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BlackBerry's Smart Strategies Can Help It Improve Further

August 07, 2014 | About:
amal.singh70

amal.singh70

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BlackBerry (BBRY) released not so impressive results for the first quarter with its revenue falling 1%. The mobile company lost revenue due to the prevailing weakness in its hardware business. However, despite the not-so-impressive results, the company managed to beat Wall Street’s estimates. It seems that investors are bullish about BlackBerry’s moves to strengthen its business. Hence, even after the revenue drop, the company’s shares rose by 12% as its turnaround plans are working.

BlackBerry is working aggressively on growth initiatives. This can be seen by the company’s success in narrowing its losses. With long-term prospects looking in good shape, BlackBerry might be a good long-term holding.

Turning around

BlackBerry’s quarterly revenue came in at $966 million. The company’s revenue breakdown was approximately 39% for hardware, 54% for services, and 7% for software and other revenue.

BlackBerry was a leader in the mobile world until it lost market share to iPhone and Android devices. The company is fighting back to remain in the market. The CEO of the company is robust in his outlook and is trying hard with various initiatives to execute a solid turnaround.

BlackBerry is now sizing the business to improve its operations. The company is focusing on relevant areas, so it has cut down many of its unprofitable partnerships to shore up weaknesses from which it is suffering.

Focus on revenue growth

BlackBerry is focusing on cost cutting, and now plans on improving its revenue. Under this initiative, BlackBerry is bringing in new products. BlackBerry is seeing a solid response in the market for its low-cost Z3. As its devices are gaining momentum in the market, BlackBerry seems to be on the front foot with its aim to launch more new devices. Moreover, BlackBerry’s soon-to-come Classic and Passport phones in the high-end category are also expected to bring BlackBerry back in the competition.

Besides working on bringing new products, BlackBerry has made noticeable progress on various other key areas. For example, in the BES department, BlackBerry saw good demand for the EZ pass program. Also, BlackBerry has confirmed six beta customers along with the launch of BES 12. In addition, there are six more plans in its pipeline commencing from July.

Seeing good traction of the BlackBerry Z3 in Indonesia, the company will also be launching it in India, Vietnam and other countries. BlackBerry is counting on various strategic moves, and under such strategies, it has entered into a partnership with NantHealth, which is a provider of cloud-based intelligent healthcare platform used to connect physicians, patients, payers, researchers and clinical labs.

But, as of now, this technology is in its infancy. It is operating in 250 hospitals, connecting more than 16,000 medical devices. BlackBerry is making significant investments to strengthen this initiative. In addition, it has also entered into a partnership with Amazon for mobile apps on BlackBerry, adding more than 240,000 Android apps including popular consumer apps.

Conclusion

BlackBerry looks impressive with its long-term growth prospects. It doesn’t have a trailing and forward P/E as the company is still in losses. But, its earnings are expected to grow at a CAGR of 18.5%. BlackBerry is on track for a solid comeback, and is seeing slow but steady growth. The optimistic outlook of its CEO has worked out well, and the company is nearing break even. With strong improvements, BlackBerry is expected to be a good long-term holding. So, investors looking for a turnaround play should definitely consider this stock.


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