June 25th, 2016
So, I like the 1st quarter. I'm in the minority opionion with Chen to stay with hardware and not abandon their customers. I like the end-to-end solution.
I think the undeniable turn is only one to two years away. I think the turn is here already, but not clear and full of balance sheet risk.
I love the fact that he is going to license out their product know-how, leveraging off their patents, to outsource their hardware manufacturing to others, making them the designer. Seems like a simple solution. Don't know why I never thought of it. That will greatly improve margins. They are already at breakeven in hardware.
The SAF in the newly posted chart (at $106 M) is going to go to zero. Or close to it. Analysts expect it to fall faster than the increase in software, so all this good stuff will still be overshadowed awhile longer. But services (the green expanding balloon within) are now 40% of the sales and at great margins, improving overall margins. But the higher-margin SAF will still decline and it's just a dead dinosaur. Milk it as long as possible.
Eventually, the green is going to emerge. It's just a matter of when, not IF, in my opinion. I love this investment. Can't have a fire sale without fires!
Look forward to much improved costs in hardware with this new licensing/outsourcing strategy. That is a more clearer reason why Chen sees profitability by September, and it also no longer requires 3 million units for a breakeven. BBRY only needs to be a marginal player in the handset business. Regular customers are just gravy, with enterprise the main focus here.
