GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

BlackBerry Seems To Be Making The Right Moves

March 08, 2014 | About:
Neha Marwah

Live investor

3 followers

BlackBerry (BBRY), once known as Research In Motion, has been going through some very heavy changes as it makes a shift from being a device company to a software company, and it turns out that the changes are good ones. Looking at returns, no other tech company, say Apple (AAPL), Google (GOOG) or Facebook (FB) has been able to give back as much as BlackBerry has managed to.

In a span of 60 days the company stocks have gained as much as 36%, and what makes this even more special is the fact that its top-line has plunged 32% on LTM basis and has reported per share loss of $10.18. On the other hand, while BlackBerry was sporting this incredible surge, Apple was down 5.2%.

So, what’s driving BlackBerry’s stock?
The answer lies in what the company is all about presently. The company is making a shift into the software space and its true treasures are the offerings it has, focused primarily on security and convenience. It’s an established fact that there is no other system as safe and secured as that of the Canadian giant.

While many corporates are shifting from the iconic BlackBerry handheld devices to the trendy and jazzy iPhone, many are still very pleased with what they get from using the devices. Companies, particularly those functioning in strictly regulated industries, still prefer to use a BlackBerry for its strict security requirements. Even government departments such as the U.S. Department of Defense (DoD) are only allowed to use these devices.

Apart from the security side of its offerings, BlackBerry’s enterprise services, QNX and BBM are also driving the stocks. Because of its troubled handset business many analysts were writing off BlackBerry, but just because of one poorly functioning unit the company doesn’t turn value less. These other segments have been pulling up the company’s performance very decently. BlackBerry has a very healthy balance sheet and its strong turn around plans is making complete sense.

QNX, the automotive software division of the company, is the one investors need to look out for according to several analysts and industry experts. Major auto-makers such as BMW, Audi, Chrysler, GM among many others are all QNX users. The product offering already has a command over 65% of the market and now that even Ford Motors (F) has decided to drop Microsoft (MSFT), that used to power its infotainment systems, the scope of BlackBerry is expected to improve further.

Concluding thoughts
As the company makes its shift from hardware to software, almost everything we knew about BlackBerry and its possibilities have changed. We can say the Canadian giant has become a different company altogether – with new performance measurement metrics and very different valuation from what it had earlier. While the stocks of BlackBerry jumped 36%, it’s still very far from its 2008 valuation of $140. However, BlackBerry’s management is on its toes and with strong turnaround plans and valuable offerings, the future of this once-up-on-a-time success story looks brighter than before.


Rating: 3.6/5 (9 votes)

Comments

AlbertaSunwapta
AlbertaSunwapta - 6 months ago

Is it Blackberry that is making the right moves or investors are just just seeing Blackberry through a different lens? QNX and BBM and their potential were well know commodities before the recent upturn but the focus was always on the falling handset sales and contracts. I wouldn't be surprised if the stock rose further when BB's vast patent portoflio gets added in as a "new" consideration with nothing really new taking place on Blackberry's part except maybe PR and a roadshow. It's not a new company, its the same old company but seen in a new light by the investing public.

batbeer2
Batbeer2 premium member - 6 months ago

Yeah,,,,

and we've had a name change that should count for something ;o)

Watch out though, every time I've said something nice about BBRY, the stock subsequently dropped by at least 25%.

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK