As BlackBerry mulls going private, analysis sees smaller company being public & profitable
Executives at BlackBerry are reportedly considering taking their struggling company private, but a new analysis suggests the company could stay public ??if management were to accept the fact that it is now a smaller smartphone company.
Over the last four quarters, the share of BlackBerry's share of revenue spent on selling, general and administrative expenses, as well as research and development, has greatly exceeded rivals like Nokia and Apple. Those high operating expenses suggest to Maynard Um of Wells Fargo that BlackBerry could succeed ? and do so as a public company ? if its executives could embrace "the reality of being a smaller company."
"We continue to believe that BlackBerry has a small but loyal following and that it could reduce spending to focus on core target markets," Um said in a note to investors on Friday.
In the last year, 18.8 percent of BlackBerry's revenue has been spent on SG&A, a sum much larger than Nokia's 13.2 percent. Apple has much greater scale than those two companies, but for comparison's sake, 6.3 percent of the iPhone maker's revenue was spent on SG&A.
As for R&D, it took 12.9 percent of BlackBerry's revenue over the last year, compared to 11.3 percent of Nokia's devices business, and 2.5 percent of Apple's revenue.
Um's take was given in response to a report from Reuters on Friday, which indicated that BlackBerry officials are "warming up to the possibility of going private." The company is said to be considering the idea, but doesn't have a deal imminent or any plans in place.
But BlackBerry executives and board members are said to believe that taking the company private "would give them breathing room to fix its problems out of the public eye," the report said.
In its last quarterly earnings report in June, BlackBerry posted a loss of $84 million on shipments of just 2.7 million devices running its new BlackBerry 10 platform. The company shipped a total of 6.8 million smartphones, but most of those were legacy devices.
Um said he wouldn't be surprised if BlackBerry does in fact go private or is acquired by another company. But if the Canadian smartphone maker is to succeed, he believes it needs to be "disciplined and quick" in adjusting its cost structure to that of a company with smaller revenue.
Regardless, Um has maintained Wells Fargo's "market perform" rating for BBRY stock, as he's not convinced that BlackBerry management will be able to guide the company out of its downward spiral.
"Any sense of urgency is difficult to determine, given management has not been very visible or vocal with a clear strategy," he said.
Over the last four quarters, the share of BlackBerry's share of revenue spent on selling, general and administrative expenses, as well as research and development, has greatly exceeded rivals like Nokia and Apple. Those high operating expenses suggest to Maynard Um of Wells Fargo that BlackBerry could succeed ? and do so as a public company ? if its executives could embrace "the reality of being a smaller company."
"We continue to believe that BlackBerry has a small but loyal following and that it could reduce spending to focus on core target markets," Um said in a note to investors on Friday.
In the last year, 18.8 percent of BlackBerry's revenue has been spent on SG&A, a sum much larger than Nokia's 13.2 percent. Apple has much greater scale than those two companies, but for comparison's sake, 6.3 percent of the iPhone maker's revenue was spent on SG&A.
As for R&D, it took 12.9 percent of BlackBerry's revenue over the last year, compared to 11.3 percent of Nokia's devices business, and 2.5 percent of Apple's revenue.
Maynard Um of Wells Fargo believes BlackBerry could become profitable once again if it were to cut spending and focus on "core target markets."
Um's take was given in response to a report from Reuters on Friday, which indicated that BlackBerry officials are "warming up to the possibility of going private." The company is said to be considering the idea, but doesn't have a deal imminent or any plans in place.
But BlackBerry executives and board members are said to believe that taking the company private "would give them breathing room to fix its problems out of the public eye," the report said.
In its last quarterly earnings report in June, BlackBerry posted a loss of $84 million on shipments of just 2.7 million devices running its new BlackBerry 10 platform. The company shipped a total of 6.8 million smartphones, but most of those were legacy devices.
Um said he wouldn't be surprised if BlackBerry does in fact go private or is acquired by another company. But if the Canadian smartphone maker is to succeed, he believes it needs to be "disciplined and quick" in adjusting its cost structure to that of a company with smaller revenue.
Regardless, Um has maintained Wells Fargo's "market perform" rating for BBRY stock, as he's not convinced that BlackBerry management will be able to guide the company out of its downward spiral.
"Any sense of urgency is difficult to determine, given management has not been very visible or vocal with a clear strategy," he said.
Comments
Well, what can you do. You get taken over by another company that wasn't even in the cellphone market. Never saw it coming, that's understandable. But why oh why did they take so long to fight back? They might have ad a chance if the response was quick enough. Now it's all too little, too late. Oh well.
AppleInsider continues to provide the open mic and uncritical 'ink' for every yutz analyst in town.
How is cutting their R&D spending going to do anything but make themselves worse off in the long run for a short-term gain? Typical short-sighted thinking for some idiot who can't see beyond the current quarter's bottom line.
Does anyone bother proofreading anymore?
Thought you weren't staying long.
This article ? seems to pose ? a lot of questions ??
(they should just rename the company Hu??ler Tech) /s
Hahahaha!
Quote:
Originally Posted by Tallest Skil
Thought you weren't staying long.
They usually don't.....after you make your typical, smarmy comments to the newcomers.
Quote:
Originally Posted by Tallest Skil
Thought you weren't staying long.
I have been reading the articles here for years, but as I said in my initial post, I only registered to let you know that you are a dick, as you have once again proven. I'm not sure dick is even the right classification; asshole, douche, and so many others may also fit the bill. I don't know if you are insecure or just not properly socialized, but I can't imagine you are capable of functioning in society given your obvious lack of self-introspection. The fact that you also clearly think highly of your barely mediocre intellect also causes me to feel some degree of sympathy for you.
Also not sure what a private could do that a public company could not. Apple came back from the brink of bankruptcy while being a sprawling mass of demotivated people, pork projects (so long Newton!), and defocused products. Blackberry is pretty lean compared to that.
Originally Posted by Dickprinter
They usually don't.....after you make your typical, smarmy comments to the newcomers.
Good. The fewer anti-Apple trolls the better.
Originally Posted by notstayinglong
[post]
Your other four posts were deleted for a reason. Maybe muse on what that was.
Quote:
Originally Posted by notstayinglong
I have been reading the articles here for years, but as I said in my initial post, I only registered to let you know that you are a dick, as you have once again proven. I'm not sure dick is even the right classification; asshole, douche, and so many others may also fit the bill. I don't know if you are insecure or just not properly socialized, but I can't imagine you are capable of functioning in society given your obvious lack of self-introspection. The fact that you also clearly think highly of your barely mediocre intellect also causes me to feel some degree of sympathy for you.
I honestly don't see the issue with Tallest Skil.
All I'm going to say is that it's "Journalism 101" (I actually learned this in grade school and it's also in every standard writing style guide ever), that the first time you use an acronym like "SG&A" that you define what it is first.
Like ... "SG&A, (Sugar, Grapes and Anteaters Incorporated)"...
Then when you say "SG&A" afterwards, it actually makes some kind of sense.
Quote:
Originally Posted by Gazoobee
All I'm going to say is that it's "Journalism 101" (I actually learned this in grade school and it's also in every standard writing style guide ever), that the first time you use an acronym like "SG&A" that you define what it is first.
Like ... "SG&A, (Sugar, Grapes and Anteaters Incorporated)"...
Then when you say "SG&A" afterwards, it actually makes some kind of sense.
Great point, and a recurring problem in the tech media.
Except that "SG&A" isn't an acronym, because you can't speak it as a word. It's merely a perplexing abbreviation.
Like ... "SG&A, (Sugar, Grapes and Anteaters Incorporated)"...
Then when you say "SG&A" afterwards, it actually makes some kind of sense.
It made it clear from the beginning:
selling, general and administrative expenses
I propose an Anti-Apple Troll rating system we can score them on. Let's use them for entertainment. They range from the smart and polite, through smarmy and condescending to completely laughable and highly entertaining.
Quote:
Originally Posted by digitalclips
I see a trend here. Companies that are totally screwed by Apple want to go private. Ok, explain how that helps? At this rate we can expect to see Gates and Ballmer wanting to take Microshit private in a few years.
A few more years of Uncle Fester at the helm of MS and it may be small enough to take private.
I remember MS in the '80s when they could do just about anything they wanted to do. Far cry from today when they can't even do what they want to do.