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The New Blackberry (TSE:BB, NYSE:BBRY)

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[OP]
Member
Jan 10, 2016
313 posts
33 upvotes
Markham, ON

The New Blackberry (TSE:BB, NYSE:BBRY)

Anyone interested?

I think the company is a new one now, under the leadership of John Chen. I am thinking about getting some under $10/share Canadian dollars.
I am going to buy some next week if the price stays below $10 CAD.

Just looked at their financial statements, and I believe they are now very strong.
72 replies
Deal Addict
May 18, 2015
1109 posts
259 upvotes
Ottawa,Ont
ValueInvestor wrote:
Apr 1st, 2016 4:11 pm
Anyone interested?

I think the company is a new one now, under the leadership of John Chen. I am thinking about getting some under $10/share Canadian dollars.
I am going to buy some next week if the price stays below $10 CAD.

Just looked at their financial statements, and I believe they are now very strong.
What from their financial statements do you love?
[OP]
Member
Jan 10, 2016
313 posts
33 upvotes
Markham, ON
nikels21 wrote:
Apr 1st, 2016 5:16 pm
What from their financial statements do you love?
Take a look yourself?
Deal Addict
Sep 13, 2003
1205 posts
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I haven't seen their report yet but I am interested in their software and security business... considering buying BB lower than $10 but not sure yet.
Deal Addict
May 28, 2006
2389 posts
179 upvotes
It's been under John Chen since that failed takeover bid by Prem Watsa's Fairfax. Chen is known to turn companies around.

I still think BB is bleeding red but I think it was John Chen that changed the RIM stock name to BB. He made quick work of the management though getting rid of the deadweights.
He's a good CEO but still the product has to sell.
Deal Addict
Sep 20, 2014
1147 posts
364 upvotes
Calgary, AB
What did you specifically like about their financial statements?

http://ca.blackberry.com/content/dam/bb ... ements.pdf (Page 60 onwards - easily the most confusing annual report I have seen)

As far as I can see, earning power is still hard to estimate but the net asset position remains solid with roughly $3 billion in current assets and close to a billion in cash. That said, the real liquidation value is really around $700 million so it's not a Graham-style bargain.

The problem here is that Blackberry's original business of selling smartphone hardware is undergoing a period of slow decay (or death). It'll be a while before one can truly estimate how many handsets BB can ship properly. What Chen is trying to do is navigate away from being a hardware reliant company to one that relies mostly on providing enterprise, security and connection software. So you really need to keep an eye on the latter to come up with their real worth.

Personally, I don't see it and think they are fairly valued given the risk/reward on offer.
Deal Addict
User avatar
Sep 10, 2003
1412 posts
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Hamilton
Yeah I'm not seeing what (OP) sees either...

Blackberry (BBRY) Stock Drops on Revenue Miss

NEW YORK (TheStreet) --Blackberry (BBRY - Get Report) stock is down by 6.67% to $7.55 in pre-market trading on Friday, after the company reported lower-than-expected revenue during the 2016 fourth quarter.

Before the market open today, the mobile communications company reported a loss of 3 cents per share, narrower than Wall Street's projections for a loss of 10 cents per share.

However, revenue of $487 million was below analysts' estimates for $563.18 million. Software and services revenue climbed by 106% year-over-year, according to the company.

"Overall, BlackBerry's Q4 performance was solid as we made progress on the key elements of our strategy, which are to grow software faster than the mobility software market, achieve device profitability and generate positive free cash flow," CEO John Chen said in a statement.

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rates this stock as a "sell" with a ratings score of D. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.
[OP]
Member
Jan 10, 2016
313 posts
33 upvotes
Markham, ON
pulkit10 wrote:
Apr 2nd, 2016 1:36 am
http://ca.blackberry.com/content/dam/bb ... ements.pdf (Page 60 onwards - easily the most confusing annual report I have seen)
Those are the notes to the financial statements. It tells you how they account for things. I think to understand the notes, you will need to take accounting courses.
Introduction to Financial Accounting
Intermediate Accounting I & II
Advanced Accounting (Mergers & Acquisitions, and some complex cases on how to account for things, but I forgot what topics were discussed, way too long ago)
Management Accounting
Advanced Management Accounting
Maybe Intro to Taxation & Auditing so you will know what auditors are for. and don't blame them for financial statement frauds.
Statistics and Financial Math are good too know.

Then you can plow through the financial reports like it's nothing.
[OP]
Member
Jan 10, 2016
313 posts
33 upvotes
Markham, ON
slotscanada wrote:
Apr 2nd, 2016 7:35 am
Yeah I'm not seeing what (OP) sees either...

Blackberry (BBRY) Stock Drops on Revenue Miss

NEW YORK (TheStreet) --Blackberry (BBRY - Get Report) stock is down by 6.67% to $7.55 in pre-market trading on Friday, after the company reported lower-than-expected revenue during the 2016 fourth quarter.

Before the market open today, the mobile communications company reported a loss of 3 cents per share, narrower than Wall Street's projections for a loss of 10 cents per share.

However, revenue of $487 million was below analysts' estimates for $563.18 million. Software and services revenue climbed by 106% year-over-year, according to the company.

"Overall, BlackBerry's Q4 performance was solid as we made progress on the key elements of our strategy, which are to grow software faster than the mobility software market, achieve device profitability and generate positive free cash flow," CEO John Chen said in a statement.

Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rates this stock as a "sell" with a ratings score of D. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself.
I ignore all analysts' reports. I do my own analysis. The way these analysts do things is that they base on recent past data (like 1 - 2 years ago), and it doesn't tell where the company is going. The reason analysts base their opinions on these data is because they need something physical to base on, so they don't get fired if anything goes wrong. Just like professors teaching wrong things in investing (some of them even recognize they were teaching the wrong things) in school. They base their lessons on the text books. So if anything goes wrong, they can refer back to the textbooks and call it a day.

In the real world, things are much different when it comes to investing. During a panic, things that happened didn't make sense if you refer them to the textbooks. However, if you base the nonsense events on human psychology, then they make perfect sense.
Deal Addict
May 18, 2015
1109 posts
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ValueInvestor wrote:
Apr 2nd, 2016 9:12 am
I ignore all analysts' reports. I do my own analysis. The way these analysts do things is that they base on recent past data (like 1 - 2 years ago), and it doesn't tell where the company is going. The reason analysts base their opinions on these data is because they need something physical to base on, so they don't get fired if anything goes wrong. Just like professors teaching wrong things in investing (some of them even recognize they were teaching the wrong things) in school. They base their lessons on the text books. So if anything goes wrong, they can refer back to the textbooks and call it a day.

In the real world, things are much different when it comes to investing. During a panic, things that happened didn't make sense if you refer them to the textbooks. However, if you base the nonsense events on human psychology, then they make perfect sense.
That is completely inaccurate. A lot of analysts include estimated growth data or projected numbers in their predictions
[OP]
Member
Jan 10, 2016
313 posts
33 upvotes
Markham, ON
nikels21 wrote:
Apr 2nd, 2016 9:44 am
That is completely inaccurate. A lot of analysts include estimated growth data or projected numbers in their predictions
Sorry, I think I didn't make my previous comment clear. Each analyst will provide their opinions and projects, but they based their opinions and projects on the past data and some irreverent data (such as war in xxx country). Analysts predictions (aka market forecasters) are used by traders/investors to make their decisions. However, in my opinion, analyst predictions should be ignored completely.

The thing about investing in companies is that investors will participate in the future earnings of the companies, not past earnings. That is why the job of an analyst is to give their forecasts so others can rely on them to make their investment decisions (so they don't get fired if things goes wrong). If anything went wrong, the guy can refer to the well known analysts and avoid being fired.


Once you get into the field of "Common Sense" investing, you will understand that investing is not hard (as Wall Street makes you think), but not easy either because you will really need to understand the businesses.
Deal Addict
Nov 9, 2013
1852 posts
640 upvotes
Edmonton, AB
ValueInvestor wrote:
Apr 2nd, 2016 10:16 am
Once you get into the field of "Common Sense" investing, you will understand that investing is not hard (as Wall Street makes you think), but not easy either because you will really need to understand the businesses.
A few points to consider (which you probably won't like):

- I haven't bothered to read the annual reports (I have no interest in a company like BB) but if it's "common sense investing" why i) can't other readers easily identify what you are seeing and why ii) do you need to go to the notes of the financial tables to see the positives. If it's so easy, shouldn't it be glaringly obvious?

- You are discrediting whatever opinions disagree with your own --> confirmation bias.

- You are exhibiting over-confidence, in that you feel you can do a better job than the professional analysts who do this on Bay / Wall Street (the fact of the matter is both of you will likely do a mediocre job forecasting the future but that's besides the point).

- You call yourself a value investor but you are anchoring (another bias) at $10 / share, but you make no mention of assessing the intrinsic value of the company (which would be difficult to calculate for this company with a changing business model). Why did you select $10 as your entry point? Simply because BB it dropped recently?
Deal Addict
Sep 20, 2014
1147 posts
364 upvotes
Calgary, AB
ValueInvestor wrote:
Apr 2nd, 2016 9:05 am
Those are the notes to the financial statements. It tells you how they account for things. I think to understand the notes, you will need to take accounting courses.
Introduction to Financial Accounting
Intermediate Accounting I & II
Advanced Accounting (Mergers & Acquisitions, and some complex cases on how to account for things, but I forgot what topics were discussed, way too long ago)
Management Accounting
Advanced Management Accounting
Maybe Intro to Taxation & Auditing so you will know what auditors are for. and don't blame them for financial statement frauds.
Statistics and Financial Math are good too know.

Then you can plow through the financial reports like it's nothing.
I don't think at any point in my post did I insinuate the presence of fraud or a deliberate attempt to confuse the reader. Just saying, that compared to almost all of the reports I read, this was laid out in a very confusing and unintuitive manner.

You're right about the accounting courses in that they are useful but I'm talking simple basic numbers here. If your numbers check out on a very simple level, and you have a margin of safety present, there is a good chance that they'll withstand any complex audits too.

Regardless, what is your thesis behind considering this to be a good investment?
Deal Expert
May 30, 2005
39088 posts
1325 upvotes
Richmond Hill
OP, can you describe what parts of the financials do you see make it a good investment? What is its P/E? Projected earnings for the next few years, and relative to the current share price? What is its growth potential, how many new Blackberries will they release and how are you predicting sales to be? Or are you valuing it based on book value, etc.?

Simply coming out and saying it's a good investment without explaining why, and telling people to go read the financial reports doesn't mean much. Anyone can easily say that about any stock, it just makes you look arrogant. Instead, a better approach on a discussion forum would be to provide your analysis on why something is a good or bad investment, and allow people to discuss on your perspective on the valuation.
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Deal Expert
Mar 25, 2005
20876 posts
1873 upvotes
Careful guys, ValueInvestor is a self-proclaiemd investing genius. Some may say the next Buffett.

His son is only 5, yet has $20k in an RESP because hes just that great.
ValueInvestor wrote:
Feb 26th, 2016 2:16 pm
Man, I have already saved up over 20k in my son's RESP even though he is only 5 years old. I can't help it, I am just that good with investing. My son will never apply for OSAP even if the education is not free; however, I can't stand those parents who saved $0 for their kid's education is now on the same playing field as me. I could have used that 20k for something else.

Live is not fair. They are punishing those who would actually save money and invest them wisely. Rather than punishing us for being considerate and smart (by spending a lot of time reading and learning on to manage money), why not punish those who don't know how to manage their money. They spend their time watching TV and shopping in the malls.

FYI, I earn less than 50k a year, and I haven't taken a vacation for 8 years. I see people who saved $0 and they take 2 vacations a year even though their income won't allow them to. There is a thing called credits I guess.

Yet he received $100k to date from his parents, fantastic growth.
ValueInvestor wrote:
Feb 1st, 2016 10:45 am
Hi all,


Back in early 2010, my son was born. So, he got a $50k gift from my dad. Each year, he receives around $10,000 from my parents, and us (spouse and me) in the form of cash gifts for events like birthday, xmas, and Chinese New Year.

In the beginning, my spouse and me couldn't decide what to do with our son's money. My spouse wanted to keep it in her bank account earning 1%. But I wanted to invest the money in the stock market. So we came to an agreement. I will borrow my son's money and take all the risks for stock investing. In return, my son will earn 8% annual interest from me. His principal is guaranteed by me.

Fast forward 6 years, my son is now the richest person in our family, with my wife being the second. The only reason she beats me is because I had to pay $2,000 for family expenses each month while she earns 1% on her savings.

Is there a need for me to report the Interest expense and help my 5 year old son file tax returns? And how do I report the cash gifts? Or do I even need to report them?

Your input is greatly appreciated.
Lets not forget about the 20 times and under EBITDA test
ValueInvestor wrote:
Mar 2nd, 2016 12:54 am
It didn't pass my first test. On their annual report, they mentioned "EBITDA" more than 20 times. I can only accept any company to mention it once for the purpose of a credit facility as bankers base their lending (aka repayment of interest ability) criteria on company's EBITDA.

EBITDA has no place in annual reports, and people shouldn't use it for any type of measurement. EBITDA makes no sense. Businesses need "DA" to operate. If you think some nice guys (uneducated investors) will finance your capital expenditure, then you are in wonderland. You can take EBITDA and minus CapEx, minus Interest expense for some sort of measurement, but not use EBITDA solely to mislead investors. CapEx (replacement cost of equipment) is much higher than DA since there is inflation.

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