Recapping the Question and Answer session from the Q1 FY 2014 BlackBerry Earnings call, there were a lot of great items asked, but a few were sidestepped by Thorsten and company. I’d say, the result wasn’t bad. I tried my best to summarize most of what transcribed if you missed the call.
Gus Papageorgiou from Scotia Capital asked if the demand was weighing in toward benefitting the company in the short term and if they have seen a strong response for he platform. Thorsten made it very clear today that we are still in the midst of a BlackBerry 10 rollout, but are seeing strong global demand and a strong reception for BlackBerry 10.
Maynard Um from Wells Fargo addressed the issues of gross margins of hardware and how service revenue and operating budgets hurt earnings. The response here strictly tried to get the point across that the margins are being greatly scrutinized with the launch of these new devices – especially the Q5. Thorsten responds that the marketing side of the Q10 – wrapped in promotions and subsidy – along with the fresh launch of BES 10 into the market. Thorsten says that they are hopeful that BES10 and hardware revenue looks very strong.
Simona Jankowski from Goldman Sachs inquired about the operating budget and if we should be seeing any increases in the budget in months to come. Thorsten managed to emphasize how the importance of marketing will inject BlackBerry 10 into all these markets in a more developed manner in order to aid the success of the BlackBerry 10 platform.
Another question came in to the effect of questioning the BlackBerry business model in the near future and if they would become more of an enterprise service company. This was quickly dismissed, but they did indicate that these services were just launched and we have to give them time to develop into the market as they gain more Enterprise support.
Ehud Gelblum from Morgan Stanley asked for some insight BlackBerry provided guidance regarding unit expectations in the coming quarters and addressed price points fo the devices and if they forsee any variance in price moves on BlackBerry 10 devices. This question was deflected to reflect the emphasis on marketing and injecting the device into all markets. Seems as if they aren’t going to disclose much of this information, but are really adamant on having people wait and see on how BlackBerry 10 performs.
Rod Hall from JP Morgan asked if lower component cost with consumer business will help boost competition and if enterprise was going to help supplement these consumer component costs. Thorsten emphasized the importance of security and enabling the full enterprise experience and security solution was unmatched. The lower component costing aspect was not answered
Kulbinder Garcha from Credit Suise questioned the cash flow and the fact that BlackBerry would have burned through 300-350 million in cash if it wasn’t for tax refunds. He asked if they were worried about the platform or if they are comfortable with their position. Thorsten sounded very confident that their platform will succeed and it’s very very early in the product cycle in order to gauge it, but they have placed it into the market very competitively and that this takes time. He referred to the process as a “Marathon” and that BlackBerry was ready to run the marathon and it takes time; can’t address this in the short term, but there will be a time when the shareholders will see the benefit of this strategy.
Jim Suva from Citigroup addressed why the price cuts on the Z10 were so prevalent so early on and how BBM being free was going to help the company thrive. Thorsten addressed this with the simple answer of users needing to become familiar with the BlackBerry 10 platform and these carrier promotions were a show of support as to how they are going to promote BlackBerry 10. He also mentioned a “plethora” of new products to come. He was happy that BlackBerry 10 makes them different and have segmented the market into a more unique segment. This is what they are focusing on, and gaining god traction. “We will do what it takes to make it successful, we will not sacrifice long term success for the short term”
That’s most of all I was able to catch from the road today. Expect a more general summary to post after the market opens today.