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
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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

368 comments

Punji Panicker

They have also now completely lost consumer confidence. I am so disgusted by today's developments. I hope they license out the platform to Sony and HTC and get out consumer play. They really have no idea what they are doing in the consumer market

Posted via CB10

alternator77

Why would any hardware maker pay to licence bb10 with a pathetic app selection when they can use android for free and have a huge supply of apps??

Sorry i just don't see it. These companies aren't buying the "it's qnx it's in nuclear power plants " Kool aid...just saying.

Posted via CB10

andrekb74

BlackBerry has themselves to blame for this really... the roll out was horrible, the marketing shit, carrier support negligible and the drip out of devices void of common sense.... not to mention software upgrades.... as much as I love BlackBerry feels like the begining of the end from a mass consumer perspective.... back to being just a phone for business and can't bridge the gap.

Posted via CB10

heri16

I have iOS7, Android 4.2.2, WP8, and BB10. The only thing that will save BB10 is word-of-mouth, a great Android 4 emulator, and one sexy jaw-dropping "innovative" feature.

Yes, word-of-mouth. Other than that, I am outta here.

Blackberry did not fail due to earnings call, but because many departments/divisions inside it are systemic failures, almost idiotic. I am saying this from personal experience. They should eradicate these dumb ass who have great showmanship but zero skill to deliver, and centralize everything to an innovation lab of bright individuals, just like a start-up, or a mashup of great thinkers.

Posted via CB10

lorax1284

Of those 4 platforms, which do you prefer, and what is the basic functionality requirement that platform meets that others fail to meet?

Auxi

I also have all four as we are developers and have developed apps for all of them (including one recent BB10 app). As a developer, iOS is the easiest to develop in and iOS7 will be even easier if the beta we are playing with in anything to go on. So expect to see more businesses making more apps for iPhones than any other for years to come. For my work in business development, the Z10 wins hands down. It's like walking around with a mini laptop.

WP8 comes in a close second as I like how it integrates with my new W8 desktop widgets. Actually improves my productivity a bit. Android - - - don't get me started. Not a very big fan which is a shame because I like Chrome browser apps. Just think the phone interface is too messy and seems to slow me down. You are not supposed to think faster than your device and Androids are not as "smart" as they should be ...

robert beeldsnijder1

No swet!all bb needs to do is to pump up cheap bb10 phones to the emergence markets an work on their bbm an make it more exclusief than on the other platforms.

aragone79

Z10 is just available at the market just for 60 days. Count it by yourself. 31 Jan to 31 March. Even in Indonesia got Z10 on March 15 which just 16 days periods in Q1. 2.72 Mio of BB10 shipping is just for Z10 only.

What about Q10? Well, here, Q10 just available in the market 3 days ago, June 25. Q5? It is expected to be available within September.

On Q2, we will see the fair result for Z10 campaign and a little bit Q10.

Q3, Z10 and Q10 also a little bit Q5. Q4 will be for Z10, Q10, Q5, and a little bit A10 or Aristo.

I'm not saying that BlackBerry 10 has a good performance to bring BBRY but it can give a light for BBRY to do extra effort for BB10 in the market. One of key factors is to bring more well known apps to BlackBerry World and available to all BB10 device?

IMHO

Posted via CB10

HKINDO

Blackberry have their time.. they put the release date back so far, but dont deliver, IMO..
Plus blackberry probably don't cooperate with the prism program that's why the US don't support it LoL

THIS IS THE END!! Can i install key lime pie on my Z10???? :p

Posted via CB10

luniboy26

I think this is pretty much it. For people like me the time came and went for them with the Z10. Count me as one of the people who were a die hard BB fan as they were my first smartphone and I felt the Z10 had so much promise but while using it, it was clear that BB was basically a gimped Android device and since I had a Note 2 at the time there really was no incentives for me to keep it especially since I brought it at full retail. BB users are rooting for Android emulated ports instead of native apps which baffles me beyond belief. I was looking for an escape from Android and iPhone and surprisingly found it in Windows Phone. Blackberry doesn't have the pockets like Microsoft to woo developers so I know apps will for the foreseeable time be a major problem which would have been fine if the core OS was up to snuff but to me it isn't and that was the last time I cared for a BB which saddens me. Hopefully they can do better next year.

Thunderbuck

The bottom line here is that in almost every respect this was a good quarter. In almost every respect--revenue, overall subscriber base, growth--BB posted promising numbers. The legacy decline is certainly evident, but not surprising.

Won't deny, I would have loved to see them state more BB10 sales, and we can only hope that the Q10 and Q5 broaden the scope for Q2.

Still all in, going to try to buy more.

njblackberry

You are living in a fantasy world.
Subscriber based dropped and now they won't report it.
Device shipments were below the most bear-ish estimates. You took a haircut today but will buy more.
Delusional.

Thunderbuck

The product is decent, if in need of maturity. A year ago the pundits were predicting the company wouldn't even live long enough to get BB10 to market. The MDM market is very promising and they have an inside advantage over competitors.

Am I delusional? Maybe. If I am why do you care?

ferre_kun

Because people are reading. Or have no life. Or it is his life lol. Whatever, doesn't matter to me. I love my z10.

I think crackberry is now flooded with people who want to take BlackBerry down, and showing up when there are bad news about BlackBerry.

They are doing a good job. I'm thinking to uninstall CB10 now, I still can use computer to come here anyway. Too many negative noises on bad news but no constructive input whatsoever. Not you Chris, you are balanced. Awesome article like always.

Posted via CB10

dannyd86

The launch of the US, or lack thereof is killing blackberry.

Posted via CB10

wujiahunter

BlackBerry failed because they spend time on making new phone like Q5 and the newer phones they should just keep z10 and q 10 for the moment and spend time on how to get into potential market like Asia, as well as make more apps, BlackBerry phones don't lack the good design, just the market and it's apps

Posted via CB10

wujiahunter

Btw, BlackBerry ceo is a dumb

Posted via CB10

D.Vader

That is a ridiculous analysis. They need the Q5 to compete in emerging markets where cheap Androids and yesteryear iPhones are starting to fill in.

You can't base a phone line only on premium phones.

Ryan Ball

how can people say they are dead. Just brcause they didn't have a good quarter. The q10 was only out for a month in like 4 Countries. The q5 is not even In this. And with the a10 coming. Give blackberry a couple more quarters before calling them dead.

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

Ryan Ball

And the q2!

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

Ryan Ball

But I do believe blackberry should have better marketing.

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

D.Vader

BlackBerry needs (absolutely MUST) replicate ALL of BBOS features on BB10 before they can really push BB10. The BB10 Bridge App is pretty terrible compared to BBOS. Little OS features like deleting Messages off Device vs. Server.

Also BES 10 doesn't not support BBOS devices, which is HELLA STUPID! Means corporations have to run 2 servers. It seems with every great idea BB has they shoot themselves in the foot over it.

These ass-hats up north bettter get their asses in gear, I am really starting to sour on the BlackBerry brand. I feel like I have been waiting for something that I am slowly realizing is not going to come into fruition.

IMHO BlackBerry should just go private, they can't build a good brand name if they are constantly trashed in the media over their financials. It just plays right into the competitions narrative that BB is dying.

EDIT -- Another thing, stop showing off cool crap you are doing with Bently. Why don't you bring that tech into a car that most of your audience can afford.

br14

Ever heard of On-star?

It's based on QNX.

But noone is going to be impressed if they show a Chevy Spark. Or are they?

TimLemieux

Does Alica Keys have a plan to turn all this around??

ferre_kun

Don't think so. BlackBerry need to rally the die hard fans up.

Posted via CB10

global14u

BlackBerry is being discussed on Bloomberg at 300 pm Eastern. Program teasers are very pretty nasty, it's being called the Black and Blue Berry. Ouch.

Hopefully Q2 is the turn around. Must go private if not.

Posted via CB10

pilyonglover

Crackberry need to stop pretending that z10, q10 or any other bb10 phones are great phones. They are all far behind, both in hardware, OS and apps compared to samsung, htc, apple and even nokia..

Posted via CB10

mobilesync

The CEO doesn't know how to use Z10 or Q 10 so he got another guy to demo while he is on stage. Pathetic.

MS

CbrezzI

I got so much to say but I'm not typing it lol and a lot of yall explained it well I will say this I'll keep my Z get the A10 but I think that's it by then I think people will start to realize that BlackBerry is dead I hope I'm so wrong I used to be a proud BlackBerry user but now I'm having second thoughts I mean what u gonna do if BlackBerry is done you'll have no other choice but to get a Galaxy I phone etc... I hope that day never comes but every beginning has an end and I think it's going to happen sooner then we all think.....

Posted via CB10

everjeff

They have 3.1 billion in cash, there is no reason to worry at this point.

z10fido

If i was diehard bbry i would feel pretty stupid for falling for this bs thor has been pulling off

Posted via CB10

fly_branch

Our company has thousands of BlackBerry phones and they are opening it up for us to choose which phone we want now. I know that most people are going to leave BlackBerry. Especially ones that have been watching and experiencing all of these update issues and problems.

Posted via CB10

freedomx20a

Can't wait for the A10! gonna rock!

Applevine

Living in the so called emerging market in Barbados, the price of the handsets and the lack of any incentive by carriers to get you to upgrade are more self administered shots to the foot of BlackBerry. Z10 is retailing for the same price as a S4, less prominent in the store space, and then you are informed that your beloved unlimited BlackBerry data plan (BIS) is no longer an option. The Q10 is the same thing. That was a feature that I believe BlackBerry did not factor in in their plans. Persons who flocked to the curves and such will upgrade to android and ios which have more incentivised upgrade plans. you can get an iphone 5 free depending on your plan, no such option for ANY BB 10 phone. iphone is always out of stock. Do the math! So hoping that the A10 wont be the last option i have for a BB phone, but who knows!. We'll all survive, the Palm persons did!

amaugie

I don't know anyone else that has one or wants one. The sale's people in the stores completely ignore them. The writing is on the wall. Eventual takeover target.

Posted via CB10

Punji Panicker

Their in ability to move volumes forces them use cheaper parts in order to maintain margins. They really needed to go all in to move into volume sales and cut their margin growths by shopping greater quantities of phones with the best specs available at time of shipping like the s4 has done. I still can't believe this incompetence

Posted via CB10

Rlmcs337

Chris, great article. Has anyone looked at the impact the carriers have placed on new sales? I have quite a few friends like myself that due to changes in carrier upgrade programs have been pushed back to 2/2014 before we are eligible. I am sure that this is also a serious factor in the sluggish growth of BB10 sales, especially in the US market. It would be a great thing for BB to implement a customer loyalty program to bypass these carrier restrictions.

DJRikko

Come on people. Stop panicking. This is going to take some time and effort to bring back to better levels. I for one, can't worry (I have shares) because when looking at the market, you can't be speculating nor reacting on emotions. Chill.
Looking at the numbers, it's obvious that BlackBerry needs more revenue streams than hardware. BIS fees continue to decline and as they do, the number of bb10 sales need to offset that decline. They are not. I'm sure that slow update roll outs, and fragmented launches isn't helping. BlackBerry needs to be more coordinated in all fronts to maximize reach.
Anyway, like I said, they need more revenue streams. I think they should look into a deal with Sony and just license BB10 out to them. Obviously they are not selling as many devices as they hoped for so I'm not sure that product cannibalizing is an issue at this point.

Posted via CB10

Huey Newton

I think they need to be more aggressive on the advertising front. People don't buy what they don't see its as simple as that. The z10 kicks ass but people don't know about it.

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Savior4Life

Ahahahaha! Talking about devices like the Q10 and the Q5 to save BBRY is ludicrous when it is exactly devices like these that got them into this predicament in the first place. And with Thor saying there is still a market for legacy devices is like trying to dig themselves out of a hole by digging down. If they continue with this mentality they are finished in the mobile device industry and I for one won't be following them down with the ship. At least they have software and car systems to pull them from the depths.

Posted via CB10

robin11

$630 mm cash flow, $284mm went into inventory build, $196mm added to cash pile, 3 more devices, bbm going cross platform, channels, continued roll out of BES10, more money spent on product awareness etc.....Thorsten stated this entire year is dedicated to restructuring so expect 3 more quarters of modest losses after re investing cash flow into the company each quarter. Also liked that Thorsten stated that enterprise customers believe the blackberry smartphone is integral to blackberry "package", putting to bed Misek's notion that BB would become software and services only. I have believed all along that BB must be vertically integrated and offer an entire eco-system. It takes time be become a Blackberry phoenix rising from the ashes of the old RIM, legacy service cash flow makes it possible and Thorsten is the guy to do it. Blackberry is a next year story. Is the $4 haircut just a discount for time, or is there more to come off?

Gord Cluthe

Well said :)

Posted via CB10

stefanbechen

I am not too surprised about the numbers. Blackberry left consumers to get tied to iOS and Android. They missed that train and the number of customers in that area is huge. But as someone wrote a while back, lots of people carry 2 phones. One for private stuff and one for getting things done. The latter one is a BB in many many cases.

I am traveling a lot and I started to look out for what phones people use and I see a lot (
I really mean A LOT) BB's. Legacy BB's, yes, but if Blackberry comes up with a good strategy to have those customers moving to a BB10 device, then the potential is big.

As far as marketing is concerned, France seem to be leading here. I travelled Paris and Montpellier last week and was astounded to see that many BB ad's.

I gave up on my iPhone5 and now have a Q10. And I don't regret it at all.

So stay supportive and BB will succeed.

Gord Cluthe

+1!

BlackBerry needs the support of people like you to bring BB10 to full fruition.

Posted via CB10

mmoosa

Maybe they should have listened to us? Sort out all the missing features and bugs. And roll it out without carriers.

Posted via CB10

ferre_kun

If only carriers will allow it.

Posted via CB10

Poirots Progeny

I'm interested: why are some people, on here, suggesting bb10 be licensed out to someone like sony? If people don't want to buy bb10 on a BlackBerry device, what makes people think they'd buy it on another device, sony, samsung or otherwise?

Posted via CB10 on my BlackBerry Q10

bman3898

The Q10 is STILL not available to American Sprint customers. And Verizon customers STILL waiting for 10.1. No wonder bbry is not doing well.

Posted via CB10

rim_investor

Mark McQueen is looking like a genius with his "throwing in the towel on BlackBerry shares" articles on Seeking Alpha. Thorsten boasted of demand for Tens of millions of Q10s but they can't do a simple cut/paste. Sounds like Balsillie's PlayBook forecasts, and look how that turned out.

Posted via CB10

buckwylder

Good read. Thanks. I agree - downplay the legacy platform as much as possible and if they're going to spend money, do not spend any of it on a new BBOS device. They're absolutely needing to focus 99.9% of their energy and resources into getting current stragglers onto BlackBerry 10. I can't stress that enough, again - get as many current BBOS consumers and enterprises onto BlackBerry 10 ASAP, with incentives to do so!!!!!!!!

BlackBerry 10 is an amazing platform and all three currently available devices are really really good. Awesome in fact.

Get the word out that BlackBerry 10 is everywhere. I always find myself having to explain to people the scope of the QNX acquisition being the core of BlackBerry 10. People have no clue how much of what we do every day relies on this platform let alone how huge that is for BlackBerry.

To people who are still using old BlackBerry legacy devices: GET WITH THE PROGRAM already!!! BlackBerry 10 is so much more than your Pearl 3G or 9700, or even your 9900. Wake the **** up already. (I typed the stars, it didn't block anything, lol). No, I don't care at all about the little features you miss, get over it and upgrade, seriously.

I bet people are so lost on BlackBerry 10 that they look at their legacy device as compared to whatever their friends use and obviously think, "my phone looks weird compared to all these samsnugs and scrappels I see my friends using..."

They also probably think, "how come every store I go into has a BlackBerry 10 demo setup that doesn't work and the employees are SUPER ignorant towards BlackBerry???" (that isn't everywhere, but as we all know is more common than we would like...)

I see SO MANY suits walking around this city with torch 1, torch 2, and bolds of various models. I'm not entirely sure how these people are missing the message??? It's like upgrading to a brand new Cadillac from a Pinto. I don't care about certain little nuances and some features still being worked out with 10.2, BlackBerry 10 is WAY better than BBOS, it's like night and day.

Posted via CB10

AtInsider

Canadian Tire, BMO Financial Group, Torys, Canadian Diabetes Association, Maple Leaf Sports & Entertainment, just to name a few along with 60% of Fortune 500 Companies Testing or Using BlackBerry 10 Currently. BlackBerry 10 hasn’t even had a proper chance to saturate itself in the industry. I can see continues strong Z10 sales with Q10 sales toppling it by 100 to 1.

In my opinion, good times ahead for BB10 and the mobile industry. BlackBerry just needs to work on its advertising and marketing, because right now it’s not that great.

Ryan Ball

My thoughts exactly

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

br14

Corporate users have to wait till their employers upgrade to BES10 before they can upgrade their devices. It's a massive shot in the foot from BlackBerry.

Dropping BBOS like a stone has contributed to the current mess, because a BB10 device can't be managed by previous BES but only by BES10.

Frankly it's that kind of decision making that is crippling BlackBerry.

Corporations have to decide whether to spend the cash on the upgrade to BES10 (which I believe is free but requires additional hardware and resources), or move to some other MDM.

Had BES5 supported BB10, we'd have seen a very different quarter. I know at least one client of mine that has dropped BlackBerry altogether and moved to a different MDM. (Having said that they're now in a mess with their mobile strategy and can't even access their corporate intranet from iPhone and Android).

When BlackBerry dropped BB7 they made a major strategic error. BB7 isn't just about phones. It's an entire infrastructure.

ferre_kun

You need to come to indonesia. Most people here are carrying Gemini. Some people are still using Huron. Bold and onyx are popular too. I haven't met anyone using z10 or q10 in my town.

Two reasons for that: One, they don't know and two, too expensive for them. If BlackBerry got not enough results from people they paid, then it's time to use people paying for their device. They need to start rallying die hard fans.

Posted via CB10

rim_investor

James Faucette...genius
Peter Misek...dumb ass
Gus P from Scotia...stupidest ass
Let the downgrades come!!!

Posted via CB10

playpen007

I agree with you Chris that it needs at least couple more quarters to prove itself if it is going to in be business for a very long time or not. BB10 has been in the market for about 5 to 6 months and a lot of people don't even know what is BB10. Blackberry needed to send out a lot of representatives to every large cities in the USA to show people on the street how this thing can get the job done fast. Or they have to put out a commercial through TVs on every major cities.

dannyboy0407

To turn a company around it takes time. It took apple all of the 90's and the first 5 years of the 21st century to turn their company around.

So long as that 3.1 billion in cash doesn't start burning. They have time to evolve and innovate.

Posted via CB10

AtInsider

The results could have been better obviously, but looking at the botched BB10 release in the USA, not surprising. Anyhow look at the positive, the last Quarter was positive. The Quarter to look for is Q2 & Q3. It's a Brand New Mobile Platform, nobody said this was going to be easy. BlackBerry from the beginning was fighting to get its Brand back, you know the BlackBerry brand which got dragged in the mud for a couple years now.
Kevin, you should give some advice to BlackBerry. For one, there marketing and advertising sucks real bad, if they can fix that, they will flourish in 2013.

crjohnston

How do they calculate the subscriber base?
By active bbm pins? Or by bb user Ids?
Or is it how many are using the blackberry network which BB10 I didn't think they used anymore?

ANGreen1

Maybe now the senseless, delusional comments will disappear. Now maybe instead of childishly calling the iPhone a toy BlackBerry fans will realize the company is in for the fight of their lives. Maybe the boards here will return to some measure of sanity. But I doubt they will. BlackBerry fans will continue to bury their hands in the sand and claim they do 'work' on the BlackBerry and the missing apps don't matter. Jobs was famous for his reality distortion field, but I've never seen one as strong as in these forums.

avidberry

I don't understand why so many people expect Q5 to be a hit... Q5, at its current pricing, will not make a huge impact! BB, in my country, is famous for selling overpriced products. BB's strong market traditionally offers limited selection of low-priced phones which make it an ideal market for curve products. Nowadays, there are a lot of Android products to choose from and some of them are actually quite decent.

stots

The vomit on this thread being spewed is just disgusting. For your information Kevin O'leary is saying give this till 2014 for solid sale results for BlackBerry. In other words STAY LONG!!!!!

BlackBerry Z10- I use it for a phone and a computer :)

steelers81

The fkin browser has been frozen since last 2 months...the maps is joke...fuking they deserved this....customers are no longer fools...

Posted via CB10

Playbookjoe

I have heard mentions of cash burn up to hundreds of millions in marketing, people calling for paying for apps, etc, etc.
if they're going to burn money could they not just mass produce oh, say 25 million z10 and just hand them out in the us market? Maybe they can get the costs down to $200 a pop, and just toss them around like candy. Half a billion, straight up. No advertising costs, tax rebate, no app purchasing costs.
Surely that would get some big name apps on board. Having 1 in 10 or so Americans on it has to help.
If nothing else, instant market penetration.

Posted via CB10

Playbookjoe

Yep, just did the math.
That's 5 bil.
Damn decimals, lol.
Nvmind, move on. Can't delete the post, awkward...

Posted via CB10

weekengyip

Management has earlier guided for a break even financial performance for the year but the street viewed it differently. When results disappoints, we can only blame the analysts for the poor judgement. We previously laughed at those who were bearish but given our pledged commitment towards the product, we failed to read the following indicators:-
1) Curve sells the best: Not targeting the low-end market will spell disaster as it may not spur app development which is an inflection point to drive higher-end retail purchases
2) Slow roll-out of products into strong emerging markets (i.e. Indonesia). Again, the price points may render this ineffective
3) We fail to admit that the launch in US was appalling - Ultimately what drive earnings are selling volumes and ASPs
4) Fail to burn cash in the last quarter for SG&A - At its current state, cost cutting may not be efficient as investors may view outselling of the BB10 products as a major catalyst over a small unsustainable earnings derived from cost reduction exercises
5) You need tablets to win mobile computing for brand awareness. Carrying around a tablet still looks cool and alot cooler than a phablet. TH, its awful for what you have just done to the PB. Thankfully, I am an I-Sheep on this

Catalysts
1) BES10 - In my honest opinion, this could be the MAIN Catalyst moving forward. BYOD could be the best option for most corp. out there as it is a lot more expensive to give physical devices to employees. Margins from this division should surpass the phone
2) 2QFY14 results?

world traveler and former ceo

Time to stay cool... not panic sell!

Q10 is. Winner!! Z5 will be strategic for emerging markets....

BBM cross platform, licensing potential,... patience.

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mobilesync

Do you see more app downloads from Q10 than Z10 over a same time span after launch? Why do you think Q10 is winner? Because RIM said so?They have cheated so many times. How can we trust them again.

I see far fewer from Q10 when comparing them over same metrics.

One thing I hope though Q10 users are more communication oriented and most just use the stock apps without downloading extra. I really hope and pray this is the case. Otherwise, end of BlackBerry.

hondaf17

What happens if an Android manufacturer decides to release a phone with a physical keyboard?

mobilesync

Then, that phone goes to trash can. However, you raised a great point here. If RIM depends only on keyboard device, on the day Apple releases one RIM goes to trash can.

Don't tell me Apple won't make one like others did. Apple will make one and one with BIG screen and keyboard IF Apple can find a new software chief. With the Sr. of design running the software department, I doubt Apple can crank out such a phone soon although it is in their plot. So, RIM still has some time to enjoy the keyboard monopoly.

Wilsonia Goldens

You will just be punching out malware on a keyboard.

Mo Cat

Indeed, patience, Rome wasn't build in a day. BB came back about 6 months ago.

mobilesync

I am out of patience not because they shipped only 2.7 million 10s or 13 cents loss. I am out of patience because they repeated the same "reboot" problem of BB 7 in BB 10 and they don't fix it quickly. They don't even treat this as a serious problem at a strategic level. If someone repeat same mistakes, there is really not much opportunity to stop him from doing that again. "reboot" just one example, there are many same old RIM problems across the organization and across the entire product spectrum, from software, to dev tools, to hardware to service. Same old RIM problem under new management.

mobilesync

Samsung and Apple can lower cost on material and labor, RIM can't. It is not RIM's fault. It is Ottawa's fault. There is also high tech labor shortage in Canada. So, RIM can only play at high end to minimize the impact of labor cost. I would give credit to Heins for his strategy of playing at high end. But unfortunately Heins cannot execute his own plan, he cannot make phones with high quality (partly his fault; partly due to labor shortage). To execute, Heins must use disciplines across the entire workforce, cut in Canada, expand in U.S. and Europe. I don't see he can do that although he wants to. Therefore I say he must go although I have high respect on him.

mobilesync

RIM and Heins. You must cut workforce in Canada and expand in U.S. and Europe. Do it now before it is too late. Then, you can return to BlackBerry's glorious days to produce the MOST RELIABLE mobile devices in the world. It is quality and reliability of BB10 that hurts the most, apps shortage second.

Remember, your core user base chooses BB because of reliability. If you loose reliability you loose your core user base. You can't grantee quality with the poor resources in Canada. Cut and expand. Now!

world traveler and former ceo

You should get an education before making such stupid comments ....

mobilesync

Suppose you had a good education, I am puzzled to see the s word here. I found your comment by searching your s word in one shot.

Suppose you were a CEO of wthatsoever, it is pathetic you don't see the real problem of RIM.

Suppose you are old enough to be a long time BB supporter, I am puzzled you don't see I am a long time RIM/BB supporter and I am pushing for good changes.

Suppose you are a "world traveler", it is hard to imagine you never got into a situation when you just landed and wanted to make a phone call but the phone didn't work or rebooted.

Suppose you still have confidence in RIM, it is odd you don't think RIM and Mr. Heins are actually doing exactly this. I am just giving them more support to do so.

One thing I am afraid is that Mr. Heins doesn't have enough support to do the things he plans to do because of people like you.

mobilesync

Canadian government. Please come up with an immigration policy like H1B in U.S. and open doors to computer software and hardware and RF engineers before all your high tech companies die like Nortel. Canada has its unique advantages in attracting talents from around the world but our immigration policies are bad. You open doors to exotic dancers. Why can't you open doors to software engineers. Open the door, let them proof their qualifications here with H1B. If they don't qualify they either go to the south or go home. The current immigration channels are slow and have too many loopholes to get morons or cheaters.

br14

You are kidding right. Have you ever been to Waterloo?

The place is full of immigrant software engineers :-)

mobilesync

A10 better be a phone with both keyboard and big screen - an opportunity missed by Q10.

Don't worry about ladies with small hands or pockets. They have two hands and their have purse.

Don't worry about one hand op too much. With properly distributed weight, one hand op should be OK on a relatively long device.

However, if RIM is a true innovator, it should make a double sided device with auto screen-switch and reasonable thickness and battery life. Don't need to worry about price, if RIM can make such a double sited device. $999 will sell a million on week one, 10 million a month, "Tens of millions" a year.

You just cannot sell "Tens of millions" of the Q10 with the tiny square screen, no matter for how long, a year or ten. Because human nature dictates there just aren't tens of millions pairs of eyes enjoy the tiny square screen, not even within the communication-centric user base. Wake up to the reality Mr. Heins !

bbry4life

BlackBerry's marketing needs to be improved. I don't like ANY of their current commercials. None are very effective in showing off how BlackBerry's features are not gimmicks. In a 30 second commercial spot they probably stitch together about 10 different clips that jump all over the place. At the end of the 30 seconds I would have seen all the BB10 features then forgotten everything I just saw cuz they all zipped by so so quickly. BB ads need more Focus!!

I see BlackBerry trying to put ads everywhere, but nothing is targeted. For example the Much Music Video Awards commercial, targeted at teens, showed BB's ability for task management and getting things done. Duh, teens don't care about that. They want super fluid access to Twitter, Facebook, BBM, email and SMS (i.e. the Hub). They want instant sharing of photos and videos in one fluid swipe. Show BB can do that !! They want to comment on their friends' pics and videos in one swipe. That's what the ad should have communicated about BB.

Getting things done, superior security, speed, ability to integrate with existing infrastructure. That should be communicated to the Wall St. / Bay St. crowd.

BBM Video should be targeted at grandparents.

BlackBerry needs to show there's something for everyone, not put out generic ads everywhere and hope that the target audience will see one of them.

njblackberry

Figures lie and liars figure. This was an unmitigated disaster for BlackBerry and the stock suffered. No conspiracy here. No blaming short sellers and a vast global conspiracy. BlackBerry failed to deliver the goods. There is no pent up demand for Z10s or Q10s or anything 10s. They bailed on the Playbook (which was an utter failure from the beginning).

There is no way you can spin this differently.

br14

On the contrary. They predicted more or less exactly this result in the previous quarter.

It was idiots elsewhere that suggested BlackBerry would do better.

mylrob

I'm reading all these comments and...I'm baffled. Many of you are rising the white flag of surrender and are giving up on their BB's. "The Z10 is a goner", "that's it for BB"....nonsense. The Z10 is still the same Z10 you loved before the earnings were released. The Q1/14 results should have not been a surprise; it will only get better from here. Just relax people. And you whiners out there that are NOT shareholders should chill out. It is us the shareholders that have reasons to cry.

mylrob

Guys, the Z10 is the same Z10 you loved before the earnings report, so chill.

wyrdfool

+1

Posted from Z10 via CB10

wyrdfool

All dooms and glooms are only problems for the short sighted. We need to have a longer term outlook on things.

Posted from Z10 via CB10

ltelios

It seems to me that smaller companies are going the way of the dodo. Its frustrating that BlackBerry is being compared to Samsung and apple in regards to product release. The reality is BlackBerry doesn't have the same amount of disposable cash to release their products globally all at once it's naive. But the reality is people particularly north American's don't know how to wait for anything anymore. I'm Canadian just to clarify.

It's going to take time for BlackBerry to catch up deal with it. The corporate world doesn't change devices overnight. Albeit BlackBerry has itself to blame for how far down the hole they went and marketing could be better, but I don't have the answers in that regard.

What I've noticed about BlackBerry stock is that it has nothing to do with the product, but rather to do with the perception of the company. That applies to in Stock on the market.

I own a z10 and am very happy with the device. I also have a small number of shares. If you like the device buy if not quite whining about it and go to another platform.

Posted via CB10

Merlin Pit

I just don´t like Heins because I think he is doing a great damage to the company. He says nonsense things like "tablets will be dead in five years". Why does he has to say moronic staments likes this? Doesn´t he see that nobody will believe in the company? Then, he has serious delays in the launching date of Q10. This awful because all the resources he has spent on the presentation and in marketing goes down the tubes with these delays. This guy is not a serious person; people are beginning to get tired of his lies. Since he is CEO of BBRY, there has been a decrease of 10% of core subscribers. Many subscribers have been shouting for more applications and more innovations or new things. Heins doesn´t listen to his customers. Seriously, BBRY should consider another CEO before this guy completely ruins the company; probably already too late.

ltelios

True the subscription base Aq

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Kurt Windibank

Why wouldn't they have announced Playbook thing well ahead of earnings? Like when Thor said tablets were dead. Just added fuel to the fire.

Also..maybe should have saved announcing bES10 installs were at 18,000 for ER in read of a couple days before like they did.

Very poor communication in my opinion.

Sending signals of strength to the market and sitting on a chappy ER.

They also sounded stunned on conference call.

Disappointed indeed.

Posted via CB10

jatinpal

This was to be expected. BlackBerry is faltering when it comes to penetrating in growth markets like India, other SE Asian countries. I'm not sure if BlackBerry has understood that pricing has to be right here, despite being in these mkts for a long time. Z10 is one of the most costliest devices in a country like India. I was totally stupefied at BB's strategy of. launching the Q10 at a higher price point than the z10!!! Just what do they wanna do here?? Scare away people who are contemplating upgrading/ migrating to BB from other platforms? I have a lot of friends who were eagerly awaiting Q10 to hit India so that they could dump their current phones and enjoy the best qwerty experience there is. But BB's stupid pricing scared them away. And they and I guess that Q5's gonna be a big disappointment too on pricing, although it is supposedly, kinda, entry level device. Come to senses BlackBerry and fast.

ghostzapper

No they are not executing. Come on. 2.7 million units. Their investor engagement is non-existent. They couldn't even kill off the PlayBook without tossing a bone to the faithful to participate in its replacement. It has become obvious that this management team can't pull a surprise out of the hat. The detractors and shorts were bang on. Smarter and better data. I found BlackBerry Live to be a dud and this quarterly report string together 2 failing grades for this management team. Next quarter, a loss, will string together 3. By then the faithful will be leaving in droves.

nabil114

I think they can do better.

Andy321

I don't understand why people don't get that enterprise users, who are the core bb user, take far longer than one quarter to upgrade. Do people understand that enterprise needs to get the new bb10 server before their employees can adopt BB10 phones? Enterprise won't do that on day one or even day 10, just because it is possible. Do people understand that government needs to thoroughly vet BB10 and will be in no rush to adopt, strictly to keep some BS-ing analyst happy? What happened here was that people bought into analyst speculation about what sales might be. How can people say that the nay sayers were right when one year ago they were claiming that BB10 would never even make it to market!

Posted via CB10

Sandeep Jain1

If people were expecting BlackBerry to post a huge profit in the first quarter it self they were expecting a lot. I mean it a huge gap to cover, BlackBerry just launched the BlackBerry 10 device anyone who knows to run a business will agree that it takes at least 6 months to recover and get back on track. I love BlackBerry I am sure they will be able to pull it off!!!!

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Wilsonia Goldens

There was some really weird reporting going on before the financial report. All the stories had been negative and then a couple of days before the financial report was tabled the stories all change to the critics saying Blackberry was set to report better than expected sales and results so people who were going to sell before the report keep their shares. When the financial was released everyone was shocked, panicked and sold at whtever they could get. Now all of the stories are negative again. Any manipulation going on here?

steelers81

BlackBerry is a loser...results prove it....end of story.

Posted via CB10

timmycanfly

This is a dangerous report period for BB. I personally think we all knew that this quarter was going to be ugly.
Enterprises need to upgrade their BES in order to use the device without it being a complete data hog. Companies like mine 28000 employees (guessing 4000 on BB) are slow and methodical about these decisions.
For many this will be a crossroads....do we invest in BES10 or start to turn away from BB. Add to the fact that enterprise apps like Lync, Jabber, Jive and many others are not available to support the growing communication infrastructure CIO's are adding.
Time will tell.

Posted via CB10

mobilesync

Contrary to the post above, BES (even the old BES) is the only Enterprise mobility server that can seamless support Lync, Jabber, Jive. BES 10 deos this even better. The others are at least 5 years behind.

That post talks about app. The key point here is not app. The key is a two way (both mobile and sever can initiate a session INSTANTLY), secure, reliable, and battery efficient communication protocol that can seamless suppor these services. BES is the only one that provides the support. It has been doing this since 2001. I personally deployed such systems in large orgs.

The second would be GoodLink which first attempted to do so by copying RIM in 2005. They then dropped the plan due to fund issue. Pathetically, even today Good still cannot support theses services. However Good is the only one close because it has a similar architecture as BlackBerry. Forget anything else, all garbage compaed to BES.

So folks don't be confused by previous post.

It is funny these days people only know apps. For many apps=mobility. Apps is no more than 10% of enterprise mobility.

Honestly, to me, any CIO who chooses solutions other than BES is either naive or for personal interests (as opposed for the benefit of the org he works for). They used to use BYOD as an excuse. BES 10 throws that excuse out.

MS

steelers81

It's funny that u think u are smarter than the CIOs...the results are facts u dck...BlackBerry is dead....their end is nearing just like they tried to fool people saying native apps are 'coming'.

Posted via CB10

KangarooDons

totally agree with this assessment. it is the next quarter which is crucial.

Parthiv Shah

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
Email: parthiv124@gmail.com

steelers81

In India nobody is willing to buy my 1 month old z10 for more than 20% of original price...i m stuck with this piece of shit

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Dave01568

3.1 billion don't worry be happy

robin11

Yes, Blackberry is executing. The balance sheet is being conservatively managed in order to provide as much certainty as possible to planning and budgets. Accomplishments are:

Selling 3.7 million BB10 devices in the 16 weeks since the Z10 was released;
Launching the Q10 in so many markets worldwide;
Launching the Q5 for European and Asian markets;
Launching BES 10.1 and making it easier for enterprise to manage heterogeneous devices from a robust management system with 18,000 servers already installed;
Announcing the availability of the marvelous BBM messaging service on Android and iOS platforms;
Keeping a strong balance sheet now with over $3 billion cash;
Planning new devices for launch later this year including not only BB10 devices but also another BB7 device for certain markets; and,
Obtaining the largest order in BlackBerry history for 1 million units of the BB10 devices.

We should all be pleased with the progress to date and that BB has the cash and cash flow to continue investing in the restructuring over the next 3 quarters, the largest items being $284mm was invested in inventory, and $196mm added to cash, rather than engineer the balance sheet to please equity markets. .

Auxi

The new BB = great devices and a case study in bad business decisions. Bear with me while I spell out the five roots of BB10s faulty launch: #1- Waiting two months to trickle out the phone in the US market. MAJOR fail. America and Canada have a minor rivalry, I get it. But was it worth a failure of this magnitude? #2- No Dev Outreach - I'm a rare BB fan who is also a sr director at a serious app dev company. I asked repeatedly for our devs to get an Alpha dev device last year, but didn't get a real response from RIM (thank you for your email type responses even from seniors there ... :-(). That hurts. I know other commercial developers and even devs at Fortune 1000 companies in the same boat - we eventually stopped trying. Meanwhile 12-year old amateur devs in far off lands got two devices. Had they spoken to us, we would have advised that porting from Android doesn't work 70% of the time on 70% of the apps worth porting. By the time the Z10 launched, most professional developers in the US cared as much about it as they cared about the mayoral elections in Nice. Result: your favorite banking app and all the other stuff our industry makes is all but guaranteed not to be in BB World. #3 Hefty price tag. Paying up to $699 (or $199 followed by 2 yrs of astronomical monthlies) for what most consumers thought was a BB7-style device was a show stopper. #4 Heins vs Keys. Consumers prefer Bond-girl to Bond-villian: more Alicia and less Thorsten would have grabbed our attention a wee bit more. Alas we saw the Heins-meister about 100 times to Alicia's once. Thorsten is a good looking guy in his own way, but please show us more Alicia. #5 Failure to flood the market: an "upgrade your BB7 phone" program, major give aways by car dealers and real estate companies, chambers of commerce. Nothing like this happened. Most of these potential partners still haven't seen a Z10. Neither have any of their customers or their friends and family. They're still using iPhone 4GS' or Androids running Gingerbread and saying they are better than BB Bolds and Torches.

Still - the Z10 and probably also the Q10 are great devices. So RIM started the year with a hell of a hand and played it poorly. Onwards and upwards and stay positive, but let's not be in denial about these major flaws lest they happen again ...

Wolfgang Aste

One more OS7 device at this stage is life-critical for BB. Many carriers do not sell the Bold 9790 and 9900 anymore. BBOS is still their largest customer base and many large Enterprises are not ready yet to switch to BES10. It is a lot about unlucky timing. If BES 10.1 and key enterprise apps (like RSA and Citrix) would have been out around christmas, then the BB enterprise world would look much different this year. But now this is a loss for another year. I am sure, A LOT enterprises will evaluate now and make their final decision for the next budget planning end of this year. And then they will go either up to BB10 or completely moving away to other solutions...

Xano

Z10 is already a case study of a EPIC fail!

Keith Hoffman

I think BlackBerry is far from dead. However they made some huge blunders. First, they launch the OS10 in late January, then it takes a full 5 and a half months for their iconic design (the QWERTY Q10, which I own) to show up in the US. The thing that makes a BlackBerry a BlackBerry is the QWERTY, they should have released it much sooner.

Secondly, I think they should have not released two phones, but one. I believe the best prototype design for a phone using the BB10 OS would have been to use the Torch instead of the Bold (which is what a Q10 is). That way they could have gotten the best of both worlds, a full touch screen with a bottom sliding QWERTY for those, like me, who got to have a keyboard.

I think that with the launch of the Q10 last month in the US, it will bode better fortunes for BB in Q2 and 3. And I hope so, because I DO NOT LIKE Iphones or Droids.

Auxi

I agree Keith I own a Torch and think that buying a BB Q10 is a reduction in screen real estate. The Z10 keyboard is the closest thing I have seen to a physical QWERTY without sacrificing screen size, but a slider would have been my personal preference.

Shadberry's comment below hits the nail on the head. I would have bought both a Q10 and a Z10 if they sold for $300 each unlocked straight from the website. I would have loved to stiff the carriers and buy direct. I would do the same with the Nexus 4, but I do not like using the Android platform.

Blackberry has made a good device with the Z10, they just make it as hard as possible to buy it and feel like you are getting a good deal.

Shadberry Bold

Why can't BlackBerry bypass carriers and sell their devices directly from online at www.blackberry.com without contracts for $200-$300?

Posted via CB10

Auxi

Because that would be a game changer. Blackberry is not a disruptive company.

Snowman888

It's always going to be a 2 horse race in any market and I don't see BBRY removing Apple or Samsung in this race.
We should just have new expectations of slow growth in the ROW.

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allanpaul

I think BlackBerry is doing fine. Its in progress. BlackBerry 10 is a solid device. Wait for the Q's to dominate

gitchies

be calm and be bold
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