There has been no denying that BlackBerry as a company has faced significant challenges over the last couple of years. We all know about the decline in marketshare of its devices, inventory write off and financial losses which led to a big restructuring effort and led to massive layoffs. Since then, BlackBerry has turned around the corner with an end of its restructuring efforts and a renewed focus on growth.
A big part of this is due to the November 2013 arrival of the current CEO John Chen and his team, who took over the leadership of BlackBerry and averted what could have been certain disaster. Since then CEO Chen and his team have been busy implementing his turnaround strategy.
BlackBerry did make some bold moves, including forming new partnerships such as Project Ion (the Internet of Things), NantHealth (Healthcare) and FoxConn, which greatly assisted them in managing their manufacturing and control inventory costs. They also diversified the company into 4 separate business units – hardware, QNX, BES and BBM with a mandate for each division to be profitable.
This approach reduces the company’s overall dependency on hardware sales for its revenue streams. In addition to that, they are leveraging their BES 12 and NOC infrastructure to secure Samsung’s Knox framework and also assist Google in securing Android for Work.
Among the real movers and shakers the perception of BlackBerry is changing. Recently high profiles investors Irving Kahn and billionaire Jim Simons have made substantial investments in BlackBerry, which was noted in an article recently posted by UTB contributor Ray.
In an article titled “Almost no one on Wall Street is now betting against BlackBerry” posted last week in the cantech letter , they noted that the short trader position (investors who bet against BlackBerry) in the last 3 months, was at its’ lowest point
So is no surprise that Neil Smith of the Motley Fool made note of these developments in an article titled, “3 Huge Reasons to Get Excited About BlackBerry Ltd” and listed security, QNX and the Internet of Things and Sentiment as the main factors in the following article posted below. It is a great read and just another sign that the tide is truly turning in BlackBerry’s favor.
Source: The Motley Fool
There’s a reason why the president of the United States uses a BlackBerry. They’re widely recognized as the most secure devices on the planet.
For most consumers, this point is moot. We want the latest cool phone, not something that will keep hackers out. Most people I know don’t live in constant fear of getting hacked. Businesses, on the other hand, worry about that kind of stuff everyday.
There’s just one problem. Businesses can save millions if they allow staff to bring their own device to work. Staff are happy as well, since this means they’re not carrying around an extra cell phone for work purposes. Everything happens on one device.
This is where BlackBerry steps in. It has agreements with Samsung, and most recently, Google, to supply both companies with security solutions for their smartphones and mobile operating systems, respectively. Considering today’s cyber security threats, I wouldn’t be surprised to see this part of BlackBerry’s business grow substantially.
2. QNX and the Internet of Things
Over the next six years, it’s estimated that $19 trillion will be spent on everything from thermostats to security systems that can communicate through the Internet. It’s called the Internet of Things and it’s going to be the next big tech craze.
BlackBerry is well positioned to be a big player in this space via its QNX software, which is the brains behind many of these items. QNX is already used by almost every major auto manufacturer in their in-dash entertainment systems, as well as in countless other web-connected items. Amazingly, QNX has been around since 1980.
The potential of QNX can’t be understated. According to the company, its software is in everything from the next generation of breathalyzer tests to military drones. This will only increase as demand for these items skyrockets.
This last reason might seem a little light on logic, but hear me out.
In North America, there are millions of people who once owned a BlackBerry and were pretty happy with the device. I still own my BlackBerry from 2008; it’s put away in a drawer somewhere.
Many of these former BlackBerry owners are investors. It’s obvious why most stayed away from the company in the midst of its turnaround, but now that it’s on the verge of successfully transitioning from a smartphone maker to a software/security provider, investors who sat on the sidelines will slowly start returning to the stock. People want to bet on a BlackBerry revival.
We constantly underestimate how important investor sentiment is to a stock’s success. That’s why BlackBerry fell to $6 in the first place, because investor sentiment was bearish. As the turnaround continues in Waterloo, so will investors’ opinion of the stock.
I can’t guarantee BlackBerry will be higher a year from now, but my money is invested in the company because I think it still has huge potential. That’s about as big of an endorsement as I can give.
So there is definitely signs that BlackBerry’s turnaround strategy is showing some positive indications and there are valid reasons to be optimistic about BlackBerry’s future prospects. BlackBerry’s financial position is improving
- In the last ER call, BlackBerry did post a small profit of approximately $6 million and earned about 1 cent a share
- BlackBerry achieved its second quarter in a row of positive hardware cash flow.
- Normalized positive cash flow of $43 million in the quarter, compared to cash use of $36 million in the prior quarter.
- The number of shorts (investors betting against BlackBerry) is declining and more high profile investors are putting their money behind BlackBerry
- The latest BlackBerry 10 devices, the Passport and Classic which were launched last year have been receiving very positive reviews from customers who have purchased these devices.
- The BlackBerry Passport and Classic are now available for purchase in the 2 largest US carrier stores at AT&T (both devices) and Verizon (the Classic) with negotiations occurring with T-Mobile for them to carry BlackBerry devices as well
With the end of BlackBerry’s EZ pass BES program and companies now paying BES 12 subscription fees on a monthly basis, efforts to monetize BBM, QNX growing presence in the automotive and other industries, Project Ion and other partnerships, my expectation is that we will see BlackBerry’s software and services contribute an even larger share to BlackBerry’s revenue stream and less dependence on hardware sales.
Over the past year there were 2 key company acquisitions. The German company Secusmart, which holds very valuable encryption technology and Movirtu, a provider of virtual SIM solutions. Expect to see BlackBerry leverage and incorporate their technology in some of their new devices, which will certainly add value to their portfolio.