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BlackBerry on the Road to Recovery

May 05, 2014 | About:
Arrow Analysis

Arrow Analysis

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BlackBerry (BBRY) seems to have finally learned to swim across its turbulent time. Changing its previous strategy completely, the company has, so far, provided a stable year. It is building towards a different future and is concentrating on fulfilling consumer demands.

The Current Picture

Though the mobile giant faced a critical situation for the last few months, it has been able to fight against all odds, its success owing largely to timely managerial decisions. Recently, the company’s reasonable cost reduction and product valuation rating received a boost, as reported by Oppenheimer. Moreover, Oppenheimer expects that BlackBerry’s latest device Z3 and the Q20 classic would be able to increase its smartphone sales and succeed in competing against the other tech giants like Apple (AAPL) and Samsung (SSNALF).

But, the question is, will it be justified to invest further in BlackBerry, considering its dismal history? Let us take a look.

About the Phones

BlackBerry launched its new smartphone Z3 in the Indonesian market recently. The device, a joint venture between BlackBerry and Foxconn, has been received appreciably by consumers and investors alike.

The Z3 features a five-inch touchscreen display along with a qHD resolution of 960X540 pixels. Powered by a 1.2 GHz dual-core Qualcomm Snapdragon processor, the device consists of a 1.5 GB RAM and an 8GB internal storage capacity, which can be expanded up to 32GB. The phone also boasts of a 5 mega-pixel rear camera with LED flash and a 1.1 front facing shooter. The device provides a 2500 mAh non-removable battery.

Although the Z3 is not as impressive as its predecessors, Z10 and Q10, officials expect its low cost and smart design to attract the mid-range smartphone buyer. It is expected that Blackberry Z3 will create a better impression among its users in comparison to its previous devices.

The Q20 classic phone has already received ample attention for bringing back the easy operated QWERTY keyboard and the track pad. It provides sculpted keys, best for typing efficiently. The Menu, Send, Back, and End buttons are the integral parts of the phone which provide users with a fast and natural workflow within and between apps. It provides one of the best e-mail services and includes features like BlackBerry Hub where users can access all messages in one place, as well as enterprise connectivity with BES10.

The smartphone features a 3.5 inch touchscreen which is the largest display to date on a QWERTY BlackBerry smartphone. The significantly large screen will enable more space for viewing messages, browsing Internet sites and accessing other apps. The battery is also larger than its previous models to serve better durability. Needless to say, BlackBerry enthusiasts are quite thrilled.

On the Way to Progress

BlackBerry’s cost control methods proved successful as the company’s fourth quarter gross margin jumped by 9% as compared to the previous quarter. The company’s fiscal fourth quarter earnings report shows that loss per share declined to just $0.08, compared to a $0.67 loss in the prior quarter. Despite an 18% drop in revenue from the third to fourth quarter, the company has been successful in reaching such impressive figures and its momentum is growing continuously.

BlackBerry has recently updated its contracts with its distributors such as pricing, marketing plans and other important elements crucial for future growth and, thus, strengthened their relationship.

The company has also focused its resources on improving its software and services, revolutionizing the BlackBerry Messenger (BBM) and embedded software like QNX. The company is also creating new features and value added services like compatibility and cross-platform into BES 12. Furthermore, the company is trying to expand into newer prospective avenues such as e-commerce with its shopBerry and BlackBerry.com.

Parting Thoughts

Currently, the company is focusing on its core strengths of security, communication and embedded softwares. It has decided to streamline operations and to reduce its investment expenses. Judging by the decrease in loss per share, it seems to be working.

New CEO John Chen has pledged to return the company to its former heights, and so far, he hasn’t disappointed us. His innovative strategy may very well propel the company to the leading position once again. However, achieving that goal is still some time away. Till then, we are just waiting to see when the BlackBerry pie becomes so hot that we have got to take a slice.


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