Media Quotes

Adam Sarhan IBTimes Quote: BlackBerry Ltd Passport Unveiled: 'Why Would Anyone Buy A Blackberry Device?'

IB TIMESWednesday 9.24.14
BlackBerry Ltd. shares rose over 2 percent on Wednesday morning after the struggling designer, manufacturer and wireless solutions company unveiled its Passport smartphone at simultaneous global events in London, Toronto and Dubai on Sept. 24. The BlackBerry Passport, which has the size and shape of an actual passport, will include features such as a 4.5-inch square screen and a three-row keyboard. The U.S. price tag: $599.

“BlackBerry needs to answer one simple question: Why would anyone buy a BlackBerry device? That’s it,” Adam Sarhan, founder and chief executive officer of Sarhan Capital, said to IBTimes. “They need an elevator pitch to give to the world. Both consumers and businesses need a catalyst.”
BlackBerry also unveiled the new Porsche Design P’9983 smartphone at London’s famed Harrods department store on Tuesday, combining the Porsche Design brand with the experience of BlackBerry 10 technology. Before the end of the year, the company said the BlackBerry Passport will be available through its carrier and/or distributor partners in more than 30 countries. 
“Unless this Passport has some kind of magical feature, then they have a really tall mountain to climb back toward the top,” Sarhan said.
This will be John Chen’s first global launch at BlackBerry since he took over as CEO in November 2013. But the questions he’ll have to answer are legion.
“Back in the early 2000s and up until 2008, you had a very clear reason why to buy BlackBerry, because no other phone at the time gave you instant access to your email. That was a clear added value,” Sarhan said. “Now there’s just ambiguity. Why BlackBerry?”
Security and Acquisitions
Chen’s dealmaking strategy indicates it knows it needs to be about more than just the phones. At a security summit in July at the Museum of Arts and Design in Manhattan, Blackberry announced it had entered into an agreement to acquire Secusmart GmbH, a high-security voice and data encryption and anti-eavesdropping solutions company for government organizations, enterprises and telecommunications service providers in Germany and internationally. Secusmart offers security across an enterprise system for not only governments but also businesses.
“The acquisitions are very important,” Sarhan said. “BlackBerry has tried to form a little bit of a niche in security,” Sarhan said.
Another acquisition that has caught analysts’ attention is Movirtu, a provider of virtual identity solutions for mobile operators that allows multiple numbers to be active on a single device. BlackBerry announced the deal in September to appeal to business users who want to use one phone, as well as one data trove, for both personal and company use, via Movirtu’s SIM card technology.
“Movirtu seems like a smart play for BlackBerry,” James H. Gellert, Chairman and CEO at Rapid Ratings International, said. “It’s a recognition of BlackBerry’s challenges as a device company and the fact that consumers have shown they don’t want to carry two devices.”
BlackBerry announced another major partnership in June with Amazon for mobile apps on BlackBerry 10.3 scheduled to come out this fall that will add more than 240,000 Android apps. The Amazon Appstore will be preloaded with the BlackBerry 10.3 app and available through a maintenance release for all existing BlackBerry 10 devices.
“BlackBerry seems to be surviving right now,” Keith Bliss, senior vice president and director of sales and marketing at Cuttone & Co., said to IBTimes from the floor of the New York Stock Exchange. “We tend to look at our own little world, and all we see are iPhones and Android devices. But BlackBerry is a global enterprise.”
Bliss said Chen has most likely ceded control of the retail market to tech giants such as Apple Inc., Samsung Electronics and other Android smartphone suppliers because that market is “so ingrained into retail consumers.” Analysts argue that BlackBerry is trying to go back to its enterprise customer because traditionally the business customer was their main bread and butter while the consumer was more of an iPhone or Galaxy user.
“BlackBerry still has a lot of services and businesses both on the phone side and as well as the enterprise-software side for governments around the globe,” Bliss said. “They’re still the preeminent player when it comes to data security across those networks. That’s really what’s kept them in survival mode right now.” 
Second-Quarter Earnings Outlook
BlackBerry is scheduled to report fiscal 2015 second-quarter earnings at 8 a.m. EST Friday, and Wall Street expects the company to post a quarterly loss of $92.68 million, or 16 cents per share excluding items, on revenue of $953.89 million, according to analysts polled by Thomson Reuters. During the same period a year earlier, the company issued an adjusted net income loss of $248 million, or 47 cents per share, on revenue of $1.57 million.
“In the aftermath of Passport’s launch and recent acquisitions, we’ll see whether the company’s attempts at regaining enterprise market share can actually pay off,” Gellert said. “The company’s upcoming earnings reports, both this quarter and over the next few after some key planned rollouts, will offer important hints about whether its recent strategy is gaining any traction.”
Rapid Ratings International measures the financial health of companies, and BlackBerry has been declining since 2012. The firm scored BlackBerry’s financial health at 15, or “very high risk,” on a zero to 100 scale for the fiscal first quarter. The score considers a wide variety of profitability measures, such as gross profitability, earnings and others relative to revenues and several balance sheet items.
“The company may continue to play catch-up in the devices arena, but success in software and services may be BlackBerry’s only hope,” Gellert added.
BlackBerry, which has a market capitalization of $5.57 billion, surprised investors and beat expectations in the previous first quarter after the company reported a loss of $23 million, or 11 cents a share excluding items, better than the expected loss of 26 cents. Revenue for the first quarter of fiscal 2015 was $966 million. 
Shares of BlackBerry rose 2.37 percent to $10.81 on Wednesday following the company’s Passport announcement.