fired. Make same mistake twice - this is RIM.

This is a classic chicken and egg problem. Seriously, I think we should stop blaming the carriers and start blaming blackberry. The BB10 phones need to be more awesome. This will fix everything. They already have brand recognition. The phones/OS are simply and unfortunately "meh". This is coming from a Z10 owner.

I agree, I have been in to several Verizon stores since in the last 6 weeks. Not one had more than one sign, and one demo model. Every time I asked about the Z10 or Q10, I got the same look from the employee. Some even dared to ask "why?" With over $3 billion in cash, why are they not paying out huge incentives to devs and to the carriers?
Appears to me, BB is playing a prevent defense. Let BBOS go, bribe the heck out of people with free stuff, and get this thing going!!! Enough already.

I couldn't agree more. I just bought my Z10 2 weeks ago and I feel like AT&T is trying to stifle its presence. The BB10 devices were in the back of the store. Product placement is crap for these devices, and some of the sales men will try to talk you out of buying it to buy one of the S4's.

After leaving the iPhone, for a WP7.5 and then leaving the WP for BB10, I can safely say I'm now finally happy on the smartphone front. And here's to hoping 10.1 officially gets released soon, I'm running Canada's 10.1 and just want to be "official" :)

Here. There is a commission issue. We can't blame RIM for this; neither can we blame the store reps. Samsung and Apple can lower cost on material and labor, RIM can't. It is not RIM's management's fault. It is Ottawa's fault. So, RIM can only play up. I would give credit to Heins for his strategy of play at high end. But unfortunately Heins cannot execute his own plan, he cannot make phones with high quality. To execute, Heins must use disciplines across the entire workforce. I don't see he can do that. Therefore I say he must go although I have high respect on him.

yah when I cancelled my contract for 250 dollars then upgraded to q10 i was questioned with, "are u sure you want a bb? the S4 just came out as well u know and its same price 200 dollars with 3 year contract."

I paid my 450 and went with the q10 despite the sales guy desire to see me on an android.

I had the same thing with vodafone in UK, the sales guy was pushing ios and s4 and tried to put me off getting bb10.

Posted via CB10

Exactly. The ATT website shows the Z10 at the bottom of a list with 46 other smartphones and they have not release 10.1 update either which could fix some of the most annoying issues with the phone. It's obvious that the carriers are not promoting the phone. BB is in deep s#@t

I completely agree. I think the devices are new and people are starting to learn about how innovative they are compared to some recent predecessors. BlackBerry needs to be more attentive to needs of the current users as well by giving them stable OS updates regularly if they don't wish to lose them to android or apple.

Posted via CB10

Sorry pal but the new iphone is coming out soon with better enterprise tools..BB is done, accept it and move on.

iPhone 6 will be a catch up device from Apple. Samsung and BB (and even Microsoft) are out there innovating, and now Apple will be copying that into theire "new" generation. And, unfortunately, a lot of people will believe that Apple ws the one innovating. You can see that here in Europe with Apple's iPhone 5 TV ads. For example, one commerical emphasizes the panorama photo option and it would seem as if only the iPhone has this function. I've had a Sony Xperia arc S for over a year now, and it had this function from the git-go. But, again people will believe that Apple invented it. Sad world....

Indeed, patience is a virtue and i'm still long, it takes time. BB came back 6 months ago, Rome wasn't build in a day.

Thanks for the write up. I was holding my breath to see what you had to say on today's results and while I'm still nervous I am feeling much better than I was.

Posted via CB10

I'd like to be hopeful, but I'm leaning more toward the 'I think it's the end for BlackBerry' side.

This by no means exempts Blackberry from making a comeback - it'll be an uphill struggle, but its possible.

They need to meet positive expectations next quarter, otherwise it will be a spiral race to the bottom. You only get one chance to start over...I never said this before, but I see an acquisition as the best we can hope for as shareholders.

Posted via CB10

MSFT please. Before you hate the idea, think about the possibilities in the Entreprise market in terms of desktops, networks, etc... Imagine XBox with QNX at its core? Windows 10 (skip 9!) built by QNX? MSFT needs to make some changes too if it wants to compete with iOS and Android... BBRY needs a partner to gain market space and capital. Makes sense.

I don't think it will happen. Microsoft doesn't need qnx. Nor Apple. They already have their own established platforms.

Posted via CB10

Shareholders should be demanding for TH and management heads. Again these people have no record in tech - Sinofsky and Forstall are available call them!

I agree. It takes time for a company to get back on their feet. Things will get better. Just give it time. Why do people expect blackberry to be back to normal in only 6 months.

Posted via my white Z10. LG banter- blackberry bold 9900- Z10

Few companies hit rock bottom or close to that and becomes a market leader again. Apple was on of the few, and they seem to be beginning another trip down (albeit slow due to its size), but if it does indeed start, I doubt it would be able to be what it once was. I don´t expect a bright future for BB.

I'm not excepting to be as big as apple. But just back were it's safe.

Posted via my white Z10. LG banter- blackberry bold 9900- Z10

I'm sad, really sad about the news, it hurts a lot ... no BB10 for Playbook, my Z10 now looks like a no success story and it's the same exact words from last quarter, Z10 has been out for only a month thats why it's not showing, yet Q later and it's just 2.7 of which are Q10s. I just panicked and went and bought more shares, i hope, i hope BBRY gets some excited news out.

The Z10 is a success. Folks everywhere just have to see it and try it. My Z10 is in my hand ALL THE TIME! It's a great device, if only folks knew how good it was. * hint to BlackBerry: we need more marketing *

It's true, I was at my sisters on the weekend taking picks with my Z10 showing off how amazing the face recognition features were so that everyone didn't have to pose for 10 photos just to get one good one. I simply selected each face, rotated the time lapse dial until the best headshot was in view, moved on the other faces and then adjusted the background. The response I got was (from an S3 owner) "wow they've got to have this feature on all new cameras". " I think I'm due for an upgrade soon".. Advertise, advertise, Advertise BBRY. If people only knew how terrific a product we have, momentum will build. Word of mouth is not enough.

I own 2 Playbooks but I understand that BlackBerry needs to focus on other things. Beating a dead horse won't revive it. What would a changeover do for the Playbook? Yes it would keep us happy but would it bring any return on investment? Probably not. Better to cut your loses and move to better things. I will agree that a new BBOS device is kind of strange. Get everyone you can to BB10 and get it moving.

If they decide to build a newer model with updated hardware and BB10 on board I will be first in virtual line to pick it up. Loved my PlayBook but I understand the need to carefully allocate resources at this point in the rollout process.

From my sweet BB10 Neutrino powered Z10 :D

The slow rollout is the killer, as evidenced by the fast decline in legacy BBOS users. They perceive (correctly) that their device is now officially outdated, and want to upgrade... however, for months in between the announcements and launch, there are no new BB10 devices to be had... so, they buy whatever is there. The full line up (top, mid, low) tiers should have been made available within weeks of each other.... otherwise BlackBerry essentially advertises against the only (BBOS) products they offer in certain regions!!

Posted via CB10

In other words, they should have approached it as the launch of the BB10 ecosystem... not as individual device launches. Think: "starting next month, you will be able to experience the new BB10 in full touch, qwerty, mid-full touch, mid-qwerty, etc... whatever suits your lifestyle (i.e. Budget), upgrade to BB10!".

This thing of making people wait months and months to take their cash is ludicrous, esp when there are so many decent alternatives always already available.

Posted via CB10

Putting the z10 out first was a good idea. Myself and many other diehard physical keyboard users would never have even given it a chance had the q10 and z10 been released at the same time.

As it stands now, I am very happy that I went for the z10 and love the touch keyboard.

From the ZED via CB10.. booyah!

"The slow rollout is the killer"

The slow roll out is to avoid having to build massive amounts of inventory only for them not to sell. By rolling out one market at a time they can manage their cash better.

It is a pain but they're treading cautiously.

I get it, but if they themselves are 'treading cautiously' then how is that perceived by the market, and worse--the under-informed consumer? It doesn't show much confidence, and certainly does not make a clear statement that 'Blackberry is Back!' They have spent hundreds of millions in advertising the Z and Q10/5 over the last few months trying to build awareness, and the crappy article on CNN's home page today stating the 'BB10 is not a hit because only 2.5M units were shipped' is probably worth as much, if not more, in negative advertising against the 'come back' story of the brand. Six devices at a time take up more store-front space than one measly loner, thus contributing to a greater perceived 'strength'. Further you can advertise for the 'flagship' Z10/A10 to attract someone into the store, and then at least be ready to offer them a cheaper alternative, if they hesitate on the price (or, vice-versa... attract with cheap device and upsell to flagship). This way, they save on having to roll out and advertise each one individually.

Whatever.. it's all monday-morning quarterbacking here... what's done is done.

They're managing. It's what they're in the job to do.

I appreciate what you're saying about PR. And that is a giant fail. But their guidance was more or less dead on. They can't manage the collective corporate will of the entire US media. Admittedly they should have been ready to handle the negativity - and maybe they are - we'll see when Heins does a few interviews - as I assume he will today.

And in five years when BlackBerry is a comfortable third place in a massive global market with annual sales in the $20-30 billion range, and a stock price around $40, we'll look back and wonder what the fuss was about.

This company is coming back from total madness. A failure to accept reality. Money spent like it was coming from a faucet. And a CEO in Balsillie that clearly didn't believe his own hype.

It'll take more than one decent quarter to turn it around.

What worries me is that 2.7 million BB10 smartphones only equals to 8,000 units per Carrier. Either carriers are being really cautious when ordering from BB or the phones are just not selling.

They need to make money! You want them to sell at a loss? We'll have the same problem as before with legacy devices.

YES!! They need to seed the OS out to more people. Loss today, gain tomorrow.
There is a boon in being the third ecosystem. You get more apps, more developer support.

Have you not seeing what Google is doing with its nexus devices? They make no money of the Nexus 4. They're probably loosing money from it but they're still making money because of content. The more people use Android and buy apps the more money they make it's that simple.

Chris, I am in a sore state right now over the PlayBook, so this is all of the calm and professional I could muster...by denying the PlayBook a A PROMISED update ( Heins said WILL, not PROBABLY), they killed their greatest source of bonafide support -- fans.

The PlayBook will not run bb10. It can't. The 1GB of memory is the reason.

The original bb10 devices the employees had were 1gb and they did not run well. That is why all bb10 phones now have 2gb on board. Even the 'budget' q5 will have 2gb.

Personally I am glad that they are not wasting time and money on bb10 for the PlayBook.. an my family owns 7 of them.

Do I hope for some upgrades to the pbOS, absolutely.. but I do not expect bb10 and never have.

From the ZED via CB10.. booyah!

That was my fear too. And that was what holding me from buying a PlayBook. I think by not giving the update to existing PlayBook they are planning to make an OS10 PlayBook in near future.

Posted via CB10

Don't think! Heins has sad that the tablet is done! I think they are turning to devices like the A10 and bluetooth them to a monitor.

well written

it was a pretty upsetting morning but i think wall street is beating the stock down more then it should have, but what can you do. it was a poor report

I think we should wait for the next quarter "Q10" of course many BlackBerry users nit switching to bb10 at the beginning because the full touch. But im thinking the. Sells are okay for an outsider at this time.

In next quarter they can improve the OS and will get mor attention because BBM at all plattforms. And now, many many users will swith to the new OS because the q10 and q 5. A big part of BlackBerry customers had to wait a long time...

They will make it... I love my z10

Happy berryz

Sada

Posted via CB10

Local news CP24 in Toronto is saying these results only include the Z10, and no Q10 sales (which will be released with the next quarterly results) is this true?

Posted via CB10

The results include a full quarter of Z10 availability. The Q10 is just for part of the quarter since it didn't come out until later.

About a month of Q10 availability in the UK, Canada and the Emirates, three of the biggest markets for BB and more than enough time for a whole lot of people who were holding out for a keyboard BB10 device to spring for one.

Excuses, excuses

Apple and Google should pay BBRY executive officers for fooling BB users and making them go to iOS and Android.

Posted via CB10

1. This regional update bs is turning off customers and potential buyers! I have android N ios users boast about oh I just go here update and it's done. Whilst we have to wait for our region to get it and different versions don't work in different regions etc etc. That needs to STOP!! When releasing an update release it for all.

2. Yes it is a new os there is an app issue still at hand I would suggest you get 10.2 out there ASAP and get more of the popular apps on board especially with the jellybean 4.2 being integrated.

3. I would suggest prolonging BBM cross platform because it will do more harm than good especially where you have current BlackBerry 10 users annoyed and can't receive updates etc on time they will just switch platform and use BBM on which ever device and in the long run you will loose more sales.

4. Marketing Marketing Marketing...there are still a lot of users who own these devices and still don't know about the true potential of these devices. Companies actually going to ios for coperate. This was once blackberry's turf you guys need to make some drastic changes.

I am a proud BlackBerry user but at the same time I have considered selling my z and getting a s4 or even and iPhone 5 us latam users are at the bottom of the list and we get everything last with respects to BlackBerry you guys need to step up the game. Do everything globally as one and not regionally make your users feel appreciated and not have them feel like they on a prioritized list and some users are more important than the next. Os 10 is out there long enough you know what carriers support what make it a global change do it as one treat all customers as 1 and you will notice an improvement. Hope I made some sense there.

Posted via CB10

Good ideas - just want to add BlackBerry should wise up and allow commercial vpns. Not all businesses want bes - open vpn is a good and viable solution!

Companies are turning away from BlackBerry because of all the pain of implementing it (not saying other solutions are easier!!! ) and just for commercial reasons, to be competitive, BlackBerry needs to ramp up its functionality: bring back missing features and ADD functionality! Open vpn please.

And perhaps reduce the price on the devices - squeezing the purchasers is a short term gain but credibility suffers...

And playbook rip.

Posted via CB10 on my BlackBerry Q10

I was looking at the requirements for a BES 10 install a few days ago. I think BlackBerry has a big problem with corporate accounts going in to the future. For example to install BES 10 with an IBM Domino server it requires a Domino server, a Traveler server because BES 10 can't talk to Domino directly, an Active Directory server because Active Sync is involved, and three or two separate servers for BES 10, plus the additional servers for BES 5 if you are not buying all new OS 10 devices, it is recommended that these all be separate servers (physical or virtual). I don't know how BB is going to sell this.

From what I understand the latest BES 10.1 allows for legacy devices and BB10 devices to be managed on the same server, as promised.

From my sweet BB10 Neutrino powered Z10 :D

They are pushed directly from Google if you buy Stock Android like the Nexus 4 or if you buy the phone unlocked directly from the manufacturer like HTC started doing

Though people mainly buy the Galaxy S4 instead of the Nexus 4 so it really doesn't matter much. But BlackBerry should be doing what Google is doing and what Apple has done for a long time, control their updates.

That is not the majority of Android users though. sk8er_tor is right, Android is in the same boat as BB when it comes to updates. Look at the last Galaxy nexus on VZW if you need more of an example.

The results I can live with, but I am infuriated with how they just dropped the playbook! People want a tablet to go with BB10 if Heins can't see that, then he should move on! There is no point in me sticking with BlackBerry if my tablet is only "supported". That was the dumbest announcement he made today considering they just sold 100k of them in the quarter.
BlackBerry has to rethink that answer and go back to work on it. I can't believe if BB10 works on a Q5 it won't work on a playbook.

Seriously sooooooo pissed off today!

Posted via CB10

They sold 100k but probably all at a loss. He doesn't want to waste the money on implementing BB10 on a device that doesn't have the horsepower to run the OS.

Also if u want to capture legacy os users offer them some sort of incentive. Some thing to convince then to go to a 10 device.

Posted via CB10

You talked about focussing on emerging markets. Blackberry is doing just the opposite. In india you get a new s4 for Rs 37000-38000 and z10 still not below 39000. And q10 for 45000. If you convert prices of both devices in US they turn out to be app Rs.30000 in Indian currency. Now if blackberry really wanted to sell phones in emerging markets it wouldn't have followed such insane pricing, that too in developing countries. I read about it being over-priced in other developing countries as well. Who other than a hard-core bb fan will buy a q10 or z10 in such a country when newly launched s4 is available at a cheaper price and with better specification. Accept it or not, you can not simply tell people you have a better os and sell phones. They worry most about specs. And if better specs are available in a cheaper phone who will buy bbs??? Blackberry shed you ego of trying to project yourself as a premium brand. Face the reality and price your products competitively.That time is over when people used to buy BBs because they were BB.

They're selling BB7 devices in India. And the Q5 will arrive shortly.

Not too much sense in selling their phones at a loss. Compared with most cheaper phones BlackBerry is a premium brand. I can't blame you for wanting the best for less, but I think you'll find the iPhones is sold at similar prices.

I think that there are other reasons at play here. First of all, the scale of manufacturing. Samsung can get better pricing just from scale. Secondly, I've read that the Z10 and Q10 is still only manufactured in Canada and Mexico (lot of parts from all over). (BlackBerry is actually Canada's biggest electronics manufacturer - which doesn't say much for Canada's hardware electronics industry.) Labour costs, even in Mexico, are relatively high (my Q10 is made in Mexico). Also, some government agencies are not allowed to use 'made in China' phones in ultra high security clearance areas. This contributes to the cost. The phones are actually pretty well made as well (see iFixit.com/Teardown to see it disassembled). Development of a new OS is also a big deal in cost. I also think that it is performance per spec that really matters. Do similar things with both phones and measure the performance.

The Z/Q10 is not designed for emerging markets; the Q5 is. This phone will be a killer in does markets.

Yeah - the results look pretty damn bad. Not in and if themselves, but for the trend they reflect.

Posted via CB10

Pricing is too high for the features that the devices offer. They need to reach the mass, and there is only one way of doing it. If you price premium you need to deliver premium, and the lack of apps and mid-range hardware features are not worth the money.
Is there a possibility that low volumes might be affecting economies of scale, cost of manufacturing might be increasing and that might affect gross margins?

Agreed we need to wait and see how the qwerty BB10 devices do before making a judgement. Physical keyboards are BB's bread and butter. And yes they need to make the transition to BB10 a lot faster and dump legacy devices ASAP.

I agree, that's pretty much my take on the situation. However, a couple of other points -

Would I be right in assuming that gross margins are going to take a hit as people move away from legacy devices and stop using BIS? My impression is the monthly service fees BlackBerry get for BIS is pretty much money for old rope - I would imagine expenses per BIS subscriber are negligible and so when you remove that income stream that will affect gross margins?

Might the fact they are bringing out another OS7 device this year be related to my above point? Are they worried about declining service revenues from BIS so want to slow down the flow? To me, bringing out another OS7 device this year is a baffling decision, that they have been spending resources and manpower on designing another phone for a 2 year old OS just makes little sense to me.

I think getting OS10 into emerging markets will be a big boost to the company, however, I don't see how they're going to accomplish that. The Q5 is NOT the answer, it's priced way way too high to be competitive with other low end smartphones from android, and considering android will be getting BBM later this year, what will be the incentive? In the UK at least, I genuinely believe £300+ for the Q5 on pay as you go is way too high, considering you can pick a curve up now for £80.

Overall I'm really disappointed with the overall number of BB10 devices shipped in those three months. 900,000 a month average - 30,000 a day worldwide is pretty terrible. After 4 months of being on sale, only 5% of BlackBerry users have an OS10 device, and they are being outsold by legacy devices.

The next quarter will be more telling, but sadly, this one was a disappointment.

Posted via CB10

Ein Mann Ein Wort. Heins, a promise is a promise and you have no honor. Unde you, BlackBerry will die...

Posted via CB10

Terribly dissapointed with the BB10 numbers. If you noticed they said around 40% were BB10 phone sales. What do you mean by around could it be 36-38% then that would take sales of Z10 and Q10 lower than lower end of the analyst expectations. No doubt Z10 and Q10 are great phones but trust me they are models ment for 2012 and were to be competing likes of Samsung S3 and Iphone 4S. Today a dual core 1.5 GHz Z10 and Q10 processor is kept against the likes of S4 1.9 GhZ Quad Core and HTC One with similar configurations. The worst part is as I also previously said BB 10 phones are very richly priced. The management claims they are premium phones and are placed at same price as S4's and HTC Ones what nonsense. Also in emerging markets like India Africa etc Z10 and Q10 were priced at higher rates than the bigger mightier competition. YES that has certainly pissed of 70% of BB buyers and they are terribly dissapointed with BB10's pricing strategy. Also trust me Q5 will do slightly well but not be a smashing hit. As in times of a 13 mega pixel camera and lower limit being 8 Mega Pixel in the lower end Samsung, HTC Nokia devises our BB10's stupid management comes out with a 5 mega pixel device.

As I wrote previously why can't BB10 come with a 13 Mega Pixel camera when the world was with 8 Mega pixel? Many other Whys? especially when the launch of BB10 and Z10 & Q10 were so damn delayed.

I am not a short on BB so please don't misunderstand my criticism. I dont see BB10 devices sell more than 4 million in next quarter which would still be 50% higher than what they did this quarter.

Nokia is guilty of the same. The Lumia 920 has 1 gig of ram, and same dual core cpu as the z10. Same screen resolution but lower dpi (4.5" screen).

However, Nokia differentiated themselves with a quality camera (though still only 8 megapixels).

The brand new Lumia 928 ALSO has only 1 gig of ram and same cpu as the 920. But again, it has a good camera.

Posted via CB10

The problem with Blackberry is it is way too slow in anything it does. They should have yanked Playbook long time back. They need to take out a cheaper all touch screen and a slider asap.
But most importantly, they need to rethink their whole strategy.

Q10. Do you guys know the current management of RIM doesn't have long years of experience in smartphone. So do not give them noise. RIM MUST focus on large screen device. Betting on Q10 is a dead end.

This shaky news coupled with the firestorm of hate in the PlayBook not getting bb10 thread has me slightly worried...

Posted via SEGA master system

With brand perception being what it was, and with that much cash on hand, I'm curious as to how they can possibly defend the low key low impact marketing approach they seem to have been content with.

Posted via CB10

+1 and shirty commercials. Alicia Keys been under used as a brand rep or whatever. she's not promoting BlackBerry, but BlackBerry promoting her music

Posted via CB10

PlayBook stuff is really bad. But, time will pass and we will probably understand the reasons for BlackBerry decision.

Great article, Chris. BlackBerry is on transition here. Everyone know transitions can be tough, but there is no way out. Only two options: live or die! We hope that everything goes Ok for blackberry. To do so, they have to fight. And nobody can say they are not fighting.

All we can do is continue the support!

Posted via CB10

I saw the earnings report but tried not to jump to any conclusions until I've read Chris's report. Thanks again for honest level headed reporting!!!

And yet they announced a new BB7 device today. This company doesn't know it's ass from its hat right now.

Posted via CB10

Thorsten learned from Balsillie that showing public bravado is all that's necessary. What a different tone vs last year? Wasn't he on Cnbc last Q saying they are now profitable going forward? Huge risk here. Inventory writedowns...what about 2mm bb10 devices per month in production ? someone please send James Faucette a postcard. His analysis was flawless. He and Ferragu are thé two top analysis.

Posted via CB10

Currency control, zero carrier support and people throw shit at BlackBerry. I've never seen a BB10 device in Venezuela.

So naive. "next quarter should be better". Really? Says who? "Q10 and Q5 will help sales in the next quarter". Really? 90% of the worlds smartphones have a virtual keyboard, how is a physical one going to improve things. Lack of developer support won't help. Optimism is great but be realistic first off

Lol, BlackBerry stock was too high at 14. That's a huge swing from $6 in a 10 month span in today's market.

I expected the stock to drop and company to report a loss.

Change your marketing strategy, commercials to actually show the phone

Posted via CB10

Count me as cautiously optimistic.

Yesterday, I flew from a large Canadian city, to New York. From New York to L.A., and then finally on to Mexico. As a happy Z10 owner and Crackberry enthusiast, I take notice of phones. I observed numerous BBs still out in the hands of travellers. I saw my first few Q10s out in the wild.

Most interestingly, I was coming from a conference with a number of corporate types that were still using Blackberry's with track balls! I spoke with a couple about their antique phones, and they were not only aware of BB10, but were anticipating an upgrade in the next few months.

As an investor, we all want immediate results, however, I think the story is slow moving, and will continue to be a painfully slow process. I still believe Blackberry is heading in the right direction.

kcdist, I have posted this before but I also travel frequently to the US but I am mostly heading to middle America. In my recent travels except for the airports I don't see BB's in the hands of users or any advertising. I had a bartender ask me what my phone was. She thought BB wasn't even in business anymore. I also had a guy that deals with selling corporations software including security solutions sit beside me on a plane returning from a trip to N.C. I had my Playbook and he had no idea what a Playbook was...and he is in the tech industry!

I love all my BB stuff and hope they can get things sorted. You know all thats going to be all over the business and news channels today in the US is BB is dying, run for the hills, the sky is falling! I fear what the negative spin is going to do to sales and developer support.

I say swing for the fences and start to market the hell out of the product. They need to hammer home that this is isnt BBOS it's BB10 and show what it does in comparison to iOS, Android, and Win8. They need to demo the product, put out a strong message that this is a totaly new OS etc. It can't be artsy, it needs to be simple, in your face, and get to the point/product demos.

They need stronger marketing and more advertisements. Late launch in the USA and other areas in the world hurt the brand. They need to start pumping out BB10 devices all over the world. They need to announce an early A10 and Q5 launch to gather momentum. We all know BB10 is the best mobile platform, show it.

Thanks Chris you always seem to make sense of things for me... I am little sad that there is no OS10 update for the Playbook..I just wish they they would have said this a few months ago so that people wouldn't have had such high expectations.

I loved the combination of my OS7 device and Playbook... I think if they had marketed that combination of devices better they would have needed to find a way to make OS10 work on the playbook.

The z10 is a decent device and has a great Os. But the device is the deal breaker when you are trying to compete against the s3 and s4. BlackBerry dropped the ball again. I love my z10 but the truth is the truth. BlackBerry needs a new BAD ASS device that is all touch and kills the competition or just shut the damn door and stop wasting time. Plain and simple.

Posted via CB10

With the S3? The Z10 and the S3 have literally part-for-part identical hardware.

Posted via CB10

BB still need to add a really cheap device for emergin markets maybe around the 200 dollar mark and really make sure the aristo is a really amazing device with the gimicky features and marketing that people want.

"Quite frankly, I can’t blame anyone for feeling like the results leave a lot to be desired"

Seriously? Your outlook is far too pessimistic. This is exactly what we might have expected. Admittedly the gross margin reduction is of concern. But they have just launched three new products in less than six months so perhaps initial manufacture costs impacted the quarter.

There are lots of factors bearing on this story. Not least the fact BlackBerry cannot afford to invest hundreds of millions in inventory and therefore is rolling out BB10 slowly.

Then there's the US story. The main carriers are clearly holding inventory of poor selling (relatively) Apple phones (and possibly Samsung also), and so failed to push BB10 - even though they committed to stock the product.

And what is the point of selling expensive to manufacture LTE devices in countries without even a 3G network?

Marketing costs were up $150 million on the quarter. It will take a while for that to bear fruit.

And corporations don't make procurement decisions overnight. They'll want to see solid evidence the devices are secure and functional before committing to BES10 and consequently upgrading their BB7 devices.

But the ground work has been done. The Q5 is a lower cost phone, and a new BB7 phone will no doubt also be aimed at the low cost market. BBM will be rolled out across platforms and no doubt create new revenue generating options. And BES10 is the market leader in MDM, and as enterprise adopts the server, sales of BB10 devices will increase.

So there's plenty to be positive about. What we don't need are the fools who think BBRY is going back to $140 anytime soon (in fact ever). The company is being run more cost effectively, and has a clear direction. They're executing on their plans effectively in difficult market conditions (even Apple is suffering).

"Wall Street wants results yesterday" - Wall Street wants to make on their short positions. And make they have. They started the ball rolling and are hoping lots of fools will sell and make them a fortune. Seems to be getting support at $10. I imagine it will be back up before long (if only so it can be pushed down the hill again).

"BlackBerry did not deliver". Really? They delivered pretty well exactly what they said they'd deliver. Maybe we all need to listen more closely to what Thorsten Heins actually says.

I don't usually disagree with your commentary but I think you've had a few too many beers at the cottage ;-)

Your comment about inventory of iPhones and S4's might be right. Samsung's stock has been taking a beating over the last couple of weeks because reports are suggesting the the S4 is not selling well (relative to expectations). Also, I read tons of reports that the iPhone5 is also not selling, even though they shipped a bundle of them.

Me parece que la expectativa de los nuevos Smarphones todavia esta en el pensamiento de muchas personas que van a adquirir un Blackberry con OS10 en los proximos dias, tomen en cuenta que estos dispositivos todavia no han llegado en forma global a muchos paises de America y no ayuda en nada que la nueva version OS10.1 todavia no este disponible en mas del 75% de los Z10 que se han vendido en America Latina, en mi opinion personal los NUMEROS cambiaran a favor de RIM (BlackBerry) en cuanto estos "problemas" esten solucionados, todos los que hemos adquirido este dispositivo queremos la tecnologia de punta y no la obtendremos hasta que las actualizaciones no lleguen!!

So you guys still want to bash me? Crackberry suspended my account for being honest and correct. Hope the culture at Blackberry is not the same as here on Crackberry where any dissent is met by censorship

I too am disappointed with the results and the tone of the BB Execs on the call; however, I believe on the last quarterly earnings call Thorsten or Brian (CFO) did predict a Q1 loss and they actually anticipated their cash balance going down to the $2 billion so it is not all bad news. I know it hurts but we have to allow them to work through the launch and transition of platforms IMHO.

Overall not to far off from what I expected. The name BlackBerry still isn't that good to the average consumer so expecting a large amount of sales is unrealistic.

The problem they have is the price point IMO, why would someone buy something at a premium when there last experience probably wasn't that (average consumer). There legacy device sales keep the service funds flowing but there gross margin very low, to combat this BB10 devices are being sold higher than they should causing less units to be sold. The turnaround will take time, a transition of this nature is difficult to predict.

Now where I see possible good is with BBM going cross platform. You want marketing? The name will be on everyone's mind each day with this. Does it make them lose some phone sales? Yes. IMO these aren't enough compared to the benefit of brand recognition and possible revenue gained from BBM channels. How well this goes will be a big part to the return of BlackBerry.

Posted via CB10

I'm not sure that bringing BBM cross-market will actually lead to a reduction in phone sales. As I understand it, it will only be available on the most up-to-date iOS and Android platforms, so to make use of it many people, particularly those using low-end android devices or older iPhones will need to upgrade their phone to be able to make use of BBM, some of whom may choose to upgrade to a new Blackberry.

alwaystimoga, investing on "hope" is one of the biggest mistakes made every day. In fact, stockbrokers count on millions making this mistake because they work on commission based on transaction volume. Whatever the fortunes of the BBRY price, hope has no impact whatsoever.

I do not believe any US carrier really cares about BlackBerry phones and without them being fully behind BB10 it will die a slow death. Loyal customers will not continue to believe Heins lies and they can not find new customers because there is no marketing and no push by the carriers to sell the phones. AT&T and Verizon has thousands of customers waiting for the 10.1 update. We have been told how great the phone is selling by BB people by CB or by Twitter or other means, but now the numbers show less than 3 million BB10. HOW CAN WE BELIEVE THESE PEOPLE ANYMORE ABOUT ANY THING. I love the Z10 compared to an Android phone in having multiple things open at the same time. But my patience is about gone after the news about the Playbook. By Christmas the stock will be back in the $6-8 dollar range unless these fools wake up.

Great level headed review. A lot better commentary than from the majority of the morons (yes "MORONS") who let their emotions get in the way and essentially proclaim that the world is coming to an end. The company is not going bankrupt any time soon in this competitive market and anyone who expects BlackBerry to sell phones out of the gate like Apple / Samsung are no different than the doomsday camp. Yes, it sucks to be a stockholder of BlackBerry shares and great to be a short seller / troll / media. At the end of the day, BlackBerry is in transition to BB10 and as Chris has stated keyboards are still the bread and butter for this company. Does the BB10 experience change with these results? NO! Is this company going by way of PALM any time soon? NO!! Is BlackBerry still selling products and services? YES! Does it suck to be a shareholder? YES!! Is BlackBerry still in the early stages of this transformation? YES!!! Nothing is built over night. Let's see what the FY14 and FY15 year end results yields before proclaiming that this puppy is dead. My dream is that BlackBerry just go private so they can narrow their focus even more and not worry about the day to day battles with wall street, the media and these armchair CEOs.

I said this in a tweet to Chris 90 days ago. "evrbdy assumes current bb owners flock to bb10(big asumptin). Will be nice to see BB lgcy to BB10 numbers". Its happening. I hate that it is happening but todays numbers confirm it. here is how the conversation with Chris went.
Javier Enrique @javirique
@cumiastowski 55%of bb10 from other platforms. So bb7 owners moving away from the platform? Its working out contrary to every prediction.
@cumiastowski
@javirique your statement makes no logical sense at all. WTF?
Javier Enrique @javirique
@cumiastowski evrbdy assumes current bb owners flock to bb10(big asumptin). Will be nice to see BB lgcy to BB10 numbers.
Chris Umiastowski @cumiastowski
@javirique pretty simple math. What's 100 percent minus 55 :) Come on.
Javier Enrique @javirique
@cumiastowski although patronizing Fact is they need to make sure bb legacy stay. I see mistrust from users everyday.
-------------------------
Here is the explanation I owed Chris and was waiting for the right time to proof my theory.

Current BB users wanto to go to other platforms, they want to leave Blackberry behind! that is my theory that Chris did not understand. BB legacy users were stuck with an OS that they did not like and saw their friends do all kinds of things on this humongous androids and Iphones that they could not. My point is again, everybody assumes that the 72 million users will migrate to BB10! No! that is not happening! They want to run away from an abusing relationship as quickly as they can!!! The new users BB10 is seeing are from dumb phones, android and IOS. Thorsten said so in the call 90 days ago. (Remember the 55% number they celebrated). Chris I hope my comment makes sense now. I am out on the road a lot, and work on this stuff everyday, I see it everyday, its happening, the 72 million number is not real to BB10. The majority of those 72 million people are going to other platforms, BB leadership needs to focus on the ones coming from other platforms, if there are enough of them. I am for the second quarter in a row, doubting it. The stock market agrees with me, and I am not happy about it.

What you have said is very true. I myself left for an iPhone before coming back to BlackBerry with the Z10. At the time I did leave I was very frustrated and fed up with everything BlackBerry had become due to the constant battery pulls and simply lacking device I had.

The truth is most of my friends did the same except they don't have the means to switch devices are regularly as I do and hence are no longer with BlackBerry. This is why a turnaround will take a long time and not happen overnight. BTW this doesn't mean doom and gloom for BB, it will just take time thats all

Agreed agreed. Blackberry legacy users I have spoken to wants to run away from the abusive relationship. Only people like me who have switched to the iPhone, and Android tablets, and then came back, would understand.

I will start to ignore certain types of polls on my crackberry, and run my own facebook polls to get real grassroots info and intent.

Posted via CB10

+100

Couldn't agree more. People who were stuck on BlackBerry are running to other platforms no matter how cool the new BlackBerry is. They just don't want to hear about it.

Posted via CB10

"BB delivered pretty well"? Revenue was the only thing up. Gross margin, subscribers, EPS all down. I must be missing something. 2.7m phones shipped, not sold, SHIPPED
Is that really delivering pretty well. Im sure last quarters sell through was 66%, on that basis they sold less than 2m BB10 phones. The fact that no sell through was mentioned this time round must have the alarm bells ringing with U all

They executed to guidance more or less. They may not have sell through numbers yet. But they are managing inventory carefully.

I guess this was your first time reading any of BlackBerry's financial results or listening to their conference calls...

Thanks for your honest point of view ive been waiting for it. Hopefully it will better next quarter im holding out till Q3 results before I make any big decisions on this. Still wish they would be quicker on the releases....To bad about the Playbook update, they should give those that bought one a discount towards a BB10 as an appology or something to make ammends.

Do BB10 phones count as "subscribers" (considering they don't operate on BIS)? If this is the case, we should expect decline in subscribers as more people adopt BB10 devices. Further (if this is the case), Heins needs to spend some time explaining this fact in greater detail. This would also explain why BB will no longer report subscribers (as the count is irrelevant since BB10 devices aren't counted as subscribers). Can someone confirm this???

>> Do BB10 phones count as "subscribers" (considering they don't operate on BIS)?

Exactly. No, to be a subscriber you need to be on the network. BB10 phones are not on the network unless they're on BES10, which just got rolled out. So by reporting subscribers they were reporting defections from BB7 but not additions from BB10. A skewed metric. Good riddance.

And i agree that this is not well understood. Ironically, communications is not BB's strong point.

Incorrect. BB10 uses ActiveSync. This is done on the phone level whether you use BES10 or not.

Posted via CB10

As Chris points out, revenue growth has occured across the world, yet BBRY still can't post positive results. BB10 is a great product but it is all about US sales, and until this changes - good luck. The marketing in the US has been terrible, support from carriers even worse, and the apps catalogue is not as robust as Apple or Android (in fact the momentum of app development seems to have slowed). If BBRY's plan is to implicitly leverage Android apps, time to acknowledge that fact and make it easier to install them wirelessly. We all know that this software upgrade release thing is terrible as was and is the release of the BB10 phones themselves. Poor executed. This is a mulitbillion company, find out what you need to do to have a real global release date and coordinate with the carriers to achieve it. The piece-meal approach and blamming the carriers is weak and pathetic. Time to either sell the company or license the software to another carrier. Being the CEO and knowing what the numbers looked like, Thorsten should have pushed the button on a big strategic announcement to offset the poor performance. There aren't any signs of Corporate America buying the Q10 as of yet, which would be the only other saving grace, but not making next quarter much more promising. Unfortunately, I think the music is winding down, least we repeat the lessons of Palm!

"The marketing in the US has been terrible, support from carriers even worse"

The two are directly related. The US carriers either don't like the device (in which case why carry it at all) or are stuck with so much inventory of other devices they can't afford to push BB10.

I was fine with the results but not with the decision on the Playbook. That statement right there kills it for me as a BlackBerry supporter. Heins better changes his tune for Tuesday! He has to realize that people like tablets! Why would I purchase a movie or a game for a phone alone!

Sooooooo angry!

Posted via CB10

Hi Chris,
Opportunity means nothing if there is no execution and as well it comes down in the end to the management team who must be able to gain the confidence of the consumer, as well as the investor. These bullboards are full of suggestions from loyal and I mean loyal fans, like myself who owns a playbook, Z10 and Q10 and Christ I am unemployed, yet still wanting to go to bat to support this company.
If I have learned one thing over the years is that you must listen to your customer and rectify the issues that are being talked about, walk the talk, resolve the issues or at least acknowledge you are working on it and execute your plan flawlessly. If you don't do this than eventually you will erode your customer base.
I'm sorry but I am so disappointed in this organization and the leadership. In the end they are the ones that need to take responsibility for any perceived failure in the organization.

Additional fallout may be continued lack of app support. If the sales/shipping numbers are weak it is even less incentive for developers to buy in to native. Likely a lot more ports, if at all. BlackBerry may actually have to pay apps like Instagram to come in board.

Posted via CB10

With a declining base even after a new OS release, BB really better step things up. I very much want to upgrade to BES10, but Im not positive where BB will be in a year. BB10 is a step in the right direction, but you can't rest on it. So why bring out another BBOs device? Cut the cord BB, BBOS is older than old, and BB10 will be if you don't feed the beast and get it growing.

Great comments jay_man. Long live BlackBerry. I saw a comment on here, the guy said he was coming back to BlackBerry to give them a chance, now he's considering leaving again because of this news?. Really? And that is why things fail, because of quitters. Long live BlackBerry

Posted via CB10

No one wins if quitters keep on quitting and go on bias rants to justify their position. At the end of the day, they're losers as their flamboyancy serves no purposes. Either you like a product or you don't. Either it suits your needs or it doesn't. Some people just need to learn to move on. There are more important things in life than trolling around.

Nothing unusual, BB10 is developing too slow and too general for financial markets. New way of BlackBerry way is still not determined enough to let us - BlackBerry Customers be proud Users of something really unusual...

[...] and new hero's coming: smartman.mobi

Chris,

Great article as always.

BB is not helping itself, with phones that reboot, slow to get updates out ( yea I know blame the carriers ) and not getting the 15 or so major apps that folks want ( and I dont mean android ports, etc, cause the average end user will not do that ).

Until these issues are resolved, IMHO they are going to have a rocky road ahead of them, and I don't believe their future will be bright.

-Jeff

My thoughts: i bought the Z10 pre release to show that i support the bb10 idea. But face it a few months after its release, the OS has not make a major leap, it is standing still the feature they added to the os updates is mostly something we have in the legacy device so that is not new.
Now the killing points to blackberry has to be the apps.. we need good apps, so far only a few of that. No major apps is supporting blackberry. Instagram, netflix, etc. With the androids devices getting more and more impressive, and the apps are so much better what are blackberry got gping for them? BBM.. but they release that to the competitor too.. so that is it. The end of the line, unless they made os 10 available to other phone producers like samsung, It is sadly, the end for blackberry, IMO. In the end you can't count love and loyalty from blackberry faithful cuatomers if blackberry dont deliver with their products..

Posted via CB10

First of all, let's keep in mind that handsets are just one vertical that they are trying to get going.
Secondly, let's also remember that the Q10 has just come out in some countries and the Q5 is just getting released too.
I assume with a more full lineup, they will sell more handsets.
How many more handsets do they have to sell (at the same ASP) to become profitable.

Always appreciate Chris' analysis on these matters.. "the voice of reason"! I will continue to enjoy my Q10s and patiently wait for the world to catch up. #TeamBlackBerry #TeamCrackBerry

Posted via CB10

Good piece as much as I hate to read it. I love BlackBerry. And I can't even begin for one second to think that some day I could be using any other type of phone. BlackBerry is turning itself around and it takes time. But in a profit oriented business, time is sadly luxury few have...
Heck even Apple now is taking flack....

BlackBerry is a great company, they are the under dog and I love them. Greedy bastards at Apple can keep their iPhone...

Posted via CB10

Let's see what the Short Interest is on July 10th @ 4:00PM

I have a feeling it's going to be a lot lower than 182 million shares.

Problem with Blackberry is simple, Pricing Ego. In India Q10 is launched for Rs. 45000.00 where as iphone and GS4 are available at Rs. 41000.00 . There are at least 10 of my friends who want to buy Q10 but price is pulling them back. Blackberry did a great job with BB10 to start with and in countries like India, it's not the lack of apps that creating problems.
They seriously needs to cut their profits and give phones at reasonable price. It's a great company, just need a bit of simple thinking.

They need to get very serious about why ti Z10 was not as well received as it could have been.

I offer two reasons.

1. The UI bothers people when the can not easily close or minimize applications. It fights the user. This behavior is often expressed as "no home button."

2. Some bug fixes are not fixed immediately. AT&T for instance has not rolled out 10.1. The longer people have to live with bugs the less they like the device. Bypass the carriers and push fixes immediately.

Posted via CB10

Why hasn't AT&T rolled out 10.1?

Because they haven't completed their test cycle? Garbage. They're just not dedicating the resources to the device. Probably because they have loads of iPhone 5's sitting gathering dust.

Considering the sales numbers I think there too busy selling those iphones you claim are collecting dust.

Posted via CB10

I take it you haven't been watching Apples stock price.

AT&T at least are sitting on a lot of inventory. They expected to sell far more iPhone 5 and Samsung 4 than is actually being sold and so are stuck with millions of cash tied up.

As a result neither major US carrier is pushing BB10. BlackBerry got caught in an inventory trap. Retailers have so much cash tied up with the competition they can't afford to promote a competitor product.

Carriers rule the smartphone market. Always have always will until cell towers are redundant at least.

If BlackBerry made a mistake it is in relying on the carriers to do their marketing for them. Wouldn't be the first time a BlackBerry guy has been fooled by AT&T and Verizon of course. You'd think they'd know by now.

I travel a lot in the US and airports are a good place to see what phones folks are using. I've only seen one Z in the wild and that was last week. BB is largely irrelevant in the US and has a reputation as an obsolete device. Basically, in the US market, next to no one is considering BlackBerry.

Very well said. I think a warning should have been required after they closed the books on thier quarter, and, fired the PR team. Other than that, it looks like what it is, a not bad quarter with lower than expected revenues on sales.

A few points on what BBRY should do NOW:

1) Pricing Policy: BB management is an IDIOT to price their phones at the top end of the range ESPECIALLY when the newer android phones from Samsung and HTC are far more powerful processor, screen size resolution and battery wise. Also MOST IMPORTANTLY BB10 still lacks a lot of commonly used apps. I am totally with the BB management in terms of as its a new platform it lacks apps and we are growing in number of apps. So all these are very logical and important reason why the pricing for ESPECIALLY the Z10 and Q5 should have been slightly lower for US, CANADA and UK and a lot lot lower in markets like India, Africa, Middle East and Latin America.
If I were Heins I would have wanted more VOLUMES irrespective of the hardware margins at this juncture. With competitive pricing of my hardware I could have had more hands using my superb OS BB10 and also that would have lured many app developers and someone like Google to make native BB10 apps. But thanks to BB management they screwed this opportunity.

2) DELAY EXECUTION: BB has now been an expert at product launch delays. Why the HELL did you announce the opening up of BBM to Android and IOS so long ago when you are still going to wait for one more month to release it. Why the HELL are you giving such a lot of time to Watsapp and Vibers of the world to improve their apps?? Totally fail to understand this logic.

3) Horrible Marketing and Waste of Marketing Dollars: The superbowl ad was the MOST pathetic one I had ever seen. You fools when the world does not know what BB10 is and how it looks why do you show what it can't do. You guys should have simply shown what it does Hub, Peek and Flow that would have atleast given a feel of how better BB10 is and what we can expect from it. Many corporates would have also seen the same and would have loved it. What has been the logic of Hiring Alicia Keys? Dude you could have spent that access in newspaper ads, TV Commercials. In my opinion the keep moving project concert etc is rubbish. The only thing I loved was the partnership with Mercedes and announcement of scholarship for women. May be more scholarships and more money should have been spent to give away to app developers. That would have added a lot more value.

Hope they improve themselves and deliver better value for money. Unfortunately I just came to know that Q5 has been offered at $400 its WAY TO HIGH FOR A CHEAP 5 MP, 1.2 GHz and cheap Plastic phone. It should have been $300-$350 MAX! I don't care if they sacrifice a bit of margins they should rather focus on improving the manufacturing and component costs. Samsungs and NOW even many Indian companies like Micromax, Karbonn http://bit.ly/1aYG5H4 http://bit.ly/1aYG5H5 These companies are making phones which are of Z10 Quality and Specifications and run on Android 4.1-4.2 and are priced at $250-$300. We must not forget expect for developed countries where BB does only 30-40% of business in terms of revenue the phones sold elsewhere are NOT SUBSIDIZED. So pricing becomes very important.

Parthiv Shah
M.S. in Telecommunications
University of Maryland, College Park
Batch : 2008

I'll venture to say that despite reporting numbers below expectations, I believe Blackberry is on the right track. Their strategy is straightforward: Focus on the "mobile computing platform". Phones are only a part of the puzzle. They won't win that battle...maybe coming in 3rd is OK. But when you look at the various the elements combined (those that we know of) like QNX, BES10, Q5...they are accretive. They're not focused on "a phone". They're focused on a "platform".

I'm not upset with the earnings at all...but the kick in the groin to all the Play book owners...and the outright lies...my god, the LIES....that is what has killed my beloved BB...I'm just...just......wow...absolutely floored. I mean on the level of deceit, this almost beats Enron

Posted via CB10

Not to beat a dead horse but I'm still on the lack of support for the PlayBook. The reason I bring it up in this article is due to my dwindling desire to care. I love my Z and hope that the A gives me a reason to upgrade. The only thing is that with a broken word I'm no longer feeling like a BlackBerry loyalist. I'm just feeling like IF the A10 gets my attention I MIGHT get it. Long story short If we as customers are not supported by BlackBerry when we stood by them and bought half baked cookies (playbook) to keep them going then I don't see the purpose of backing them up.

Call this a rant or even call me a troll. All I know is that it feels like something changed today.

Posted via CB10

Q10 & Q5 (probably) will be the main catalyst on the next quarter report. I like my Q10 so much, but blackberry should come up fast with 10.2 that brings BB10 to the new level and attract more apps. They have done a good job for the new BB10.

Posted via CB10

Great breakdown. To me, BBRY is a strong buy right now. I feel like a lot of analysts (and uninitiated retail investors) are judging the numbers as an established brand/company. To me, you really have to look at BBRY as a resurrection, which is very similar to a startup in a lot of ways. You can't use the current revenue and profit model on a startup to create an accurate valuation, and the same is true of a resurrection. While it is absolutely a speculative play, I do feel strongly that there is still a TON of upside with BBRY. So many things on the horizon that, if executed correctly, can translate into a dramatic shift in revenue, marketshare, higher margins and (subsequently) profits. Emerging markets is a huge one. Apple has done abismally in emerging markets. Android barely better. There is a huge opportunity there for BBRY to fill that gap that is currently being held tenuously by subtier brands like Nokia. I'm buying the dip created by the impatient. Just my. 02

Posted via CB10

OMG are you saying the stock is going to 2 cents a share?!?!?
I'm just kidding. That's just what I thought when I read your last sentence.

I love my q10, but they're taking too long. Best option is probably to sell my BlackBerry's which i've had for 3 years and try something up to date like an Iphone or Galaxy. And maybe, in time BlackBerry will be great just like OS7 was. BB10, not impressed with the apps I don't have anymore.

Posted via Q10

Keep in mind that they can't just stop selling or supporting BBOS devices, because a lot of corporate customers are not on BES10 yet. Companies still need to refresh devices. This is likely to be one reason why BB10 devices comprised only 40% of their shipments. BBRYjust announced a new version of BES10 this mont that can be on the same server as the old BES. Also, this new version can admin iPhones and Androids without setting up multiple servers. That's a big step forward that will make more companies look to implement BES10. Add upcoming sales of the Q5 and R5, and you have some good potential sales increases coming up.

I think it is time for BlackBerry to throw the "Hail Marry Pass". The should unleash the creative potential of the TAT company they acquired. Samsung used one of TAT's components on the S4 and the consumers are tripping heads over heels, so I don't understand why BlackBerry isn't doing likewise. Like an old Workman Compensation commercial says "You got it, Use it"!!!! It's my opinion that mobile phone, these days, sell mostly based on "hype and looks ". The best productive/functional phone on the market without the hype and look is bound to fail. For BlackBerry to really get its shipments up, it must aggressively produce phones that target the impulse and social/young buyers. Yes, the cost cutting measures and all the other operational strategies that they've implemented, thus far, are very essential but will not suffice. BlackBerry should truly unleash "QNX and TAT" now before it is too late. So if it is really true that YOU (BlackBerry) GOT IT, then USE IT now.

Posted via CB10

I think TAT needs a revival inside of blackberry. I see nothing from TAT so far... they are the same bait-and-switch bunch of people who have sexy demos but zero substance.

Posted via CB10

BlackBerry oh BlackBerry... you are in hospital now. Time to prove you have it or DIE!!! Mhuawhaha...

LET'S BET! The Q5 will be blackberry's saving chip. Cheap is the way to go now. Earn from services, not hardware.

Launch a Kickstarter! That will get your employees on their feet and thinking... and a channel for your supporters to say what they really want in the next BlackBerry project.

Posted via CB10

This quarter was pretty much about the Z10.

Was not priced inline with other devices with similar hardware and better ecosystems - asking customers to pay for a "more advanced" OS that doesn't really benefit them... is not good marketing. BBRY should have seen that MS/Nokia had problems at $99 on contract... why did they expect the Z10 could do better?

BBRY delayed the launch of their new platform several times, and by more than a year total. But yet at release (here in the US) battery life was terrible and random reboot along with some other "bugs" had customers returning devices and not recommending them. Granted "leaked" OS have improved many of the problems... but you get one shot at a first impression.

Are they executing? I'd say they are trying.

The only thing that makes me sad is the PlayBook announcement. Everything else is in line with what BlackBerry said was going to happen. Meh. It is what it is. My Z10 is great. No reboots for a bit now. I just need some of these apps like Vine and Insta, and I am good. I already have Instagram, mind you, but I want the real deal. Give me apps, or give me death! Hee. Hyperbole, however, I am sure you are picking up what I am laying down.

Regardless of stocks and analytics I love my BlackBerry Z10. Smooth fast and excellent call quality.
I'll continue to support them with recommendations and my business.

Posted via CB10

The biggest problem with Blackberry is that they don't deliver on their promises. Case in point: the Playbook. They have basically thrown all those who bought a Playbook under the bus! Those who bought into Playbook did so with the assumption that Blackberry would update the software to make it better: better browser with editable bookmarks; better browser response time; synchronization of contacts and mail with desktop systems like Outlook; and more apps like Skype, Netflix, etc. Now I know that Blackberry is at the mercy of others for Apps like Netflix and Skype, but Skype is on the new Blackberry phones but not on the Playbook.
I bought into the Hype but now I'm sorely disappointed and will abandon Black berry completely! Since my phone contract is now up, I will be upgrading to a Samsung Galaxy S4 instead of a Blackberry and I will get another Tablet that at least is useful!

Too bad that even the new management cannot get it through their heads that when you abandon your customers, they will flock away!

As a shareholder and PlayBook owner, I'm more than a little upset, but I look at the alternatives: iOS, Android, Windows Phone?

Tried 'em all. Don't like 'em as my main communications device.

LOVE my BB10 OS, the gestures etc. I see my niece on her Q10, "gesturing" so fast I can barely follow, and to me, this speaks to that hyper-efficient thing that the kids today typing on iOS or Android on-screen keyboards seem to be able to do, only SO MUCH FASTER on the Q without all that "In and Out".

I feel obliged to get in my car and storm into BB headquarters and demand they stop d*cking around and hire me for an influential marketing position, because I just think they're not saying the right things... I'm still puzzled by the whole Alicia Keys thing: seen almost ZERO results from that, but maybe I'm looking in the wrong place.

If the comments that the PlayBook will still be "supported" means that Bridge will be updated on the BB10 handhelds AND there will be a corresponding update to Tablet OS (2.2?) then my complaints about the PB are mitigated. But supported is "business talk" for 'barely: but we won't actually hang up on you if you call for support" I fear.

What worries me about the support they promise is when exactly it's supposed to come.
With three more bb10 devices, another os7 model and the marketing to go with them I highly doubt we'll see an update anytime this year. I may be wrong and hope I am but that's my gut feeling.

Posted via CB10

Keep on introducing BB10 to your family, friends and colleagues. Help them who are new to BB10. I got friend almost want to sell her Q10 as she's panic with all the brand new feature in BB10. Fortunately, she consult with me and now she understand BB10 features and looking forward for the apps to be port in soon.

Posted via CB10

The comments from almost every industry analyst, except for those individuals on here of course, ranged from outright ridicule regarding the overall dysfunctional corporate mantra at Blackberry to an out-an-out calling for the company to be broken up, sold off in pieces as they are all but finished. Thorsten should resign over the laughable and embarrassing launch of OS10, one money analyst said. Twitter and other sites exploded over the "blatant lies regarding the Playbook". Arguments spewed forth that, yet again, Blackberry shows it's true corporate slogan is - "We promise much and deliver next to nothing". I'm not saying that I necessarily agree with all this - the Z10 is by far my favourite BB product of all time - but anyone who thinks that today was a good day for Blackberry is in serious need of medication.

The Z10 once is a very elegant device. Once you've given yourself a few days to swipe around a bit you won't want to put it down. There's a lack of app's that I am used to on my Iphone but not as many as one might think. The few that aren't native I've managed to sideload.

Doing my own informal channel check at an AT&T corporate store yesterday they indicated that 85% of sales were still Apple product. The rest mostly Android with a little Windows thrown in. I asked him about the the Z10 and he said they no longer have them in stock. They do have in stock the Q10. He indicated that Blackberry has dropped the ball with regards to marketing. The Q10 was stuck in the back of the store lost among the legion of Android devices. No banners, no signs no nothing with regards to Blackberry. He believes the Q10 and Z10 to be solid platforms but without marketing being thrown behind it from Blackberry he doesn't anticipate any "new" converts just current Blackberry users trading in their old ones for the Q10.

"Are they executing"
It depends if you mean a product rollout/launch then no
If you mean their own demise then yes slowly but surely.
Sadly that will be the view of every major news site tech blogger. And in turn that will influence the consumer.

Posted via CB10

Sheer incompetence. How you sit on 3.1 billions dollars of cash and don't spend enough in USA ad campaign to bud awareness is completely a joke. This was a poorly executed launch. The company had to go all in and they didn't. Depending on emerging markets and shipping (not even sell through) Q5 is not going to drive revenue. They spent 500 million for all markets to promote their new BlackBerry 10. But they should of focused on unified rollout by carriers in Developed nations. (North America and UK) and targeted their ad spend in those countries to see a turn around. BlackBerry 10 is the superior mobile OS the lack of awareness in America and UK highlights poor a Ad spend. Very disappointed in these results. When you see how much marketing went into the S4 which is largely a gimmicky phone, they had to out spend their rivals. The second thing is the hardware specs on the A10 should of been way the Z10 had. By the time they release the A10. That will be saved technology. Very poor execution on Heins'es part

Posted via CB10

"How you sit on 3.1 billions dollars of cash and don't spend enough in USA ad campaign to bud awareness is completely a joke. This was a poorly executed launch."

They can't do any better than the carriers allow. US carriers are having problems moving other devices and so don't want to push the BB10 devices.

Once the inventory moves through carriers will push the device.

The carriers rule the smartphone market and BlackBerry aren't big enough to force the issue.

Sad as it is, BlackBerry have to suck it and keep on moving. Rally up the die hard fans in front of Alicia Keys, she is not saying BlackBerry loud enough.

Posted via CB10

BBRY is at the point of no return. They must keep marching forward. They should stop BB7 and focus solely on BB10. Keep adding features to BB10 and release it to customers. Yesterday my Tmobile 10.1 Z10 rebooted by itself. Apparently, reboot problem is still there. My coworker's Verizon Z10 devices are still running on 10.0.9.x. This is unacceptable. There is so much tolerant and patient that consumers have, event the loyal ones. I'm sure the engineers at BBRY are working hard but official release update must be pushed out promptly across carriers.

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