What’s behind negative analyst commentary on BlackBerry stock?

By Chris Umiastowski on 7 Jun 2013 02:55 pm EDT
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Over the last few days lots of people have asked me questions about the timing of certain negative analyst research notes on BlackBerry. Tero Kuittinen, over at BGR wrote a pretty solid piece describing some of the most recent action, including Pacific Crest’s recent report suggesting that BlackBerry is manufacturing significantly more product than it is selling.

Kuittinen, who has an equity research background, offers the following explanation:

One major factor motivating hysterical research notes and wild estimate swings is simply a raw need for attention. There are too many small and mid-sized brokerages out there. Most clients have slashed the funds they use to pay for research over the past decade, and many hedge funds have the habit of calling analysts with the highest and lowest estimates on the Street and ignoring the middle.

I thought I’d take the time to expand on this because the vast majority of readers probably don’t have much of an idea how the world of equity (stock) research works. 

Research analysts (like I was for over a decade) are paid to cover stocks by doing research, writing reports, and “selling” that research to clients. The clients are people who manage mutual funds, hedge funds and pension funds. In other words, the clients are professional money managers (not us regular Joe retail investors who trade at a discount broker).

Although we say analysts are in the business of selling reports, there is no financial transaction that happens. Nobody actually buys the report. Instead, clients pay for an analyst’s work by directing some trading business (buying and selling stocks) to the firm’s sales desk. This way the analyst’s firm gets some trading commission which helps to pay for those annual bonuses.

Analysts don’t actually get paid for accurate stock calls. At least not directly. Instead their pay is much more correlated to what clients think of them. If clients love you, generally speaking, your bonus is going to be higher. In a perfect world the clients love the analysts who do great research, publish great reports, and share excellent insight into their areas of coverage (such as the mobile tech industry).

Analysts don’t actually get paid for accurate stock calls

But the world isn’t perfect, and every analysts is human. Different people have different ways of behaving. And analysts respond to their environment just like any other person would. 

The environment is like this: Very large investment banks (with very large research departments) automatically get a large cut of the trading business. They are expected to hire top quality analysts and these analysts are under less pressure to make insanely out-of-left-field comments on stocks. Analysts at large firms have an automatically huge audience. They don’t need to noise to get attention. They just need to focus on doing good work. But they can also get lazy and complacent.

It’s also important to understand that large firms have a much better chance at getting paid to do investment banking deals with large public companies. If BlackBerry were to do a stock issue, sell a part of their business or make a major acquisition they would hire an investment bank (or syndicate of banks) to work for them. This generates fees. Guess who’s not going to be in the syndicate? The small guys. 

So these smaller boutique research firms are not going to earn fees by covering very large public company stocks. At least not often. And investment banking fees help pad the bonus pool which gets distributed, in part, to the analysts. 

This leads us to all kinds of potential conflicts of interest.  How can an analyst at a small firm make sure that his firm gets paid for his work?

  • He can find himself finding ways to report on a stock in a way that supports a big client’s position on a stock. A hedge fund client who is short BlackBerry may develop a friendly relationship with the analyst. The analyst gets influenced into adopting a bearish stance on a stock because the client is doing a lot of business with the analyst’s firm. This all happens tacitly (unspoken).
  • The analyst could have a relationship with a smaller company that may lead to financing business for the analyst’s firm. Let me make up an example. Say an analyst’s firm is courting a smaller firm that makes a product to compete with BlackBerry’s enterprise division. If the analyst was to write negative things about BlackBerry this would help him build rapport with the BlackBerry competitor, increasing the chance that his firm can do business with them on an IPO, M&A deal, or whatever.
  • Or the analyst can simply realize that the squeaky wheel gets the grease. So he’ll yip and yap about anything that is outside of the current focus in order to draw attention to himself. I’ve seen this happen plenty of times in my career.

Also, understand that this isn’t necessarily the norm. I’m not saying all analysts at small shops behave this way. I’m not saying most of them behave this way either. But some of them do.

You have to either accept it at face value and admit you were wrong

Other analysts simply get caught up in what Dr. Robert Cialdini calls “The rule of commitment and consistency”. I highly recommend his book “Influence: The Psychology of Persuasion”. In short, people who make public statements on something tend to get very married to their views. The more public your commentary the more difficult it is to later separate yourself from it and change your view. This is pretty much a universal rule dictating human behavior. 

Put yourself in an analyst’s shoes. You’ve make very public statements about your views on a stock. If something happens that goes against what you’ve consistently said, you have to either accept it at face value and admit you were wrong, or you can dismiss the data and find new data that supports your view.

Most analysts do the latter. And that doesn’t make them evil or stupid. It just makes them human. My bet is that most analysts actually believe what they publish. If you gave them a polygraph test asking them questions about the integrity of their work, they’d pass.  Sometimes an analyst’s opinion comes purely from high quality research. This is the ideal situation. But other times analysts form opinions that are unconsciously shaped by what they know is going to get them  paid. And that’s why we see some of the garbage that we see.

Topics: BBRY Editorial

Reader comments

What’s behind negative analyst commentary on BlackBerry stock?

163 Comments

It amazes me what some of these so called "analysts" are able to get away with. Looking forward to the day when BlackBerry fights back!

Posted via CB10

some are using negative information to manipulate the stock some are just lazy and don't want to do research *

BBM CHANNEL C000EF854 < stocks*C0004ABC9

There's a Crammer interview that explains how he personally influenced the markets on you tube .check it out it ,happens all the time, and they do definetly lie to manipulate the stock price of their target ,it's made him zillions.He never went to jail and has a prime time TV slot.

I agree. I used to track the stocks Cramer talked about on his show, and they always move the next two days after he talks about them.

Posted via CB10

Good article. I would also add this; what consequences does anyone (analyst or pastor at your church) have if they are wrong? If an analyst boldly calls for the demise of the economy or a company and gets it wrong we move on and forget. However if they make a bold call and get it right they become famous. Think muddy waters with there (at the time) bold call on Sino Forest. Same thing goes with all these people who called for the end of the world. Obviously they were wrong, but we move and forget. I think there should be more consequence put on wrong or mis-leading information

Posted via CB10

Matthew 24

36 "But of that day and hour no one knows, not even the angels of heaven, but My Father only.
37 But as the days of Noah were, so also will the coming of the Son of Man be.
38 For as in the days before the flood, they were eating and drinking, marrying and giving in marriage, until the day that Noah entered the ark,
39 and did not know until the flood came and took them all away, so also will the coming of the Son of Man be.

:o)

Posted via CB10 on Blackberry Z10!

+1,000,000,000 That's the 64 million dollar question,when will the markets stop these practices and send them to jail for their manipulation,if you can make a buck and prosper ,I guess that's the American way ,there are different laws in Europe that jail people for this ,and ,I guess this is just plain Capitalism.I remember the day, RIM decided to be listed on NASDAQ and I fretted what could happen once we are in their clutches

Another good insightful article on how analysts and in the end how money moves around.

Thanks,
Chris

Posted via CB10

Excellent observations. This is not inconsistent with my view that analysis is often there to support the bias of a large position, long or short, in stock of the subject company.

Posted via CB10

Makes me think of the analyst at Jeffries that was a huge bear before the release but has since pulled a complete 180 and is now one of the most vocal bulls, thanks to having real data to go on instead of pure speculation. Although he never admitted he was wrong, it is nice to see some honest analysis when it's deserved.

Posted via CB10

Was he actually wrong or bang on right? He was a bear during rim's decline and now he switched to being a bull as blackberry is making a turn around. So far, misek seems to be the most reliable bbry analyst i've seen out there.

He did make a 360,and don't forget he made the stock fall 8% with his negative outlook,at least once,that I can remember,and it could be twice!!! probably was, check it out.

Jeffries, just out on Seeking Alpha, believes Z sales have slowed but Q sales are happening ,how will the market react?What do you think?I think after hours will be disapointing

thanks for this. I guess the frustration is seeing such varying data points. Pacific Crest is pointing to very low sell thru levels ~500k/mth. at least they are providing data though not sure if correct or not. the others are just saying its either selling well or not, without quantifying what that actually means. Perhaps they are just going the extra mile on this while others are not doing as much work. It feels a little ominous that blackberry hasn't commented on q10 sales in either the UK or Canada yet, given they were quick to point out z10 traction the first week of sales.

and Jefferies predicted 500k...why should we treat Misek's word as gospel? What hard data has he provided to support the bull case?

Why blackberry isn't shouting around how the Q10 is doing?

Well quite easy: because nobody is saying that the Q10 is doing bad/would do bad. Why spend money and energy in communication to confirm what people/analysts already think?
Remember around 3 months ago at Z10 launch? everybody was thinking it's DOA and BBRY spreading around some news to change that opinion (best launch ever in canada, 50% were coming from other platforms, 1m single order etc...).
Now it's another situation, they just need to confirm the positive expectation that the Q10 is doing well and to do so, the best media platform to convince the audience (Analysts / investors) is: quarterly earning calls!

And i didn't say which one on purpose, because it wont just be the next one, I invested in BBRY for what it will be in mid/end 2014 and later...

And by the way, thanks Chris, I second every word you've wrote in this article, work myself in finance industry, and you describe it very well...!

Posted via CB10

What's behind the negative analysis? - - Poor management decisions and execution. Despite the fact that most folks (not just on this site) confuse product and company - they are two separate things. BBRY now makes some very good products. But BBRY - is still making very poor decisions; and executing poorly on others.

I have a photographer friend who used to tell me if someone calls you a frog ignore them, but when three strangers call you a frog - - better look in the mirror. BBRY has tens of thousands of outstanding shares and their are millions of folks investing in the tech center. A valuation between $12-15 is appropriate, otherwise it would be different.

Chris, great article, thank you.

How can the noise be filtered to help identify the better analysts and then perhaps repost or tweet their work regarding Blackberry to balance the negativity?

Knowledge is power. Only by being well informed can we "filter the noise". Otherwise we get tricked into believing these "analysts" because we think they're better informed than we are because we wrongly believe that's their job. Like Chris said, analysts aren't necessarily paid for doing quality work.

Posted via CB10

Set 'the zipper ' onto these so called anal -sis let's find out who's putting the heat on them to publish this garbage.

Personally speaking the competition is a little afraid of a BlackBerry comeback. Why else print this nonsense.

Posted via CB10

Chris you made very good points.

Might I add, if the analyst wants to get attention then they look for short term gains and losses. Nobody looks at the analysts reviews from way in the past.

For example I would never have purchased BB stocks last Fall when there were service outages and the first OS10 phones were delayed.
The analysts said "SELL!"
The popular press had a field day to lampoon BB. 'BB is dead'.
The BB stock was in the mid $6/share range.

I looked at it differently. My analysis was based upon what I read here in CB about the opportunities for a market recapture by BB. I also felt the iPhones and Galaxy phones were over hyped: the stocks Apple and Samsung, were over priced. So, I bought BB shares at under $7, not much, but enough for me to afford to lose. And, I bought again as BB stocks slowly rose closer to the OS10 phone release.

If the 'Analysts' had seen what I did, they might have had a more positive attitude. BUT, they could not afford to be unsure. Their clients would devoured them and they would be out of work. Once again, they are, and were not, looking for long range gains.

What is happening now? Apple cut their orders for iPhone with Foxon by over 15%. Samsung seems to have over projected sales of Galaxy too.

BB on the other hand has not even started to US deliver their hallmark phone: the hard KB Q10. So, how can anyone say BB has made a bad production projection?

BB stocks are now in the $14 range. Did I do wrong to buy BB stocks?

To answer your question, yes you did do wrong. You should've bought more! ;)

Posted via CB10

Every missed deadline is adding to the BlackBerry bonfire. Those analysts want BlackBerry to fail.

Mr Heins DON'T Give them the satisfaction. We need $30 a share by 2014

Posted via CB10

Hands down: I'm worried.
In my (very) ignorant view of the situation, BlackBerry stocks should be trading at a higher level by now. I mean, a very good product was successfully launched and some time has passed (just a few months, but still...). As far as I understand, the stock price is lower than the launch day and pretty far from that $60 when things were already going down. Please don't get me wrong, I'm a big fan but I have my fears as everyone else and I am (and always have been) very public about my passion for BlackBerry. I truly hope (everyday) to see some outstanding news about how BlackBerry sold a lot of devices or how the stock price is really going up at an incredible speed :D

Posted via CB10

Be patient. There are a few things in the works

1) The new R series low price phones will be released later in the year for entry into Chinese India network developing markets. Apple is already scared of the BB position for new release. They just announced a buy back program to sell the old used phones to these markets; they can not make money on old stock referbs. BB products will be new made, making new profits.
2) Yet just being released, the Q10 will out sell Z10 since most business users want the hard KB. Neither the iPhone or Galaxy series have hard KB.
3) The BB model is to sell service. When the business users demand from their IT departments that they want Q10 then those companies will have to install and continue to maintain BB Enterprise servers.

A successful launch depends on where you are. The U.S. market is key for the time being. The launch has been lackluster there. For the stock to recover properly it'll take time. Look at how long it took for Apple to go from almost filing for Chapter 11 to being one of the most valuable tech companies on the planet.

We shall overcome.

Interesting read. I would be very interested in an article that discusses the pros and cons of BBRY stock buyback.

Here's a video-link I posted in a related thread a few days ago; one Investment manager calls such research out as BS (I think he was less direct, insinuating that it's "suspect" or at least "questionable") and clearly implies it's short-sellers driven.

FFWD to 6:45min mark: http://watch.bnn.ca/clip941085#clip941085

I will contend that another element may be Competitors (ANY, from AAPL to GOOG, even the other HDW-Mfg's) seeding negative news - ANYTHING at all - to a create negative news-reporting AND possibly trigger a 'reconsideration of purchases' among consumers' <i.e. "well, if the people who analyze such things for a living don't think things are going well for them, it MUST be because their tecnhnology is STILL as bad as they told me it was 2-3 years ago">.

Interesting how such "negative analyst reports" usually come out AFTER some report claiming or showing that BB10 devices are selling strongly in some market somewhere.
I think, "this" (video-related) report followed a "strong Z10 French sales" report late last week.

Equally suspicious is that the media (doesn't matter who) ALWAYS devote LOTS of discussion and airtime to such negative reports without providing ANY element of "questioning the bad" with "potentially positive counterpoints," while ALWAYS and almost immediately finding a negative "but ..." to cut down all positive news.

In all fairness, I must also concede that a similar condition seems to be developing for AAPL.

No matter; someone already brought up Jim Cramer's tactics ... and ALL the evidence has me convinced that exactly the same thing is happening to BBRY these days.

If the analysts had previously said Apple would rise above $700 a share and now the stock is in the $450 range, they MUST stimulate new interest to "BUY ... BUY ... BUY. Hay, is anyone listening?" :)

Sorry Chris Umiastowski, but you are wrong. There is one thing to be human and there are analysts who are abusing their position. You should stop defending your ex-position and apologizing for monkeys and start defending your Blackberry stock.

I think this guy on BNN really ripped US analysts on blackberry very well. His comments on grammar is not only to insult their intelligence but to prove that they rushed these reports depending on stock movement. You can notice how an analyst says something bad or ridiculous and at the same time of report release stock plunges. These aren't coincidences.

http://watch.bnn.ca/#clip941085

Move timer to 6:47

Couldn't agree more. His article is far too idealistic. Jim Doak says it all. Let's stop playing games here and admit what is really going on. Faucette is being paid to write negative articles at a moments notice which serves as a smokescreen for short hedge funds to raid the stock. While this obviously doesn't apply to ALL equity analysts, this DOES apply to BlackBerry. Who even heard of Pacific Crest Securities prior to them being bearish on BlackBerry? I hadn't.

You've not heard of Pac Crest before this? They are not a new shop. James is not a new analyst either. That doesn't make him good, I'm just pointing it out.

Posted via CB10

I rarely do it, but remember the writer of that story is a former analyst and understands how things work. I don't care where things are published. If the story is good I don't mind referencing it.

Posted via CB10

it isnt lack of research. it is lack of accountability. they dont do the proper research because they arent held accountable. if they say something blatantly false they should be sued, simple as that.

with all these rumours and fear mongering going on on the BB stock and all the manipulation it is clear that these people are only doing it because no one is standing up for BB, including BB themselves.

To not have to disclose analyst's relationship to companies or clients' holdings in their reports seems to me not human but a huge conflict of interest at Best and should be illegal, like insider trading.

It isn't that simple. Analysts have lots of clients. Some will be long. Some will be short. Clients pay for the analyst's work if they like it / him / her. Everyone on the Street knows this. It isn't cut and dry what motivates any particular report that we think is total BS.

Posted via CB10

Not to reflect upon the particular 'analysts' in question, but, many get paid for showing their opinion was correct in the short-run. So, they get a standing ovation and a raise. Many of the hot-dogs will be around just so long as they don't have a big flop.

Maybe there are some who read this and remember looking at the daily newspaper to count their un-earned gains for Netscape, a company who could not lose. That was a case where the analysts kept the hype to buy more than the worth.

Technology is short lived. Analysts AND their clients who appreciate this notion will survive longer than those who jump on the coming band-wagon.

Nice to see someone explane how the World can work... thanx for a good piece of information here!

Posted via CB10

Although I agree with many points in this article, I wholeheartedly disagree with the excuses. Call it whatever you want...complacency, laziness, greed, or whatever else...the end result is that this type of manipulation plays havoc with the stock, and when average people invest their money (and sometimes a lot of it) into a stock that has the potential to grow, it is unfair for these "analysts" to be biased for their own personal gains or positions.

This is unacceptable behavior to me, due to the influence they hold in the markets.

It is nice to see that BlackBerry has finally hired a lawyer on staff to fight these morons, and I suspect the stock will recover nicely over the next 6 months.

And yes...I am a proud shareholder and will continue to be.

That's my. 02.

You can label then whatever you want but I'm not defending anything here. I'm explaining what happens along with some of the psychology. Some of the actions are unethical. Some are not. Too much mind reading going on in these comments.

Posted via CB10

Actually, I wasn't implyng that YOU were making excuses for them, Chris...I enjoyed reading your writeup...what you wrote are the justifications I have heard time and time again. My point is that this type of behavior is unethical and unacceptible from the minority or the majority...no matter. Generally, people invest in these stocks based on the understanding that if the company does well, the stocks should follow...and vice-versa. The problem here is that most people don't know or understand this type of manipulation by "analysts" and "experts"...not because they know the stock or the company, but because they are looking to protect other interests. This is what is unacceptible to me, and should be policed, the same way insider trading is policed and prosecuted.

Chris, great article as usual, though I agree somewhat with Alex Keb that you give the analysts a little too much slack for publishing misleading cr*p.

Just because someone is tempted to steal from the cookie-jar when others aren't looking doesn't mean we should all excuse them for doing that. It's a pity that "respectability" for many people has changed from being a concept revolving around truthfulness, insight, reliability and empathy, to something revolving around "full of themselves".

What a great article. It cleared up a lot of questions I had about the equity world and how analysts work. It's kind of ridiculous that their opinions can harm investors and the negatively impact a company that is publicly traded. Too bad there is no way to regulate this.

None the less, great article!

Posted via CB10

As always follow the money trail for the real motivation and reasoning for these half assed analyst research reports. Thank you for writing this article Chris. Hit the nail on the head again.

CB10- BlackBerry Z10

I feel they are going to beat down the stock to around 10$ ,and when earnings comes out it will shoot up 20%, but what is that going to be? 12$,Pity!!Apple wants BB and has the money and patriotic media behind them ,they think they can get them for peanuts,but BB has no debt and will survive ,and if they want BB ,so does MS ,which could easily pass the CDN Gov 's approvial.so let the games begin!!!

Hey Chris, I know you try to take the higher ground and present a balanced view but on some occasions i think you should call a spade, a spade. With bbry, there is constant distortion in support of the huge short position, and the mis-information is usually a prelude to cover forceful short selling price manipulation. To talk in generalities about typical analyst behavior belittles the extreme distortion and manipulation foisted upon bbry. The FD sec complaint is just the tip of the iceberg. If you compile a list of the stock "sell offs" after all positive catalysts and timed to every media event chaired by TH, and the escalating short levels, you can see some very powerful forces at work. I would have preferred to read a much stronger and to-the-point piece explaining why as bbry prospects blossom the stock price withers on the vine.

Well said. The article turned out to be much more favourable than I would have originally thought. We really are only concerned with one firm and analyst: Pacific Crest Securities' James Faucette. Although, i'm sure Chris would rather not have to dealt with libel charges!

Just in case the news report on this didn't get out earlier in the week, the short position on BBRY INCREASED again (reported on May 15) to OVER 170 million shares - an increase of over 6 million shares vs. end of April. I believe that's OVER 40% of the outstanding shares ... an INSANE percentage.
Should be NO surprise that the pressure to create negative news and direction is SO huge!

data source: http://www.nasdaq.com/symbol/bbry/short-interest

These short sales give an opportunity to buy. IMO when there are days the shorts are selling at $13.50 then buy. Usually the timing is close, only moments. It is best to put in a limit order. In those cases, the stock invariably jumps $.50 within a day or so.

Short position will also be released on Tuesday, June 11th @ 4:00PM EST (after market close) for the period ending June 4th. Look for the short position to increase yet again.

Same thing happened to Tesla. Then a huge rally following great quarter and guidance. I don't care about short volume at all. I really don't. Stock will follow the results.

Posted via CB10

Good point, Chris, and you're right, of course: when the good news "finally" arrives AND it simply can no longer be discounted by some talking head's shrugging shoulders or some other "Debbie Downer" technique, THEN the "Short Squeeze" will be "ON."

However, "MY" point with ALL these points is to showcase a secondary one.

Sure, as shareholders we're in pain when the shares are in the low $14 range when - IMHO - they should be closer to $19, $24, or even the "book-valued $30," based on recent events and trends.
Again, not the goal of my post & discussion point/s, though ...

B E C A U S E :

There's another angle to this negative BS, one that takes only a hair more thinking to make clear, and IS every bit as real and tangible as the share-price argument.

ANYTIME some schmuck does his/her negative-BS-song-&-dance, it gets reported by ALL the media, with just as straight a face and unemotional a tone as for the weather.
From BNN to CTV, the Globe & Mail and Wall Street Journal; even BBC and beyond.

PEOPLE WATCH and LISTEN, soaking up every little detail of the presented information as well as nuance in the reporting. Was that a smirk on the anchor's face? What about the guy on the street they asked; did he just say " ____ - THAT?"
"Why IS the video of store XYZ NOT showing people rushing out into a crowded street while holding their new device/s in the air and yelling in exuberance at the tops of their lungs?"
"How bad must things really be for this to get headline mention in prime-time business news?"

When there are reports of "NO lineups in stores on launch day" AND B.S.- "higher than average device returns" PEOPLE PERK UP AND LISTEN.

Then readers, viewers and listeners ALL pretend to think knowingly and reach some meaningful conclusion by saying "well, IF THAT'S how it's going down in stores and on the street, it must not be very good at all ... better get a _____X instead." Never-mind that no-one EVER lines up for a new droid or WP device; but if BBRY has no lineups on a really cold blustry day in February, no-one must be buying them. Damn the facts and pre-orders!

A hundred glorious & glowing "techie-geek" reviews be damned too; if some analyst (who - cough! - should KNOW what s/he's talking about!) in a research house says "it ain't selling" OR "more units are being returned than sold in the first place" then I best not buy one too.

It's the ol' "where there's smoke ..." line-of-thinking. Which, of course, is just plain false, because not everything that smells and looks like smoke really "is" smoke, and sometimes even smoke truly is "just smoke" and nothing more.

The 1000 alarm bells going off in every really-thinking bystander's head AND all the unspoken but clearly logical reasons (like, in my case, carrier contract lock - with early upgrade $$$ penalty - til Jan. 4, 2014!!!!!), are ignored en-masse, just as the report-publisher intended. And "sorry:" I REFUSE to fork over ANY extra unnecessary $$ to my carrier
- for ANYTHING!

What people always "think" is that the business news reports "ACCURATELY" based on what really happens in the real world of businesses. IF "X" is reported about company Y's product, then "Z" must be the case ... because it wouldn't be possible OR allowed otherwise.

ERGO, people are sheep and when they hear & see just plain lies presented as fact, they will believe them as such. And possibly choose "not" to go and buy said product.

The self-fulfilling prophecy is reported before it happens, regardless of whether unscrupulous "short sellers" are using it to get rich-quick, OR a competitor is trying to spoil the marketplace.

And THAT'S the connection that wasn't being made before; I hope it's finally open & active in people's minds.

It amazes me how bbry supporters keep whining about the negative reports but slap ass the fools who say the stocks worth 40/60+. Let's not forget many people hate bbry with a passion so that doesn't help. Money aside bbrys flaws have royally pissed a lot of people. And these people are in this industry. So they have a serious axe to grind. If bbry feels like crying over bad reports take a look at apple. They have people on a daily basis saying the company is on a verge of collapse. With hundreds of billions in the bank. Yet bbry with a measly few billion is considered amazing.

Posted via CB10

You have something there, especially with the "pissed off at BBRY" sentiment: no argument & no contest there.

However, I can't remember when anyone in their right mind has claimed a $40-60/share value; and I hear this stuff ALL day long, every day. I also can't remember anyone calling BBRY "amazing," even of-late, and that despite the - sure - "amazing" technical feat of creating an entire ecosystem from concept to release in just over 2 years. AAPL and GOOG supposedly worked on theirs for close to 5 years, and at least 3.

Still, since you brought up AAPL, I recognize that some commentators are questioning the ongoing prowess of "creative-innovative streak" AAPL's been on the last decade.
NO-ONE int heir right mind is suggesting that AAPL is in "serious trouble," financial or otherwise.

Comparing "short positions" between the 2:

AAPL float: 570,229,741 shares ...-... SHORT position: 25,968,885 shares = 4.6%(http://www.nasdaq.com/symbol/aapl/short-interest)

BBRY float: 282,798,550 shares ...-... SHORT position: 170,632,578 shares = 60.3%
(http://www.nasdaq.com/symbol/bbry/short-interest)

That's also a solid "no contest" and it places BBRY squarely in the cross-hairs of everyone who is able to manufacture outright lies and half-truths from misinterpretations of questionable data.
Look for the Jim Cramer video on youtube explaining how "he" did it many years ago; NOTHING has changed except the names.

Whether you are a "hater of the product and/or company" or a "competitor with a market position" to protect or advance, or a "short-position holder who is looking to gain HUGE" the fact is that "manufacturing or providing factually wrong information for the public makets in order to affect share price" is anoutright as share-price manipulation and THAT is a felony under SEC and other public market rules.

^^THIS^^
Hopefully that shuts Z10fido up for a little while.
Cudos on calling out bs and ignorance. If you don't understand the subject matter it's more than okay to keep quiet

Posted via my Zed (not Zee) 10

Thank you, Chris.

I would have to add, though, that the power of current social media means that anyone can write anything and it is immediately and instantaneously published globally "as is". Because it's in written form it is easy to cut & paste to support any other article and this forms "journalism" today. The seeming need for immediacy gives birth to error prone articles put out by poorly prepared writers who are paid to put out x-thousand words a month as "journalists". The problem is compounded when the newer generation of writers are barely able to publish an article without using LOL and running a spell-check. Fact gives way to Opinion. No matter how positive the current news one can cut and paste months old data like job cuts to colour it back to gloomy again.

I enjoy articles like yours, or Peter Misek's, because you explain your logic and reasoning and back it up with well thought out examples. Then you take that foundation and build well crafted paragraphs on top of it.

Were your competitors willing to spend time doing this same thing we would have a much more thoughtful discourse.

But then - cut & paste and I've done my 2000 words for the day, right?

So, it sounds like you can't refute what the analysts said in their commentary, but you don't like it, so instead you raise a cloud of doubt about those analysts and their motivations and ethics.

Hmmm.....

Actually sounds like he is missing key data points to know whether the analysts are correct or not (a problem the analysts themselves don't seem to have a problem with). Instead of compounding the problem by creating more "facts" to support his opinion he is simply presenting his ideas about why all the BS exists in the first place.

Posted via my Zed (not Zee) 10

I'm sending you a lump of something for Christmas. Betcha can't guess what it is. Speculate as much as you want.

Thanks Chris! Another great article to help those confused about the constant gains and losses of BBRY'S stick price! always love reading you're articles

Posted via CB10

So....the basic thrust of most analyst's work is to formulate a theory about the direction that a company's stock ought to go and then try to convince enough ppl to buy into that theory so that their prognostications become self-fufilling prophesies.

Posted via CB10

Not quite. The first part is right. Formulate a theory and sell it to clients. But analysts still want to be right. They don't have enough influence to turn their opinion into fact :)

Posted via CB10

What this boils down to is writing a Thesis Statement then creating the body of your work to support your Thesis.

Hey Chris, curious to know what's your opinion on Peter Misek , Equity Analyst from Jefferies???

Posted via CB10

Haha np. Anyways great article again! Definitely having a better understanding towards the stocks and everything occurs to make them go up or especially down in BlackBerry's case.

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If BlackBerry could guarantee the general public that all their phone calls and text messages etc were not turned over to the NSA then I am sure there subscriber base would skyrocket. It's about time the news exposed Gmail, yahoo, Apple and the rest of the gang for this massive breach of privacy. To me, the old and private network was a problem for the States. I believe now that we no longer use BIZ, we are just as exposed. But who really knows.

Posted via CB10

Thank you for your honest article. I was a buy side analyst for a few years (billions under management) and agree with all you said. I'm also invested in BBRY, believing that it is coming back big time.

Again, thanks for sharing how that world (our world) works.

Posted via CB10

Thanks. You know how it works from the other side of the street, eh? Most people really don't know any of this so I thought some folks would appreciate it. Some do. Others stick to the idea that all analysts are evil and dumb. They are not usually, but they can be manipulated like anyone else. Or they can just be evil. But most are not. Most really do want to publish what they think is accurate.

Posted via CB10

Chris, blame cannot just be limited to these analyst, in the case of Blackberry, it appears that some "higher" forces are also effectively utilizing the entire communications machinery - the newspapers, media, blogs, etc. to strategically malign the Blackberry brand by effectively orchestrating/peddling misinformation (and in some cases blatant lies) through the aforementioned "channels." Even seemly good news is being effectively converted into a bad one with adequate coverage given to such news from all corners of our media. Even Goldman Sach's Simona who was so called "pounding her fist" calling Blackberry a successful comeback and valuing the stock at $23 came out at a very opportune moment to "downgrade" Blackberry and cutting the price target to $17 - I guess, most likely because Prem Watsa's average price is currently at $17 and she is well aware that Prem Watsa is smart enough to have done adequate due diligence to have taken 10%+ stake in Blackberry at that average price. When such, so called well known, analyst can flip on a dime - I hardly blame James Faucette - at least that poor guy has been consistent in his stance. As Kevin pointed out, to Faucette's credit, he did call out that the Q10 will be released in US markets in June 2013.

Blackberry has to do a damn good job at managing product release dates and its relationship with analyst, media and the user community at large. Blackberry has done an excellent job by getting Kevin onboard - Kevin deserves every bit of this recognition by Blackberry. He has been a true trooper for Blackberry and I am glad that Thorsten personally called him as soon as he took over as the CEO of Blackberry. It shows that he is smart enough to court the right people whom he knows mean well.

There are people out there who want BlackBerry to fail, especially fans of Apple and Samsung.

Canadian Z10 owner on Telus

The street is about making money. That's all. Even if companies and lives are destroyed. BlackBerry is going to kick their asses. Analysts have no idea about managing or running anything.

Posted via CB10

I like the comment about how Apple and Android fans want BlackBerry to fail. I am totally against them people, however, I wouldn't go spreading garbage lies about Apple or Android to make them fail, it's for one, bad business, bad karma and you will get caught in the lies anyway. If I wanted Apple and Android to go down I would make sure I have real facts. Long live BlackBerry

Posted via CB10

Chris, you are too miuch of a gentleman. I, for one, think people at Detwiler, people like Faucette, Gillis, Suva are pure evil and they put the whole investment profession in a bad light. How can Gillis have a Price target of $7 on BBRTY when BBRY hasd $6 in cash and no debt? That means only $1 per share ($500 million) for all of BBRY business.. BB10, BES10, BBM, 76 million customers, patents, network, corporate base, security, MDM... I am sorry I dont buy that Gillis is that stupid, there is an ulterior, sinister motive. Maybe short-sellers, maybe US competitors... but whatever it is, it is very sinister

I don't know Gilis but I did eat lunch with Suva at one of the events a few years ago. He was bearish. I hadn't met him before then, only seen his work as a competitor. We discussed the stock. He genuinely believed his bear story and he was right at the time. I'm not always going to agree with him, but I believe he does honest work.

Posted via CB10

Very interesting article...
The garbage is becoming the norm!!! New York Times, WSJ, etc... Should start letting the readers rate the analysts, and those analysts that continue to get bad ratings/complaints from the readers due to integrity/qulity of their work should be banned...

How are the analysts being rated or scored!

Ahh Misek now he's a bbry hero. He used to he the big bbry bear. There's no way he had a financial interest in this. He's awesome now.

Posted via CB10

No, the reason people like Misek is that he has been good at predicting BB10 demand in the short and medium term. He carefully lays out his rationale, describes how he does his channel checks and then makes a prediction based on fundamentals and market knowledge. I can respect that although I think he is still a bit on the bearish side. So let's look can faucette. Won't tell you how he does channel checks, is unable to apply basic fundamental analysis to BB like he does with other stocks and then injects a healthy dose of his own opinion. When it becomes clear that BB is increasing its component orders from multiple companies, he makes up a goofball excuse about better pricing. When asked how he came to this conclusion, he simply said it was his opinion. No analysis or insider information at all. Now would you like to know who Faucette worked with in the past and likes to vacation with. Well, it happens to be Walkley at Canaccord, the other off the wall analyst who has a documented history of being one the worst long term analysts in Canada. But hold it, these two also have friends at Detwiler Fenton and ICG. Imagine that, all the BB perma bears actually know each other. Surprise, surprise.

Chris, one must admit "the street is pretty small" in this case. We are not talking casual connections at big investment houses; this is about the far too chummy behavior of 4 mom and pop operations with somewhat questionable backgrounds to begin with. Canaccord isn't nicknamed "can of Worms" for nothing.

Let's face it Chris, individuals who know each other very well want to manipulate the market. They want to pretend that they are acting independently of one another when they are not. Just run a connectivity plot among the key individuals and their pronouncements and you will get a surprising correlation when it comes to BB. For people that profess to know something about technology, they seem perfectly daft at understanding its power.

I agree about the human behavior rule of "you have to either accept it at face value and admit you were wrong, or you can dismiss the data and find new data that supports your view."
Anyone who has ever debated a fundamentalist of any religion has experienced this...and these guys are stock fundies for sure

Posted via CB10

Analysts write what the money wants to write.. they will write what they are paid to write.. doesn't matter if they write bullocks as long as they get paid... maybe not all of them but most of them are just fiction writer..

Posted via CB10

Very Nice Article.

GOOD and BAD share equal.
After all, at the end, it all depends on the stock player decision.

When we bet on GOOD, we Smile,
When we bet on BAD, we had to also Smile.
It's Our decision.

Posted via CB10 with Z10

thanks for writing informative article chris, as always. now i can see the truth that analysts are sophisticated fortune tellers in suits. more or less lol.

Im gonna put 5-10k into BBRY stock. Not because of this article...because I own a Q10 and believe in the product.

Chris, interesting and professional article once again. Great! Since I'm totally outside that world, any insight is welcome to understand it better. Thanks :)

It seems the speculative analyst activity has died down since BlackBerry asked the securities commissions to look into the Detwiler Fenton report.

Bloomberg Business Week put out a post yesterday about BlackBerry's newly minted, but massively experienced, Chief Legal Officer, Steve Zipperstein. From "BlackBerry's New Lawyer Is Getting Busy": (http://www.bloomberg.com/news/2013-06-07/blackberry-s-new-lawyer-is-gett...)

"After years of market-share losses, BlackBerry is trying to stem a customer exodus to Google's Android and Apple's iOS, and the company's taking a more assertive legal approach to disputes. That includes challenging analysts who publish reports that BlackBerry says are untrue and lobbying for legislation to thwart companies derided as patent trolls, which obtain patents to demand royalties rather than making their own products.

"One of Zipperstein's targets: Detwiler Fenton & Co., a Boston-based financial-services firm. Detwiler said in an April report that return rates of the new BlackBerry Z10 were unusually high and in some cases exceeded sales of the phone.

"It was a charge that BlackBerry and Zipperstein refused to let stand unchallenged. The company asked both the U.S. Securities and Exchange Commission and the Ontario Securities Commission to investigate the report. Zipperstein at the time called it either "a gross misreading of the data or a willful manipulation." BlackBerry's stock fell almost 8 percent on April 11 after the Detwiler report appeared.

"'Everyone is entitled to their opinion," Zipperstein said. "It was characterized as a statement of actual fact, and it was wrong.'"

Seems like there's a new sheriff in town.

Hey Chris,

I am an avid CB reader and I have been noticing that the forum posts are being taken over by newly joined users bashing the products and the company. I believe that CB is being hijacked by increasingly desperate short interests in an attempt to bash the products with the hopes of beating down the company and stock price, since it is clear they are running out of shares to borrow to short in order to keep a cap on the stock price.

Your thoughts on this? ...and what is CB doing to curb this manipulation through its own site???

Same thing happened to Palm/webOS. Early on when webOS was the new darling there were lots of “new" members who were there strictly to bash. Many thought they were from Apple, but either way they weren't interested in how things worked or general constructive criticism but only to bash at every opportunity. I am seeing this in the forums as well. Thats the unfortunate side effect of a open forum. I don't see the same ending to BlackBerry as webOS. BlackBerry is in much better financial shape and it's leadership knows what it is doing. This is fun watching BlackBerry return:-)

Good article Chris. And to the other posters, there are many good comments. I follow the line of thinking that we make our decisions based on an emotional response and then seek the "facts" that support our decision.

Posted via CB10

Great writeup Kris,

I guess it all comes down to, when will all the madness stop and credibility is viewed from analysts just as much as their data.

Posted via CB10

Get attention and manipulate the audiance in your way to earn benefits (mostly money or control)... It works in a small environment (like a grade of school) or in the "adult-area of voracity" in a more corrupt way at the stock market...

Probably because they have a vested interest in seeing BlackBerry fail. Take Yahoo for example. Their Tech section is like an anti BlackBerry cheering gallery with article upon article finding all kinds of faults with either the company. Or its products.
Even the most objective of individuals will come to that conclusion after reading some of the so called "articles" and "expert pieces " on what ails BlackBerry and it's workers as well as the naiveté of its users and customers. All the while, praises upon praises are heaped upon Apple or Samsung or whoever the overlord happens to be that particular day, or better yet whoever pays the so - called experts' bills.
When one starts digging and finding out who the experts are, surprise, surprise!
They are, financial experts, market analysts, capital investors, basically people who have little to no tech backgrounds, passing judgement on a company and its products, based not on informed research and investigation and addressing real issues or shortcomings of said company and its products, but rather market manipulation and increased profit margins.
As I said before, at this point no matter what positive steps BlackBerry takes or what technological achievements it manages to master, or what milestones it reaches these people will stoke the fires of public perception against BlackBerry because it is in their interest to do so.

Posted via CB10

Yes.
Like I've said many times, all analysts are not the same.

Every sensational media report on blackberry, that is dutifully reported on by all tech blogs and discussed ad nauseum in the forums is always from some no name analyst at a no name shop no one has every heard of.

When was the last time you say something like Goldman says bb10 has more returns than sales? Boaml says q10 is too little too late? MS says Thorstein Heins seen smoking cracking? Since Canadian, RBC says BBRY should declare ch7 and be sold for parts, etc.

NEVER. All we hear are stories from these derweiler Fenton, paccrest, Boston associates, and other 5 guys in a basement like shops. These should be IGNORED, not listened to, repeated, and discussed. All the big guys publish non sensational, level headed, sometimes bullish, sometimes bearish reports. If you really want to understand the stock, read THOSE, even if they aren't as exciting. Ignore the rest of these jokers.

Posted via CB10

David Suzuki said in the documentary "Surviving Progress " that "conventional economics are a form of brain damage ", and I tend to agree with that assessment...
while we continue to take advice from economists...go figure!

Posted via CB10

Things have changed in the analyst view of BB (the company). From Tech Market Watch

"RESEARCH IN MOTION LTD COM ISIN#CA7609751028 (BBRY)

TECH STOCKS: BlackBerry Among Gainers In Tech Rally, 13 Jun 16:21
By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) --
The tech sector rebounded along with the broader market Thursday, with BlackBerry Inc. among the sector leaders flexing its muscles after an industry analyst said sales of some of its newest smartphones may be turning out better than expected. BlackBerry (RIMM) shares ended with a gain of more than 6%, to close at $14.41. Before the market opened, Société Générale analyst Andy Perkins raised his rating on the smartphone maker's stock to buy from sell. In a research note, Perkins said expectations for BlackBerry's fiscal first-quarter results are "diverse" ahead of the report, scheduled for June 28. However, Perkins said that "recent channel checks suggest that [BlackBerry's] new models are selling well," and he estimates the company will report more than 4 million sales of its Z10 handset.