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What Should Investors Do with Their BlackBerry Shares?
Posted by: Muhammad Bazil (IP Logged)
Date: March 21, 2014 11:40AM

Back in December of 2013 the new CEO of BlackBerry (BBRY), John Chen, published an open letter to the company’s enterprise customers detailing the company’s new business strategy moving forward and attempting to dispel some of the more negative rumors coming out about BlackBerry’s future viability. In the three months since, opinions about the stock are increasingly polarized. Some analysts strongly advocate a strong position in the company after positive news regarding deals with Ford (F) and Apple (AAPL). While the more bearish investors recommend staying away from the relatively volatile stock as competition from newcomers, like Boeing (BA), present renewed threats.

Room for Growth

In his open letter, Chen outlined many of the key areas that the company will be focusing its investments and efforts on in 2014. These include already strong sectors for BlackBerry like its enterprise customers as well as emerging sectors such as multi-platform management. The company has made deals with Ford and Apple that will help secure its position in the multi-platform management market.

Ford has officially dropped Microsoft (MSFT) in favor of BlackBerry’s QNX operating system. Furthermore, Apple will likely also be using BlackBerry’s preferred operating system to run its own software in the new in-car platform, CarPlay, which has been in development for awhile. BlackBerry’s QNX system already controls more than 50% of the market and if this news about Apple is true, it will solidify BlackBerry’s monopoly in this sector.

In addition to the company’s solid performance in the automotive market, BlackBerry is placing greater emphasis on its already strong enterprise customer base. In the letter, Chen stated, “Our EMM customer base is much larger than any of the other vendors in the Gartner Magic Quadrant for Mobile Device Management – and is growing.”

Still Cause for Uncertainty and Caution

Although BlackBerry has been developing a new strategy for moving forward and adapting to the changing climate of the market, there is still some concern that the company still does not have what it takes to recover from its precarious position.

John Chen himself has admitted that the new business plan under his leadership has a 50-50 chance of actually being successful. There are simply too many variables to say with certainty how the future will look for BlackBerry.

Furthermore, while BlackBerry has long been a leader when it comes to security, new competition is set to reach the market soon as the aircraft maker, Boeing, launches its new handset, Boeing Black which is meant to be the most secure phone on the market. This new phone marks the company’s inaugural attempt to break into the handset market, bidding for exactly the same market share as BlackBerry with its purposed security features.

With all that in mind, it is really hard to say just how well the plan is working for BlackBerry. As the stock fluctuates largely on speculation and the new CEO makes an effort to express an optimistic vision tempered by realistic expectations, investors are left scrambling for every little clue as to the state of the company.

After the stock recently managed to break the $10 per share barrier, it has dipped again in the past week, closing at $9.40 on March 20. The struggle BlackBerry has experienced keeping its value above this barrier is definitely not something investors should overlook in their considerations.

Conclusions

Both arguments have their virtues and which side you land on really depends on your personal risk tolerance. This has been a whirlwind ride for investors as the stock has risen more than 35% over the past 52 weeks but continues to exhibit a high level of volatility as it experiences dramatic fluctuations from week to week and even from day to day.

Those who already have a position in BlackBerry have enough positive news to warrant holding at the moment, but it would be best to avoid initiating new ones until the most recent earnings are announced. The polarized debate will continue at least until the company releases its official report at the end of this month so those who are unsure what to do this at point might be better off waiting until after the report to make a decision.



Stocks Discussed: AAPL, MSFT, F, BBRY, BA,
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