BlackBerry stock nosediving on Home Depot news? (Updated - Jim Balsillie liquidates his shares)

Home Depot
By Chris Umiastowski on 14 Feb 2013 09:35 am
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* Update - Umi wrote up this editorial on yesterday's Home Depot news, as the stock dipped yesterday and he was writing an editorial around it. Today's much BIGGER BBRY market news here is word that former BlackBerry Co-CEO Jim Balsillie has liquidated his stock in the company. Find out what this means for BlackBerry. Headlines aside, Umi's editorial here is still a good general educational piece. * 

When I write about BlackBerry the stock, I usually don't focus too much on short term minutia. But sometimes people get freaked out over big moves in price, and sometimes it helps to look at what's happening and put it in context.

Yesterday BBRY stock from its prior close at $15.20 to lower close of $13.99. That's an 8 percent drop in a single day. For this to happen you'd think some absolutely horrible news must have been released, right?

It doesn't look that way. The only negative headline I see is the loss of Home Depot as a customer. The home improvement retailer will transition about 10,000 people to iPhones. From a quick look at the news, it seems that the story is true. Home Depot has confirmed it.

So what does all this mean?

First of all, let's look at the enterprise business. Home Depot is a large company based in the USA where BlackBerry market share has absolutely tanked. So it isn't too surprising that we're hearing of corporations dropping the platform on American soil. That's where it is most vulnerable. Obvious.

Also, BES 10 has just started its rollout over the last two weeks. We need to see how the next 6 months shape up before we know much about the BlackBerry comeback in the enterprise, as the company has switched gears in this transition by supporting BYOD quite heavily.

Next, let's look at the real issue that affects valuation: success or failure in the consumer market.  BlackBerry 10 is out. It's quite clear to me that BlackBerry isn't giving up and they certainly havent' shown up to a gun fight with a dull knife. The Z10 is a stunning device with a beautifully fluid OS. The app ecosystem is improving enormously. The product is differentiated and attracting a lot of consumer interest.

Apparently, investors are more worried about Home Depot than the overall consumer market. And in that all important consumer market, brand sentiment is improving. YouGov InvestorView released a survey showing that, in the US market, 43% of BlackBerry owners now plan to buy a new BlackBerry in the next 6 months. That's up from 18% in the last survey, marking a big change. Obviously this has been driven by interest in BlackBerry 10 in a market where carriers aren't even advertising it with any force yet.

Not bad, BlackBerry. Not bad at all.

Bottom line: The market gyrates like crazy and loves to speculate. In the short term these movements mean very little. There are so many factors that can go into short term trading. In the long run all that matters is the financial results.

Jim Balsillie liquidates his BlackBerry shares
Former Co-CEO Jim Balsillie now totally disconnected from BlackBerry

58 comments

ekafara

I bet they are happy with their purchase. Nice 6.1 security fail.

sk8er_tor

You are very true! This is exactly why the BlackBerry solution is best for enterprise.

Foppa_21

Not to mention, every week or so at my company an email goes out telling people NOT to acccept calendar invites with their iPhone as it screws everthing up.

NamelessStar

lol i have the same happen apparently causes some kind of loophole that makes it re-accept the metting without notifying anyone but the person who sent out the request.

WillieLee

Having around 25% of the stock shorted means those positions aren't going to give up without a fight as well.

meltbox360

31% And yeah its just hedge funds playing games to scare the stock into a drop to cover. BBRY is waaaaayyyy too risky to short. So much less risk and potential for gain going long. One way or another the shorts will translate to a price rise. I saw an analysis about potential sales. A conservative target for the stock would be $20. Very conservative. Of course it didn't come from an analyst, it came from a comment on some article and he stated $40 is reasonable.

kidneythief

Well said. Besides it's Home Depot... Not worried at all.

pheodore

The stock market speculation is so the stock market can retain it's customer base who buy and sell to generate their own profits. They need to manufacture and perpetuate this volatile environment to remain relevant.

Tom689

No this article is completely wrong. It's going down because an ex CEO dropped his shares a year ago.

BruvvaPete2

how is it you continue to amaze us with stupid comments? What did you say when the stock was at $18??

chi-town311

isn't it funny how you accused him of making a stupid comment and now you look like the moron.

JakeTheCat

"It's going down because an ex CEO dropped his shares a year ago." Even if that was a fact (which it is not - the ex CEO dropped his shares last quarter, but perhaps the sentiment is the same...) it is still a stupid reason for the share price to rise or fall. I'm not saying it isn't the case that's what has happened here nor that it was stupid to point it out, just that anyone who buys or sells shares based on what someone else does is a speculator. An investor knows that the value of a company depends on its profitability, which depends on its assets, products and execution, which to some extent depends on its management. In almost every instance none of a company's value comes from who does or does not own the shares. In this case an ex CEO - who has long since removed himself from the firm - selling his shares months ago has absolutely zero impact on the value of the company today. To think otherwise is stupid.

And for the record, the shares dropped on February 13th. The SEC filling showing the sale of shares was on the 14th. The article was "completely wrong" only in hindsight and only if you assume someone was trading on what was then non-public information. If that was the case it should be easy enough for the SEC to track down who was tipped. (But I wouldn't hold my breath on that.)

Superfly_FR

@Chris; i totally agree about HD and your whole article.
Yet, the "Balsillie disclosure" may have a terrible effect, if confirmed true. I believe the rumor went to financial circles before it hits the news ... Have you some inputs about it ?
http://finance.yahoo.com/news/
blackberry-former-co-ceo-balsillie-140114597.html

EchuOkan1

No, the reason for the fall yesterday was due to an analyst saying that U.S. carriers have no confidence in the Z10. As soon as that person said that, I started seeing the decline.

adammcewen

Hope they enjoy their new super secure iPhones. Look ma. i can bypass the password lock screen by pushing a few buttons......weee....

walnuts1024

I shop at lowes anyway :p

GTiLeo

they are doing the same thing lol it was announced last year lol

dhhoffm

The stat about brand loyalty seems at least potentially misleading. That is, BlackBerry's has less US customers this year than last, so the pool of "current BB users" is smaller. So, if only 18% of users last year planned to stick with BB, and fair amount of the rest did in fact switch to other platforms, those 18% that stuck around now represent a greater percentage of the pool (say even as high as 35%). So the survey really could just be measuring/capturing the same exact devoted BB fans who intended to stay last year, and intend to do this year. Just because the percentage is greater doesn't mean the overall number of users is.

walnuts1024

Brand loyalty for any device is hard to come by. I know many people that have jumped from BlackBerry, to Iphones, to Android, and either back to BB or to another Iphone. Many of these people are looking forward to the release of BB10 because they are all bored with the current crop of phones out there. I believe if BB can get enough of those BB10 curious people hooked then those same people will spread the word.

lorax1284

Is the news that Balsillie divested himself of BBRY stock by the end of last year NEW news? That is, was there an SEC filing just yesterday or today that made this public info?

I guess if one of the founders "doesn't have faith" that would send a bit of a chill... but personally, I think he divested because he has something he wanted to do with the money, now, rather than wait months for it to gain, and, if he was at odds with the board on the direction of the company ("Make BBM for Android and iOS NOW!") that would be a good reason for lack of faith if there was such a thing.

BruvvaPete2

I'm not sure where you read that he doesn't have faith in the company. A person can sell his stock for various reasons. What is interesting is his non appearance at the launch event. What if he was "encouraged" to walk away?

NamelessStar

from my own view Balsillie gave up on the company a long time ago if it wasnt for Mike i dont think BB would be were it is today he did alot of outstanding things to buy the companies requried for BB.

Dash

Jim Balsillie liquidated all his stock and that's why BBRY dropped. not because of the Home Depot news. I love crackberry.com for my blackberry news, but no offense...I won't be taking any stock market advice from you guys....

Kevin Michaluk

We saw that. This was written on yesterday's home depot news.

Getting up the editorial and news on Balsillie now. And you shouldn't take advice from us. We write to put it out there... you make your own decisions. Always. 

br14

Home Depot didn't have many BlackBerrys anyway.

And the stock is moving because the hedge funds want it to move.

In a few weeks they'll take it back up again, and unless the news out of BlackBerry is fantastic (or even if it is), they'll take it back down.

And every time they move the stock, they make money.

As long as there are millions of small investors moving the cash on the basis of emotion, the hedge funds will make a killing.

jackwaldon

So, the lose .0127% of their customer base and their stock looses 8%? That makes a lot of sense.

lnichols

Not only is BES 10 just starting to roll out, the initial release is lacking many advanced IT management capabilities that are on BES5. BlackBerry even states this on the BES10 page and says those features are coming in the May update for BES. Based on this you won't see any US Government agencies adopting BES10 or BB10 until sometime in the summer based on the software needing to be GA'd, tested, and put into service, and likely the same thing with private sector security conscience BES shops too. Combine this with the new savior phone, the Z10, not even available in the US till "sometime in May" and BlackBerry's continued "Its coming soon" way of doing business and I think it is easy to see why the market is wary of the stock. BlackBerry is simply poor at execution!

Jimberry Storm

Lots to ponder, not sure who is right. Chris usually has the goods. But no way a 10,000 iphone purchase is good for Blackberry.

bryan144

I cannot figgure the market out any longer. Companies report record quarters and stock drops because "it didn't meet expectations" or some such nonsence. Companies report they LOST money, and stock rises because .... well who knows. I guess it's traders that are too lazy to research any longer, or programmed trading that only keeps stocks for a few seconds.

Nick Shadow

I has always been this way, at least the last 30 years that I remember. What happens now is just much faster, news is everywhere in a split second.

Used to be you go home after work, read the stock quotes in the newspaper (remember those, or google it) and call your broker in the morning (he was gone for the day) and ask him what the heck, you took his word for it because he was "in the know" and a trade cost a fortune. Then a few days later, depending on when the weekly news mag was in your mail box (again we really had them)you got another point of view. Of course, by then the broker was churning you into another sure thing (see cost of trading above) which started the cycle all over again.

No thanks, I will take today, and the conspiratorial theories coupled with the large number of opinions. That broker was a prick, wore nice suits too.

Nick

george_helgerson

Let's face it, some guy at the top of Home Depot really just wants to play Temple Run while being on mute during his staff call. The iPhone is a toy...not as good as a Playstation 3, and much worse than a Blackberry for doing calls or e-mail.

As for BBRY stock, people are talking hype and nobody is talking dollars and sense. Never make investment decisions on hype & speculation.

EchuOkan1

...Forbes report on the lack of confidence from U.S. carriers based on an analyst report:

http://www.forbes.com/sites/ericsavitz/2013/02/13/blackberry-u-s-carrier...

After this report, the stock went tumbling down almost immediately (literaly).

The Home Depot news hit the market way before (a day or two before) and did not affect the stock that much.

dkonigs

I'd expect more of this over the next year or two. You see, these big corporations move slowly. They all likely started their "Let's dump BlackBerry for those phones all our people are begging for" research projects during the hight of all the doom and gloom about the company. Now that BB10 is finally out, those projects will start to turn in their reports, all based on data from a year ago, and will move forward with those plans.

Actually it kinda reminds me of how everyone was finally dropping Mac support, during the first few years of MacOSX based on leftover sentiment from MacOS 9.

RubberChicken76

Wonder if Jim and Heidi are settling?

greyw0lf01

The password issue annoying but in terms of security, that’s the basic level. If you want to a deeper level of password protection it’s easy to obtain... simply by going into the settings. Also from an enterprise standpoint... using something like Good or MobileIron... before you can access your work, you need to enter another layer of security because it’s sandboxed. - No issue on the security front in my opinion when you consider what you can really access by mashing keys.

Every so often there’s a security hiccup w/ an iOS rollout but it isn’t stopping people from rolling w/ Apple. People complain about Android and malware but people still gobble up those devices. I guess in 2013, cold war bunker security isn’t that important anymore and if it is, enterprise customers have found 3rd party companies to secure it.

The former co-CEO dumped his remaining holding in the company and the Street is overreacting to it. SEC rules dictate when that can be made public but obviously insiders let stuff leak.

The Home Depot thing is “old” market news but does give reason to pause when you think about Blackberry winning back Enterprise customers. Lowe’s already switched to Iphones... a lot of companies want to have a familiar product as the people walking in the door.

It looks like New Zeeland’s police force is switching over to iOS devices.

http://techcrunch.com/2013/02/14/another-blow-for-blackberry-as-new-zeal...

These guys tested for a year, wish BB10 came out a year ago so the comparisons would have been iOS/Droid/BB10 rather than their legacy system.

Makes you wonder how long other companies will test BB10 before deciding to roll it out as the market absorbs new products from every phone manufacturer out there.

dbaynejr

The Big picture is Blackberry is tanking in the USA. Home Depot is just another company added to the list and that should be the real concern for Blackberry. However, I do not think that BBRY cares too much at this point, what happens in the US market. So why are you surprised that the stock is falling? As the market continues to decline in the US the stock will continue to decline. Maybe at some point BBRY should start to look at how it can rebuild its market base in the US. Pulling stunts like making the US wait two months after the BB10 is released to the rest of the world does not helps.

Bolderholder

The delay in the US was due to the US carriers. Read up on that yourself. BlackBerry wasn't the one dragging its heels here.

dbaynejr

They knew it would take longer for US Carrriers and could have gotten the devices to them sooner. The point is Backberry is tanking in the US and BBRY is doing very little to change that.

gvoskres

You wrote: " As the market continues to decline in the US the stock will continue to decline."

I thought it (the market) is as high as it has never been. Well, almost.

dbaynejr

You stated

I thought it (the market) is as high as it has never been. Well, almost

I am not sure where you are getting your facts but BBRY is losing market share in the US at an Alarming rate. They may have more phones lately than ever. But, their share of the market is falling faster than ever. At one point BBRY traded at over 220.00 a share and now they are hoping for 20.00 a share. I am not an economist but that does not sound like a company that is doing well.

shabbs

Do we have any details on where these companies think BlackBerry is coming up short and what advantage a move to iPhone/Android/whatever will bring them? Is it a particular app they are going to be using? Or is it a "too good to say no" deal on hardware/services? We hear about all these companies switching, but I'd like to know more about the decision points and gaps that are being addressed with these moves.

neyamat

I'm an ex-Iphone user, Now got my BB Z10. I dont know about the android but this device kills the Iphone. Forget Home Depot once this Superphone gets to US, it is going to change the people view about Blackberry.

greyw0lf01

@ george_helgerson

Why are we comparing phones to gaming consoles?

Everyone here is always pissed at Apple for disrupting the Blackberry dominance as though it wasn’t warranted. Apple made a device that consumers loved; those consumers brought it to work and eventually demanded they be able to integrate the most basic corporate function... email.

Once you can get corp. email on your consumer device, who cares what some guy at the top does? If he’s on a conference call w/ the mute button on, what’s to stop him from surfing the web on his pc research his next vacation. Don’t blame a consumer device for changing the way business gets done.

Blackberry built its business around email, instant messaging & security. The competition came along and offered email, instant messaging and a host of other time wasting activities... you tell me which people are going to gravitate towards.

greyw0lf01

The biggest advantage I think iOS/Android have over Blackberry is the fact that you can get an all touch screen device for less than a new BB10 device. The iOS 4 is free and the 4S is $100 bucks.

The 4/4S has all the apps as the iPhone 5 so when companies are thinking about cost savings... they can replace BES infrastructure and upgrade to new(ish) smartphones with no problem.

LinkedIn just gave all 3,500 employees new Ipad Minis... give the people what they want I suppose.

Kiddo2050

Bottom line is they have to get the F-ing phones out in the US. Still no word on when or even if they will come. Just a web site that says we'll tell you what were are going to do in the future.

Sorry to say this but that is piss poor.

travaz

While no one likes to lose customers I am sure that somewhere along the way there has been additions to the BES clientel. Its an ever shifting market. Granted once a company invest in infrastructure its hard to get them to change. Anyone have a guess what the difference would be to up grade your BES verses bring in a whole new system?

kastortroy

Nice writeup Chris. I bought shares when it was it was @ $6. Regardless of these short term fluctuations esp with what's happening with HD n Balsillie I'm in it for the long haul. I have alot of faith in blackberry esp qnx. I strongly believe qnx is an important and integral part of the tech industry and qnx itself is way entrenched in alot of industries. Z10 ( which I have yet to own) seems a very capable and complete device to compete with current devices. Imo tech shares short term rise and fall has alot to do with investors emotions than anything substantially real. BlackBerry is just getting started with its new OS and it's only fitting that it's going to take time to rebuild. Yes, Ios and android and fully intrenched in the us but globally blackberry is still quite strong with several strongholds like UK, middle east and asia.

As with HD switching, when you are offered discounted iphones to ditch blackberry why wouldn't a company jump @ opportunity to switch devices. In all speculations, I believe that's what's been happening with many industries in the us that are switching to iphones. The US @ a 16 trillion debt needs to save wherever it can, and if this is the way to do it, regardless of the security issues is the only viable option. Imo, blackberry is right not to focus alot of energy into us markets. For the near future it will be a waste of resources. Bb10 is a strong product so let the global consumer determine its fate, not the US. All BlackBerry needs to do is remain relevant, and innovate and it will succeed in the long run. Imo qnx is versatile and powerful, and so long as BlackBerry remains true to it n continuously adapting to changing tech climates, will remain in the consumer consciousness.

Peace

GV2012

Hey Home Depot,
Clean up your phone mess in aisle 3!

dbmalloy

Funny how so many expect a busiess or government to stay static in their brands.... HD changing over is old news... as this was known in Oct of last year.... if HD was purchased Iphone 5 I would find a story in this but as it is Iphone 4 it is obviously a price issue.... New Zealand government announce today they are purchasing 6000 iphones an ipads..... in business you cannot win every contract... for BB it is simply going to be a long haul....

Switch13

The stock is way too volatile for me to deal with. One day it's down 7%, today it's up 7%... its a pump and dump play. Some people are using it to make a quick buck and there's some people that are losing on that same play.

The Forbes article has its sources from what analysts are saying. Now, right or wrong, there are indicators out there that say blackberry z10's are in stock in the uk and the device is readily available for purchase. Only carriers and blackberry know what the actual sell rate is. Perhaps blackberry is doing a great job managing inventory and getting devices to the shop. Or perhaps everyone who wanted a z10 got one and many maybe waiting on a q10.

Since I'm in the US, the only glimmer of public marketing I've seen is the 30 second superbowl ad. Maybe people in the UK and other countries where the device is live can describe the market, advertising and product buzz.

afwriter

I still think the key in this whole thing isn't where the shares were six months ago, or where they'll be in six months from an investor standpoint. In that case, the folks who got in on the floor will always be happy, and the folks who got in at around $15 will be nervous until the stock stays steady over $20.

To me the key is what the stock's valuation does for sales, what sales are needed to keep the valuation steady, and how much is needed to go forward with new products on a steady stream. I'm not big on the angst, but on the philosophy behind the actual drivers of the stock's valuation.

Losing Home Depot isn't good, but that in itself shouldn't drive the stock down in the manner in which it went. Balsillie's sale can be seen as either a good or bad thing from a personal perspective, but from an institutional perspective it's probably more bad than good.

Overseas sales figures should be buoying some buy recommendations -- but I still think not having the Z10 available in the US at launch is a negative. It says more about supply chains and vendor relationships -- and the management decisions that put BBRY where it is at this moment more than anything else.

Bottom line, whether or not you like Blackberry as a stock, it's good to have them in a safe position as a company so that they can stay competitive in the marketplace. While I'm still angry at BBRY on occasion with the way they handled the original Storm a few years ago, I'm glad they're still able to bring new devices to the market -- because it helps all of us when there are new phones and new technologies to foster marketplace competition.

Anyway, I'd like to see BBRY be successful at a reasonable price point. The question is, what is that price point?

Nick Shadow

Batteries last 18 months to 2 years (trust me, been in the mobile computer biz for many years). So look for an unusual looking (pocket protectors and tape measure on the belt) and large crowd at the Mall in about 18 months as they all line up to get their iphone batteries changed. Hell, might as well tune up the hearing aid while we are at it.

MayhemMaybe

Blackberry's biggest problem with US corporations like Home Depot is the fact that its not available in the US yet. For whatever reason it's not, it is not. Couple that with most companies making such decisions months ago with meetings, testing, etc, the decision is no surprise when they would have been comparing the 7 with iOS and Android, and unlikely knew about the iOS 6.1 issue back then. Android is no surprise either since every phone has differences so its hard to support them. My company only supports iOS and Blackberry.

France and Kuwait have the Z10 now. Still no US. We wont see BB pick up in US until April.

dungeon418

What is wrong with you people blaming Blackberry for the delay in getting the BB10 out to US customers. This has been rehashed dozens of times. It is not Blackberry holding up sales for the BB10 in the US, its the carriers. They are holding it up due to (what they say) testing on the unit. It appears to me its just another way by the American carriers to drive down the US market . Hopefully reason will prevail.

Rootbrian

Damn home depot. Oh well. Let them get iHacked and iLeaked when it happens.