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RIM rallies 11% in Canada in advance of Thorsten Heins’ one year anniverary as CEO

RIM Stock
By Chris Umiastowski on 21 Jan 2013 05:02 pm EST
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Tomorrow (Tuesday) marks the one year anniversary of Thorsten Heins as the captain in charge of righting the BlackBerry ship. When he took the job, the stock was around $16 and on its way down. RIM's positioning was weak, and there was still a very long list of work to be done on BlackBerry 10 ahead of launch.

Today, with the US markets closed, RIM rallied nearly 11% to close at $17.41 on the Toronto Stock Exchange (equivalent to US $17.53 US). That's a nice rally ahead of an important anniversary for the BlackBerry boss.

Hugo Miller from Bloomberg wrote a good piece summarizing some of the reasons that may explain the stock's move today. Most notably, Heins was quoted in the German media as having reiterated the possibility of putting RIM's hardware business up for sale.

To be crystal clear, it doesn't sound like Thorsten is actually saying any of this will happen. It sounds more like he's just honestly answering questions about what the future holds. RIM is still conducting a strategic review of its business. They've been very consistent in explaining what might come from this. Specifically, we've all been told not to expect anything ahead of RIM launching BlackBerry 10. It wouldn't make sense for RIM to try to license the OS or sell the hardware business without first proving that they can launch the platform, and win over both carrier and customer support.

So if nothing has changed, why would he market react positively to this news? Perhaps because investors are happy to hear that RIM hasn't let the good press around BB10 go to its head. They're remaining calm, collected, and rational in their thinking. BlackBerry is fighting for a strong comeback here. It's not the time to stop and claim victory yet.

Today the US markets were closed. So we'll see if the rally sticks tomorrow. Often RIM is more volatile on days where it is traded in Canada only. And I'm not a huge fan of over analyzing short term price movements. But RIM has been on a tear lately, and another 11% move is significant, and nice to see.

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RIM rallies 11% in Canada in advance of Thorsten Heins’ one year anniverary as CEO

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LOVVVVVing this right now was one of the lucky early ones to see this coming and got stocks in around sept. I have been a full RIM faithful for awhile and cant wait to have a BB10 in my hands to let this skyrocket even further.

Happy anniversary Mr. Heins, thank you for leading this ship to go out of the thunder. BB10 is on its way out and things have been positive since then. However, yeah as Chris said, the trophy is still far away, BB10 needs to prove itself that it is the 3rd and the most advanced mobile computing platform ever made in the history. Still a lot of work need to be done, but that won't deplete my #BB10Believe, not even once.

GO THOR!

As usual one weak character of this ceo is that he sends wrong messages to media. The interviewer kept asking about options and he said we will see. Instead of he should have said that it's not something we are focusing at this moment

Not sure what that over generalization means. RIM has stated publicly that is is undertaking a strategic review of all options after a successfully launch. The public knows this, the employees know this, stop ks went up 11%, more buzz created. How is that we negative?, Mr spin doctor.

If RIM ever sells the hardware business, it will be a long time from now. I don't see any advantages at this point.

Right now RIM needs the hardware business more then ever over the next couple of years to draw a profit to supplement declining carrier fees as it grows it's MDM and M2M businesses.

Long term, as RIM does become the dominant force in BYOD MDM and M2M, these revenues will more then make up for lost carrier fees but in the short term, the profit margin has to come from hardware.

RIM needs to grow it's software business and genuinely become a Mobile computing company. The BlackBerry 10 Platform must be licensed out to medical equipment manufacturers, car manufacturers and automotive OEMs. Basically anyone that needs QNX with a gui on top. Right now, QNX licensees are used to building their own gui on top of the embedded platform if they need to. RIM need the new Platform to sell and a good way to demonstrate that is by having a successful line of BlackBerry Smart Phones and Tablets.

But only once RIM is established as a legit software company outside of their own BlackBerry products does it make any sense at all for RIM to consider leaving the hardware side of the business to some one else.

Selling the hardware business does not mean that they won't be seelling phones and making money from phone sales, it just means that they wwon't own the division producing their handsets much the way that Apple does not own Hon Hai or their division Foxconn, and everybody knows that Apple still manages to make a little profit from hardware

I know rim isn't going to license out blackberry 10, since that's a UI over the QNX operating system. They'll license out QNX like they're currently doing in the future too, besides just the automotive and other areas.

Hardware district being sold off? Not happening. Gloomburg did it again.

RIM is always going to have to pay more for hardware made in limited volumes. Look at Microsoft, who licence Windows 8 so that there is a Windows and an Android version of basically the same box. If RIM wants to produce a 6 inch phone with a stylus, do they do a deal with Samsung and release the Blackberry Note 2, or do it themselves? No brainer. Doing it themselves would be unaffordable.

Another opportunity is in printers. The current generation of HP printers use, basically, a mobile phone core - 800MHz ARM with 1G of RAM - running Windows Embedded. Other manufacturers might be interested in a QNX printer engine with a BB 10 front end, which would be a great differentiator from the clunky panels we have now.

Happy Anniversary, Thorsten. Well, some may be celebrating a great year, I certainly will join them in congratulating you. However, I do have a few concerns:

* need to get the user experience on the device at its best, so avoid slow development environments like Adobe AIR, not to pick on Adobe. Native apps in C are best, especially for the core apps. Device stability is also key to a great user experience.

* push updates to the device; don't wait for carriers or you'll constantly be fighting numerous versions of software out there making development and testing a nightmare.

* stick to your promises and be transparent so folks know what is happening.

* never be swayed by Wall Street! They will come around eventually.

* you make the best hardware so don't give it up. Don't be a Google or Microsoft, depending on others. Even Google now owns Motorola, and Microsoft is considering manufacturing their own devices.

Something really odd is happening with RIM's share price on the PlayBook QFolio app. It has RIM in the 30s, and up 135%. Must be a glitch. But a really cool one!

Share price is still seriously undervalued.
Lets just say it extremely challenging/impossible to start a new smart phone company with all of RIMs current assets and advantages.
CEO Heins is a quality CEO.

Just to add to your point about starting a new smartphone company...

The volume and value of patents required to offer a phone without the burden of net licensing fees to your competition;
The scale needed to produce phones at a cost that is competitive;
The time and energy needed to develop carrier relations in order to sell your phones globally;
The investment in marketing needed to establish your brand (if you expect to have any sort of profit margins);
The upfront time and cost (and know-how) required to develop an operating system with a viable ecosystem (or else the ongoing expense of licensing someone else's)...

These are all barriers to entry. It is unlikely any newcomer could muster the resources to enter the industry based on the way it is structured now.

And as for the shares being "seriously undervalued"...

RIM is an established incumbent with all of the advantages listed above, not to mention the most modern operating system, a streamlined and more effective organisation, a differentiated higher-value core customer, and a sustainable competitive advantage in the form of a billion dollars of service revenue each quarter (revenues which, according to the CEO, are not going away).

What are some of its disadvantages? If you exclude all of the markets where it is either the number one smartphone or a premium brand in high demand you will see that BlackBerrys have less appeal currently to U.S. (and Canadian?) consumers. Furthermore, the media and analysts that follow the company (and thus the brokers and institutional investors that rely on them) are generally negative on the company, apparently letting the stock price inform their opinion. And... what else is there that is really bad?

Before investing in a company in transition you should be able to answer: If I owned the company which things would be most valuable to me over the long haul? Is the company being valued as if it is likely on an inevitable decline into oblivion? (Yes, still, even despite the recent rally...) How likely is it that the company actually declines into oblivion over the next few years? If the company doesn't disappear which factors are most likely to be different in the future and what does that mean for the company? Are the shares undervalued? How much do I stand to lose if I am wrong? How much do I stand to make if I am right? A lot? How much are we talking about here?! Seriously, that much?! What am I going to do with all my money!?! (The last couple were completely in jest of course.)

Sell the hardware business? What for? The phone looks awesome.

POView is correct. Share price is very undervalued. Anything below $50.00 per share is DIRT CHEAP. Look at the movement of this stock. It is leaping higher then Superman can ever leap.

Lots of goodness on the way.

This phone is an iPhone Killer for sure.

He is from America. He is probably kicking himself in the butt for not having a larger position. My guess is that he, and a lot of American investors want back in the stock at a lower level, but can't get it.

From the interview, I guess he is trying to say, if BB10 is successful, the share price is going to the moon.

The phones will sell at a high price, but basic BBM will be free.

I talked with a coworker today who once told me RIM won't mount a come back. He watches the stock market as much as we here on CB look for all news RIM. He listened to the pundits. Today he's kicking himself for not buying the stock when it was at $6. For those of us loyal to RIM, and who live and breath in all things RIM, we knew better.

Can't really blame him. Its just so volatile at the time. But, I jumped the ship when I first saw BB10. Feel like one of the best choices ever made!

Agreed.
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To me it's a big lesson learned when it comes to investing into a company long term. Live and breath that company.if he truly saw the momentum and opinion swing that was mounting he may have thought differently.
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Pundits are not always right. Biggest case is point is Apple, which was minutes away from flatline some time ago.
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I haven't seen Kramer's stance, but I'll bet the kitchen sink he was bearish on RIMM stock. He's not really a big fan of non-US stocks. I could be wrong.

RIMM is doing so many things right than wrong in its time upto release. No wonder the stock has been rallying for a long time! It better be good on Jan30 and 31!

Congrats for a great year Thor! I couldn't imagine a better leader for this company.

Congrats to all of us "informed" investors / supporters that saw this coming since December, 2011, which was when I bought my PlayBook and started to dig a little deeper into the future of RIM. It was well worth the $499 retail price...

Today's high so far on NASDAQ is $17.20. Should it hit $19 at any point today it should be all over the newscasts.

I still believe the stock is greatly undervalued.

I just wish i had more capital to invest as it went even further down. I was all in!
A couple of points I would like people's opinions on.

1) I have been shocked that most of the analysts and commentators on cnbc and similar channels, either dont have a clue what they are talking about or they dont want to express what they really think because it is not the widely accepted.
If you want to make money investing, think for yourself, all my friends and family thought i was insane investing in the stock and now i am laughing all the way to the bank

I saw Peter Misek on CNBC the other day after Jeffries raised their forecast, giving some positive report on BB10. This was the same guy who for the last year or so has been claiming rimm would die, bb10 would never make it, it would be delayed etc etc. It really amazed me.

2)The minute i saw BB10 in operation with all its features I knew it would be a hit. I did my research looked at the figures and made my decision to invest. Some of the information that the analysts are talking about have been in the public domain (especially crackberry) for at least 12 months now.

Does anyone have any doubt now that it will not be successful? They interviewed someone on CNBC who also dont know what he was talking about. He was sceptical about its success...

3) On the subject of the stock price, if you are looking at the numbers, something simple, like for example their P/E ratio, after todays' trading at around 1.

Assuming their revenues stay the same (which if BB10 is successful, they should substantially increase) the company is still massively undervalued.

4) I like to predict things see how they turn out, so my predictions are:

At the end of the year, if the new OS is successful and all things are held equal, we should see a stock price around $80/share.

I see Apple beginning a 5 year decline now, unless they can really innovate within the next 12 months with a new product (and iphone 5S doesnt count). It seems that they have fallen out of favour of alot of their consumers.

RIMM should regain a fair amount of market share, and a large chunk of this will be from Apple and Android.

I expect by the end of 2014, all things being held equal, we should see rimm stock price between $120 - $150.

Thoughts...

You, sir, are not alone. Apparently there are quite a few of us "informed" investors / supporters who see RIM for what is really is, rather than looking through a rear-view mirror like most analysts and the media.

I have been so puzzled by the negative perception of RIM over the past year, the same way you have been. It just seemed so blatently obvious that RIM had a real winner with BB10, and would easily regain a significant market share back in the smartphone industry. Notice I didn't say #1 (although I wouldn't be surprised if they make a run at the top). I also am not blind to the stronghold that Apple & Android have acheived in this competitive landscape. I would not underestimate what they may bring to the table to keep RIM's threat to a minimum. Nokia and Windows 8 could potentially gain some ground here too, but I am not worried as the industry in still so young, and its rediculous to think it will be a Apple and Android duopoly forever. With that said, my expectation is that it may take some time (especially here in the US), but eventually, the perception of RIM will change as soon as these new phones are in the hands of the public. Anyone who saw this happening and bought in, will be handsomely rewarded. It amazes me that so few people saw this coming. Instead of pumping RIM to everyone I know, which I tried for a while and got shot down 99% of the time, I stopped talking and said, "just wait, once you see my new phone, you WILL want one too". Once the BB10's hit the streets and people see what they can do...lights out! As to your projections...you are very optimistic...but so am I. I think $40/share is more achievable by the end of 2013. If this thing takes off early on, you may be closer with your guess of $80.

Let's not forget to mention what's in store beyond BB10. There are all of the doors / opportunities that RIM has opened for itself with QNX, NFC, HTML5 Apps, Car 2.0, etc. This may very well propel RIM to something much greater than the best smart / super phone company. Since I am a betting man, I don't think there is a more crystal clear bet in the market. As Chris U perfectly stated, "The stars seem to be alligning for RIM". Enjoy the ride. LONG RIMM!