Blackberry 2014 Annual Report Download - page 35

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through September 20, 2013, the Company and certain of its officers made materially false and misleading statements
regarding the Company’s financial condition and business prospects and that certain of the Company’s financial statements
contain material misstatements. The individual lawsuit was voluntarily dismissed. The purported class action claims seek
unspecified damages. Motions for the appointment of Lead Plaintiff and counsel have been filed in the U.S. proceedings.
Proceedings are ongoing in all cases.
RISK FACTORS
Investors in the Company’s common shares should carefully consider the following risks, as well as the other information
contained in this AIF, and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the
fiscal year ended March 1, 2014. If any of the following risks actually occurs, the Company’s business could be materially
harmed. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and
uncertainties, including those of which the Company is currently unaware or the Company currently deems immaterial, may
also have a material adverse effect on the Company’s business.
The Company may not be able to implement and realize the benefits of its recently announced strategic initiatives.
On December 20, 2013, the Company announced that it intended to focus on three key strategic initiatives: (i) returning the
Company to its core strengths of enterprise and security; (ii) implementing changes in the Company's Devices business to
provide operational flexibility to meet the needs of its customers and to mitigate the financial risk to the Company, including
the Company's joint device development and manufacturing agreement with Foxconn; and (iii) transitioning to an operating
unit organizational structure consisting of the Devices business, Enterprise Services, the QNX Embedded business and
Messaging. See “Narrative Description of the Business - Strategy” in this AIF for further details.
The Company's strategic initiatives involve a significant restructuring of the Company's business, a refocusing by management
on key strategic areas, significant organizational and personnel changes, outsourcing, and workforce reductions, including both
voluntary early retirement programs and non-voluntary workforce reductions. The challenges faced by the Company to
implement and realize the benefits of the strategic initiatives are significant, as described in the risk factors that follow, many of
which are beyond the Company's control. There can be no assurance that the Company will be able to implement and realize
the benefits of these recently announced strategic initiatives. The Company may experience delays in the anticipated timing of
activities related to these initiatives, higher than expected or unanticipated execution costs, changes in competitive dynamics
that may reduce the effectiveness of the strategies, difficulties executing the strategic initiatives because of factors relating to
the Company, actions taken by the Company's competitors, assumptions made by management proving to be incorrect or other
factors associated with the often unpredictable and rapidly changing dynamics of the wireless communications and embedded
software industries. If the Company is not successful with these efforts, or if these efforts are more costly or time-consuming
than expected, our business and results of operations may be adversely affected, which could limit our ability to invest in and
grow our business.
The Company may not be able to attract new enterprise customers or maintain its existing relationships with its
enterprise customers or transition them to the BES 10 platform and deploy BlackBerry 10 smartphones, and
current BES 10 test installations may not convert to commercial installations.
On February 25, 2014, the Company announced new enterprise solutions, partnerships and smartphone models, including the
next generation of BES (BES 12) that will unify BES 10 and BES 5 onto one platform. BES 12 will enable organizations to
develop enterprise-grade applications that are quickly deployed to BlackBerry smartphones and other mobile devices and
provide customers with the ability to move securely from on-premise to the cloud effortlessly. The Company also announced a
new BES pricing and licensing structure (Silver and Gold) and a new EZ pass program that will enable customers to move from
BES and other mobile device management programs to BES 10 or BES 12 at the Silver level of service for free, the eBBM
Suite (a new family of products and services, including BBM Protected, that will work with BlackBerry smartphones, BES and
BES 10 to provide enterprise-class mobile messaging), the BlackBerry Z3 and the BlackBerry Classic (originally announced as
the BlackBerry Q20). While the Company expects these initiatives to improve and enhance its strength in enterprise solutions,
there can be no assurance that new enterprise customers will be attracted or existing ones maintained. In addition, while the
Company is continuing to see increasing penetration in BES 10 with approximately 33,000 commercial and test servers
installed to date, there can be no assurance that the test installations will convert to commercial installations, or that the
installations will result in equivalent levels of revenue that the Company experienced in the past. The Company also faces the
risk that certain enterprise customers may defer adopting the BES 10 platform until after the availability of BES 12 later this
year. The Company’s BES 10 and planned BES 12 products also rely on partnerships and software solutions with third parties
to deliver the solution. In addition, the Company's recently completed strategic review process may have increased market
uncertainty as to the future viability of the Company and may have negatively impacted demand for the Company's products,
including the BES 10 platform and BlackBerry 10 smartphones. If the Company’s new products are not competitive, do not
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