Articles by Chris Umiastowski

BlackBerry is cash flow positive and growing the software business

Earlier this morning BlackBerry reported Q4 results for fiscal 2015. Revenue dropped from $793 million in Q3 to only $660 million in Q4, but that's mostly hardware related. On most other metrics things are looking up for the company, which explains the stock market's mildly positive reaction to the results. The stock is up about 20 cents as I write this, to US $9.52 per share.

BlackBerry Q3 results show progress towards sustainable profitability

Earlier this morning BlackBerry posted its results for Q3 of fiscal 2015. Every quarter it seems people think this is a typo, so as a gentle reminder I'll point out that the company has a February fiscal year end.

To jump right to the short term situation, the market is not particularly keen on the numbers. The stock is down about 6% as I type these words. I suspect the big reason for this is the reported revenue line. BlackBerry reported $793 million for the quarter compared to analyst expectations of $931. That's pretty huge miss of 15%, and because I don't have my hands on a bunch of analyst models, I don't know where the miss came from right now. My guess is the analyst community was expecting better hardware sales, whereas BlackBerry only recognized revenue on 2 million devices.

BlackBerry is on the cusp of returning as a growth company

Yesterday could turn out to be one of the most pivotal days in the transformation of BlackBerry. I don't say this lightly either. I've been very concerned, yet hopeful about the future of the business since before the launch of BlackBerry 10. Despite the huge earnings and stock price volatility I still remain both concerned and hopeful. And I'm still a shareholder. I've never sold any of the shares that I own.

John Chen

Here we are again. Another quarter has gone by and BlackBerry has reported another set of financial results. I look forward to these reports. I enjoy breaking down what can often seem like complex stuff into something that novice investors can understand. I enjoy being able to focus on what matters.

Before I go into the numbers, let's have a quick glance at the markets. As I write this, BlackBerry stock is up about one percent, but it has been as much as 5% higher at times. The overall market is up about half a percent, and names such as Google, Apple and Microsoft are also up slightly. For a smaller name like BlackBerry to be up only marginally more than the market tells me Wall Street doesn't really think much of the results.

Can BBM Protected boost BlackBerry's earnings?

With documentation of $30 per year BBM Protected price plans starting to emerge, it's worth discussing what effect this might have on the company's earnings and stock price. As it stands right now, BBM Protected requires a BlackBerry device. That will change in the fall when it becomes available for Android and iOS through Secure Work Space but for now, let's just stick with the possible BlackBerry only numbers.

New COO at BlackBerry another sign of software focus

Yesterday BlackBerry announced that they've hired a Chief Operating Officer. The company has not had a COO since John Chen took over and cleaned house.

Remember when Thorsten Heins brought in his own management team including COO Kristian Tear who had tremendous experience from Sony Ericsson and Ericsson? Or how about the co-COO structure that worked very well for BlackBerry during its hyper growth phase? They had Don Morrison covering carrier relationships (he was formerly an AT&T guy) and Larry Conlee (an ex-Motorola guy) who was in charge of manufacturing.

Could the Apple/IBM enterprise mobility deal bring Microsoft or Google closer to BlackBerry?

Yesterday IBM and Apple announced the start of a significant courtship that stands to forever change the landscape of enterprise mobility. In short, Apple and IBM launched an exclusive deal by which IBM will sell iPhones and iPads to its enterprise customer base, create iOS apps and services, and launch other cloud solutions including mobile device management (MDM).

That last bit … cloud hosted MDM … sounds a lot like it could be a major competitive threat to BlackBerry, right? That's how it's being represented across most of the media thus far. The street has reacted similarly as well, with BBRY shares trading down nearly 12% today. I don't think it's quite so cut and dry.

BlackBerry stock is close to a new 52-week high

In the weeks since BlackBerry's latest earnings announcement the stock has climbed significantly higher. It was trading in the $8 range (all figures in USD) prior to the quarterly news, and has now advanced to $11.43 as I write this. This week the stock reached a high of $11.63, which is very close to the company's 52-week high of $12.18.

The BlackBerry fact check portal is a great idea and here are ways they can make it even better

On June 26th BlackBerry announced, via a blog post, something they are calling a "fact check portal." Technically it's not a portal but a category under which they can file blog posts. We can call it whatever we like. Portal, category or even a dedicated blog … these are just labels. What matters to me is the content and how well they market it.

John Chen seems to be exactly the dose of medicine that BlackBerry needed to get things moving in the right direction again. He's only been CEO for about 7 months but his mark is everywhere, and I mean that in a good way. If you don't have time to read all the details let me just say this: BlackBerry has gone from being a company that I thought might not have enough cash to stay alive to seeing some light at the end of the tunnel. If enough enterprise customers start to realize that BlackBerry will continue to be around as the trusted leader in enterprise mobility management, then I think the company's future looks a whole lot better.

I think we all have to realize that BlackBerry isn't in the running to compete (on volume) with Apple, Samsung or even (at least for now) Microsoft's hardware numbers. But there are still groups of enterprises that prefer the security and reliability that BlackBerry offers, and the company is expanding with BBM services to reach consumers and enterprise users who aren't using BlackBerry hardware. There is a definite opportunity here even if we must concede global defeat in the device market.

BlackBerry earnings are on tap for tomorrow!

First thing tomorrow morning BlackBerry will report Q1 results. It should be a great conference call since the company has officially launched the Jakarta phone and they've announced support for Amazon's app store in OS 10.3, which I think could go a long way to resolving many of the most common consumer complaints. But more on that in a separate piece.

Z3 Back

Several months ago I embarked on an experiment. As a guy who'd used BlackBerry since 2000 I had deep experience with the platform along with good experience on iOS. But I had practically no experience on Android. So I put my Z10 on my bedside table and left it there while I moved my SIM into a Samsung Galaxy S4. At the time it was among the best Android handsets available.

I realize I'm in dangerous territory on CrackBerry when I say this, but unless certain things change it is very unlikely that I'll switch back to BlackBerry. I truly wish this was not the case. I say this because overall I think BlackBerry makes a better device and a better OS. I wish a few things would change to tip the scale back in their favor. But as it stands the major factor keeping me away from BlackBerry is app availability.

I could make the argument complicated and tell you that it's about 3rd party apps AND Google services. But in reality the Google services are apps, and they are available in Google Play. If BlackBerry 10 gave me access to Google's awesome apps along with the selection of Android apps available in the Play store, I'd feel like I had the best of both worlds.

Parental Controls

Several years ago BlackBerry started a secret project to bring BES-like features to families. This was way back when the iPhone didn't even have copy and paste yet, the iPad didn't exist and Android had next to no market share. BlackBerry was still king of the smartphone world so the idea of going cross-platform wasn't terribly important yet.

BlackBerry Unite offered families a way to install software on a PC and benefit from a shared contact list and calendar, photo and file sharing and user management. Parents could also act as system administrators. There was a lot of potential behind the product and although it was executed well from a software perspective, the marketing was non-existent.

The project was shut down.

Looking back at the incredible pace of change at BlackBerry in CEO John Chen's first six months

On November 4th, BlackBerry's board of directors made a shocking announcement. The company was officially ending its strategic review and eliminating the plan to go private. Instead they raised $1 billion in convertible debt, fired Thorsten Heins as CEO and brought in a guy named John Chen who was new to CrackBerry readers, but very experienced at technology turnarounds.

The financing closed on November 13th, which marked the first day on the job for the new BlackBerry boss. It has been just over six months since then. When you look at announcements (press releases) individually, it doesn't seem like much. But when you look at the collection of changes Chen had his hands I think you begin to see just how much work there was to be done.

Here's a list of what stands out the most when I look back.

BlackBerry and Sierra Wireless are a good fit for the Internet of things

Lately I've been feeling like there isn't much exciting going on in the world of BlackBerry. We're basically waiting until November to see if BES traction is as good as the company says it will be, and hoping to see BlackBerry get back to profitability.

That's why last week's announcement of Project Ion was somewhat exciting to me. Don't get me wrong - I think the press release said practically nothing. It's all too common in technology land for fancy press releases to be filled with vague-speak. BlackBerry announced a project, not a product. They are not anywhere close to the same thing.

I have a lot of questions running through my mind. Who's leading the project and what experience does he or she have? How does BlackBerry expect to compete against the other enormous companies that want to win in this space (including Microsoft)?

Strategy Analytics says BlackBerry is the cheapest, lowest risk EMM platform

On BlackBerry's last quarterly conference call, CEO John Chen said that customers are responding well to the product plans that the company has shared with its enterprise customers. Chen described a customer base that is willing to wait to see what arrives from BlackBerry in November of this year.

Today BlackBerry was featured as the winning vendor in a new report from Strategy Analytics. I haven't yet had a chance to read the entire 54 page report, but it appears to be pretty detailed and analyzes most of the competition including Good, Airwatch, Mobile Iron and Citrix.

A press release with some good summary information on the report is included at the end of this post for your reading pleasure.

The report looks at two main scenarios. The first is companies building a enterprise mobile management (EMM) platform from scratch, while the second is a company migrating from BES 5 to either BES 10 or a competing solution. The analysis is conducted on a 5-year total cost of ownership (TCO) basis.

Strategy Analytics says that its report shows "BlackBerry offers an implementation and service package which is substantially cheaper than any of its competitors for the commercial grade EMM package", and goes on to describe how this isn't promotion-driven, but instead based on the single package pricing that BlackBerry offers.

Here's the big picture conclusion provided in the executive summary:

"Overall, Strategy Analytics findings suggest that BlackBerry is a strong choice for companies seeking lowest cost of ownership, particularly when there is also a need for a high level of trusted security. On intangible cost factors, no single player can claim to have achieved leadership across all areas. "

In the case of upgrading to BES 10 from BES 5, BlackBerry scores points in the TCO study because of the EZ-Pass program and by providing BES 10 software at no cost. They're also providing free licenses on BES 10 when a customer can show they've purchased a license from another MDM vendor. So BlackBerry is being aggressive.

Strategy Analytics calculates that it's significantly cheaper to migrate from BES 5 to BES 10 instead of migrating to any of the competing products, as shown here:

Hopefully BlackBerry will get some mileage out of this report. At least they are asking potential customers to opt-in (with name, email, phone number) to download a copy of it. I just can't help but think they'd get even more mileage if they did something a bit more interactive and personal instead of tossing a massive white paper at their audience.

I think the enterprise sales team would do well to read a copy of Chet Holmes, "The Ultimate Sales Machine". They'd be able to take this TCO report idea and leverage it into a actual sales with more effect.

Here's the full press release:

Editors Note: There are 2 figures accompanying this press release.

WATERLOO, ONTARIO--(Marketwired - May 8, 2014) - BlackBerry Limited (BBRY)(BB.TO), a world leader in mobile communication, today announced that BlackBerry® Enterprise Service 10 (BES10) is the most cost effective multi-platform enterprise mobility management solution, according to a report by the global market research firm Strategy Analytics.

"Our detailed report found that the pricing offered by BES10 creates a lowest-cost migration path from a TCO perspective", said Andrew Brown, Executive Director, Enterprise Research at Strategy Analytics. "We attribute this to multiple factors, including the Enterprise Server License Trade-up program, the impact of BlackBerry Software Assurance across its Advanced and Premium support categories, and new tiered support categories."

The Strategy Analytics report, "Enterprise Mobility Management: A Review of Total Cost of Ownership,"1 found that BES10 is the lowest cost Enterprise Mobility Management (EMM) solution based on a five year total cost of ownership (TCO). Migrating from BlackBerry Enterprise Server 5 (BES5) to a BlackBerry competitor is, on average, more than double the cost over five years than migrating from BES5 to BES10. The Strategy Analytics report went on to note that the "all inclusive" nature of the BlackBerry offering provides a tangible cost advantage which is then sustained throughout the TCO period.

"BlackBerry customers consistently tell us that cost, coupled with world-class security, is a top priority when choosing a multi-platform mobility management partner," said John Sims, President, Global Enterprise Solutions, BlackBerry. "The report exemplifies why BlackBerry is the only company that can support the full range of EMM requirements, from the most secure to the most open BYOD environments. Customers also recognize the additional security provided from our global NOC infrastructure. No other company has this range of capabilities and we will work diligently to earn the trust of enterprise customers globally."

Strategy Analytics analyzed the TCO of each solution and took into consideration multiple cost drivers, implementation, support and payment scenarios for enterprises migrating from BES5 to BES10 or to other mobility management platforms, as well as enterprises adopting an EMM solution for the first time.

Based on the report, BlackBerry ranked the strongest in these categories:

  • Lowest TCO for commercial EMM deployments: BlackBerry offers an implementation and service package that is substantially cheaper than any of its competitors for the EMM package. (See Figure 1)
  • Lowest TCO for EMM deployments in regulated and high-security environments: Even in a fully regulated environment where BlackBerry offers the highest form of security, it also proves to be the lowest cost solution based on a five year TCO.
  • Highest security: CIOs and IT decision makers listed BlackBerry as the most secure solution. The report concluded that competitors do not offer the same level of IT policies and compliance controls as BlackBerry and cannot deliver a similar end-to-end security model.
  • Scope of EMM capabilities: BES10 offers the most comprehensive set of capabilities for the broadest range of customers, including regulated, enterprise and SMBs. (See Figure 2)

BlackBerry EZ Pass Migration Program Gains Momentum

Customers are realizing the benefits and cost savings of the recently launched BlackBerry program, which provides free license migration and support for BlackBerry customers to move from BES5 and other MDM platforms to BES10.

Since the program launched on March 31, 2014, more than 800,000 BES10 client access licenses have been issued to customers worldwide. The enterprises participating in the program represent a cross-section of industries from financial services and healthcare, to telecommunications and government organizations. Migrations to BES10 include customers using other MDM vendors such as AirWatch, MobileIron and Good Technology.

The BlackBerry EZ Pass migration program is designed to help customers take full advantage of the BES10 multi-platform solution by seamlessly migrating from BES5 and includes access to BlackBerry's technical support services.

For more information about the BlackBerry EZ Pass migration program, please visit: www.blackberry.com/ezpass. For more information about BES10, please visit: www.bes10.com.

For more information about the Strategy Analytics report, please visit www.blackberry.com/tco.

To view the figures accompanying this press release, please visit the following links:

Figure 1: http://www.marketwire.com/library/20140508-BBRYFIG1800.jpg

Figure 2: http://www.marketwire.com/library/20140508-BBRYFIG2800.jpg

What John Chen actually said in his Reuters interview

UPDATED: Reuters reached out to explain things. They claim the original quote from their story is accurate and was part of a bigger off-camera interview. It was still out of context, but it wouldn't be fair to suggest they misquoted, so I've updated the text.

Yesterday turned out to be a pretty big mess as far as BlackBerry news goes. Last night Reuters posted a brief story quoted John Chen saying they might get out of the handset business. Once a video interview was posted, it looked like a misquote (but wasn't) and snowballed down from there.

Here’s what went down: First, Reuters posted this story at 7:45 P.M. which quotes John Chen as saying, “If I cannot make money on handsets, I will not be in the handset business”. Since this was a quote from an interview it’s natural that people took as an accurate statement. The only problem with this quote is he didn’t actually say those words in the video interview that followed. I and many others saw the message from the video vs. the original Reuters story as conflicting. But Reuters tells me this quote was part of a longer (one hour) interview with about 20 people in the room, and he did actually say this.  I'm including the shorter video interview (which is created by the TV side of Reuters, not the news side) below. 

John Chen Soup

While the new BlackBerry CEO hasn’t been at the company very long, he’s made a lot of changes and most of us agree that he’s been very effective so far.

Lately, on the legal front, he’s shown that BlackBerry won’t take any crap from anyone. The company successfully stopped Typo from selling their iPhone case after convincing a judge that BlackBerry would likely win a lawsuit. The injunction was granted in late March, not that long after Typo hit the market. This new BlackBerry sure moves fast.

Just this week BlackBerry was also successful in court with Dutch semiconductor company NXP. They had been sued for willful patent infringement by NXP in 2012, and the case went to court only last month. BlackBerry crushed NXP. The jurors reportedly deliberated for less than a day.

Stock Talk: BlackBerry’s situation for the next year

Last Friday we had a chance to look at the Q4 financials for BlackBerry, and the CrackBerry team held a podcast to talk about it. Were we all doom and gloom? I don’t think it was quite that negative, but we are keeping it balanced and considering the good and bad areas of the business when we talk. No sugar coating.

Over the weekend I did some more thinking about BlackBerry, while enjoying the fact that spring FINALLY arrived in Toronto. I also had a chance to read a well-written report from GMP analyst Deepak Kaushal. While it was quite bearish, I believe the analysis adequately looks at the business. In other words, Kaushal isn’t trying to paint a negative picture on purpose, and he clearly lays out what he believes needs to happen for BlackBerry to hit its goals of being cash flow break even by the end of this year.

Here’s what matters from the BlackBerry Q4 financial results conference call

This morning BlackBerry published Q4 results for fiscal 2014 and held the usual analyst conference call. I’ll go through the results here, and I’d like to invite you to post your comments below.

First of all, John Chen did a great job of communicating on the call. I really like this guy as the CEO. When he speaks it’s obvious that he understands the issues that are bothering shareholders. He doesn’t dance around issues. He doesn’t duck questions. In fact he brings up most of the big issues as part of his prepared remarks. I’ve followed a lot of public companies, and I’ve been listening to quarterly conference calls for at least 15 years now. Chen is in a small group of great communicators. If you ever want to bore yourself to death with the opposite end of the spectrum, go listen to an Amazon conference call. Great company, but horrible speakers. Dreadful.

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