An Ignoble Experiment

2. BlackBerry's Heins: We expect 'tens of millions' of Q10 sales

SoftBank CEO Masayoshi Son said his company will not raise its $20.1 billion offer for 70 percent of Sprint Nextel (NYSE:S) to compete with Dish Network's (NASDAQ: DISH) unsolicited $25.5 billion counterbid because he said SoftBank's offer is already superior.

In a lengthy PDF presentation, SoftBank contends its offer is worth 21 percent more than Dish's.

In presentations to investors and the media in Japan, Son delivered a blistering attack against Dish's offer and said SoftBank's deal offers more long-term value and fewer complications for Sprint. According to the Wall Street Journal, Son called Dish's offer "incomplete and illusory" and said Dish's offer "includes statements that are misleading. It doesn't compare apples to apples. I want to better explain to shareholders our offer so that they can properly evaluate it."

Speaking later at presentation aimed at Sprint shareholders, Son said, "Some people ask me, 'Will SoftBank be increasing the price for the offer?' Why should we? We are already providing a better deal than the Dish proposal."

"We remain confident that the Sprint board will share our view that the Dish proposal is superior by offering Sprint shareholders greater value with a higher price and more cash, while also creating the opportunity to participate meaningfully in a combined, and competitively unique, Dish/Sprint," Dish said in a statement. "A combined Dish/Sprint will benefit from synergies and growth opportunities that are not attainable through the pending SoftBank proposal. We will continue to work with the Sprint board's special committee and its advisers, as we have been over the past week."

Under the SoftBank proposal, Softbank will pay $12.1 billion directly to Sprint shareholders and will pay another $8 billion for new equity in Sprint at $5.25 per share. Under the terms of the deal, around 55 percent of current Sprint shares will be exchanged for $7.30 per share in cash, and the remaining shares will be converted into shares of a new publicly traded entity, New Sprint. After the deal closes Softbank would own around 70 percent and Sprint shareholders will own 30 percent.

Under Dish's proposed offer, Sprint shareholders would receive $7 a share, consisting of $4.76 in cash and about $2.24 in Dish stock for each Sprint share. That equates to $17.3 billion cash and $8.2 billion stock, according to Bloomberg. Dish has said its offer will result in "synergies and growth opportunities" estimated at $37 billion in net present value, including an estimated $11 billion in cost savings. Dish Chairman Charlie Ergen has said the combined company will be able to deliver video and high-speed broadband to consumers both at home and on mobile devices.

"Our price offer is better than theirs. Our timing is one year quicker at least," Son said, according to Reuters. "Our leverage is much more healthy. (Their) financing is uncommitted. We are committed."

Sprint has tentatively set June 12 as the day for a special shareholder meeting for a vote on the SoftBank deal.

Son said that when Sprint shareholders consider regulatory delays, breakup fees, transaction costs and synergy effects, SoftBank's offer would end up worth 21 percent more than Dish's. Son calculated the value of his offer at $7.65 per share vs. a $6.31 per share offer from Dish.

Son and SoftBank are also relying on the fact that the company has grown into the No. 3 operator in Japan and that Dish has no experience being a mobile carrier. SoftBank has said it expects its domestic operations to generate more than $10.2 billion in operating profit in the current fiscal year, which ends next March 31, according to the Journal.

Outgoing Intel CEO Paul Otellini wrote a letter to FCC Chairman Julius Genachowski saying that Son's vision to help Sprint build a high-speed, competitive third U.S. national network is compelling.

For more:
- see this release
- see this SoftBank presentation (PDF)
- see this WSJ article (sub. req.)
- see this Reuters article

Read more about: Mergers and Acquisitions
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By Phil Goldstein

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3. T-Mobile takes no-contract 'Simple Choice' plans to B2B market

BlackBerry (NASDAQ:BBRY) CEO Thorsten Heins ratcheted up expectations and brimmed with confidence over expected sales of the Q10, the company's first BlackBerry 10-based smartphone with a Qwerty keyboard, noting the company expects to sell "tens of millions" of units of the phone.

Heins

"We have very, very good first signs already after the launch in the U.K.," Heins said Monday in an interview with Bloomberg Television. "This is going into the installed base of more than 70 million BlackBerry users so we have quite some expectations. We expect several tens of millions of units."

Heins has said the Q10 is in testing with 40 carriers in 20 countries. So far, sales of the device in the United Kingdom appear to be strong, as Selfridges & Co., a British department store that had an early exclusive on the Q10, sold out of its initial stock within two hours last Friday, according to AllThingsD. On Monday, the store issued a press release and said the Q10 is its fastest-selling consumer electronics product ever.

Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T), Sprint Nextel (NYSE:S) and T-Mobile USA will support the Q10, which is expected to be available in the United States by the end of May for $249 with a two-year contract. The carriers have not yet detailed exact pricing or availability.

So far U.S. sales of the touchscreen Z10, which is being sold through Verizon, AT&T and T-Mobile, have been modest, according to analysts. BlackBerry is banking on the Z10 and Q10 to help it regain market share both in the U.S. and globally. The Q10, with its distinctive BlackBerry physical keyboard, could appeal more to die-hard BlackBerry fans. Early reviews of the Q10 have been largely positive.

Heins, in a separate interview with Bloomberg, said he does not see the tablet market as a long-term one. The company's BlackBerry Playbook tablet, built on software that predated BB10, has not sold well, especially compared to Apple's industry-leading iPad (NASDAQ:AAPL). BlackBerry sold around 370,000 PlayBook tablets in its most recent quarter, compared to more than 500,000 BlackBerry PlayBook sales in the year-ago period.

"In five years I don't think there'll be a reason to have a tablet anymore," Heins said. "Maybe a big screen in your workspace, but not a tablet as such. Tablets themselves are not a good business model."

Heins said a new BlackBerry tablet would need to provide a unique proposition in a crowded market. "In five years, I see BlackBerry to be the absolute leader in mobile computing--that's what we're aiming for," he said. "I want to gain as much market share as I can, but not by being a copycat."

In other BlackBerry news, the company launched a cheaper, entry-level subscription plan in India for its BlackBerry-branded communications services in a bid to increase its market share in the market, where smartphone penetration is growing. The company introduced a $2.39 per month plan for individuals and corporate users. Previously, BlackBerry service cost around $16.70 per month to companies and $7.40 for consumers, according to the Wall Street Journal.

For more:
- see this Bloomberg article
- see this separate Bloomberg article
- see this AllThingsD article
- see this CNET article
- see this WSJ article (sub. req.)

Related Articles:
BlackBerry: Verizon, AT&T, Sprint and T-Mobile to carry Qwerty Q10
Verizon's Z10 sales giving BlackBerry a boost, according to Chitika
Analysts: BlackBerry's U.S. Z10 sales off to a weak start
BlackBerry 7 to power new devices targeting emerging markets
BlackBerry sells 1M Z10s, but loses 3M subscribers
Report: Brightstar is mystery buyer of 1M BlackBerry 10 phones

Read more about: tablets
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By Phil Goldstein

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4. Nokia investing in Pelican Imaging to enhance Lumia photo capabilities

T-Mobile USA is bringing its new "Simple Choice" no-contract plans to the B2B market, hoping that its "uncarrier" rebranding effort will also translate into more enterprise sales. The plans are priced from $50 per month to $70 per month and are essentially exactly the same as what T-Mobile offers on the consumer side.

The carrier is pitching the new plans as an easier way for business customers to manage their wireless service. Additionally, the company unveiled a new "Business Extras" bundle, designed to give enterprise customers more value-added services and savings.

Earlier this year Frank Sickinger, the No. 4 carrier's senior vice president of B2B, said T-Mobile hoped to grow its B2B market share significantly this year by focusing on plans that do not gouge enterprise customers on pricing, as well as by offering enterprise customers new products and services. The carrier's announcement today seems to fit in that mantra.

And, as with its consumer Simple Choice plans, business customers can either buy their smartphone outright for the full cost of the device or they can make a down payment and then pay for the remainder of the cost of the device in monthly installments. Additionally, customers can bring unlocked devices to T-Mobile.

As for its new "Business Extras" bundles, T-Mobile will offer services like 24/7 remote IT support and paper-to-mobile forms conversion for free to any small business customer who activates a new line or renews an existing line of service (with a minimum of a 500 MB data plan) before Sept. 30, 2013. The bundles typically cost hundreds of dollars per year.

T-Mobile's new service plans for businesses are notable since the carrier last year quietly introduced shared data plans for its business customers. Under those plans, if a company wanted to sign up for 500 GB of data across 500 users, for example, each of those users could be signed up on a 1 GB plan and T-Mobile would not charge any overage until the common pool was used up.

It's unclear whether T-Mobile will continue to offer this shared data option. The carrier couldn't immediately respond to questions about its business plans.

T-Mobile's new Simple Choice plans will compete with new shared data plans for business users from T-Mobile's main rivals. For example, in January Verizon Wireless (NYSE:VZ) launched shared data to its business users, expanding the addressable market for the shared data push the carrier launched last year with consumers. Verizon's Share Everything Plan for Small Business gives companies up to 25 lines of service. The plan provides unlimited talking and messaging and a shareable allowance of 30 GB ($225), 40 GB ($300) and 50 GB ($375). Users must also pay the monthly per-line access fee, which costs $40 for smartphones and $10 for tablets.

Sprint Nextel (NYSE:S) followed suit in early March; its business-focused shared data plans for smartphones range from 20 GB to share with up to 10 lines starting at $139.99 for the first line to 60 GB for 30 lines for $349.99. The plans include unlimited talking and texting.

Sprint also offers a range of business plans for individual enterprise customers, including is Everything Business plan, which offers unlimited voice, messaging, push-to-talk service and data on the Sprint network for $99.99 per month for smartphone users.

A few weeks after Sprint announced its shared data plans for businesses, AT&T Mobility (NYSE:T) launched its own new shared data plan pricing for small business customers. The new options include unlimited voice and texting and offer buckets of 30 GB per month ($300), 40 GB ($400) and 50 GB ($500). Customers still must pay a monthly fee for each device added to the account ($30 for smartphones, $10 for tablets, etc.) AT&T said businesses can add up to 10 devices for plans up to 20 GB; 15 devices for 30 GB plans; 20 devices for 40 GB plans; and 25 devices for 50 GB plans.

For more:
- see this release

Read more about: Simple Choice, Small Business
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By Jason Ankeny

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5. Best Buy quits Europe, sells JV stake back to Carphone Warehouse for $775M

Nokia (NYSE:NOK) plans to invest in photo services startup Pelican Imaging in an effort to differentiate its Windows Phone-powered Lumia smartphone series from devices running Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS, Bloomberg reports.

Pelican Imaging specializes in array camera technology that leverages multiple optics within a single self-contained module, allowing users to tweak photos after they have been captured. Array cameras "are on the cusp of being commercialized, and Pelican does software for that," Nokia Growth Partners' Bo Ilsoe said. "It's very complicated to do this algorithmically, and Pelican is one of the companies that has mastered this." Imaging quality is one of the three biggest reasons consumers purchase or return a smartphone, Ilsoe added.

Nokia Growth Partners has been tracking Mountain View, Calif.-based Pelican since the firm launched in 2008, Ilsoe said. Globespan Capital Partners, Granite Ventures, InterWest Partners and IQT have also invested in Pelican. Ilsoe did not specify the total value of the pending Nokia investment, but Bloomberg notes its typical investments range between $4 million to $7 million and are usually capped at about $15 million. Nokia Growth Partners has around $600 million under management.

Nokia has made camera functionality a key selling point of the Lumia line. Notable examples include GIF making app Cinemagraph, which enables users to add motion to still photographs, identifying elements optimized for animation; the Smart Shoot app lets users mix and match components from a sequence of photos, swapping in perfect smiles and swapping out unwanted distractions, while the Panorama app synchronizes multiple images to create panoramic views.

In mid-2012, Nokia acquired Scalado, integrating the company's image capturing, viewing and creating technologies into its Windows Phone devices. Nokia Growth Partners has also invested in image-sensing technology firm InVisage and micro-optics maker Heptagon.

For more:
- read this Bloomberg article

Read more about: Mobile Social Networking, VC/M&A
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By Phil Goldstein

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