BlackBerry Limited (BBRY, Financial) has been struggling to regain its strength in the market for a long time, and the presence of market leaders such as Apple (AAPL, Financial) and Google (GOOGL), has made it even more challenging. However, the company has showed some signs of strength in its stock amidst positive news and expectations surrounding the company. BlackBerry recently launched an unusual new device which was received positively by reviewers and now the company is gearing up for an enterprise event in November which will target BlackBerry loyalists.
BlackBerry’s Passport device attracted positive expectations prior to its launch, which had a favorable impact on the company’s stock performance, and this trend continued as it received fairly positive reviews and unexpected demand. The unusual device merges the features appreciated by BlackBerry loyalists such as a QWERY keyboard and the latest software and hardware enhancements that bring the device in direct competition with leading smartphones in the market. BlackBerry Passport features a 4.5 inch display with 1440x1440 pixel density, a touch-enabled QWERY keypad, and Qualcomm’s Snapdragon 800 chipset with 2.2 GHz quad-core CPU along with 3GB RAM. Although BlackBerry is facing a supply problem as the device has attracted high demand and it is slow to produce, this is a positive sign for the long term financial performance of the company.
At the BlackBerry enterprise event slated for Nov. 13, the company is expected to announce a selection of new hardware and software including the much anticipated BlackBerry Enterprise Server 12 and the new OS 10.3.1. Similar to the announcement regarding BlackBerry Passport, this event will also target the loyalist customer base which appreciates the sophistication in BlackBerry’s hardware and software.
In wake of the positivity originating from Passport’s success and announcement of new hardware and software, the stock market performance of BlackBerry has also been positive in the recent past. The 52-week range of the stock price is $5.44 – $11.65 which reflects BlackBerry’s volatile market performance, however the stock price of BlackBerry at the time of this edition is within the range of $9.88 – $10.33. The stock price is expected to rise further as the enterprise event nears and it may even break its 52-week high. Figure 1 shows the trend of BlackBerry’s market performance over the past year.
Figure 1: Market Performance of BlackBerry
(Source: Google Finance)
BlackBerry announced financial information for its second quarter fiscal 2015 on Sept. 26. The revenue for the quarter was $916 million, which was lower than previous quarter’s revenue of $966 million, and significantly lower than the revenue for the same quarter in the previous year which was $1,573 million. BlackBerry announced a net loss of $207 million which was a significant decline when compared to the net profit of $23 million in the previous quarter. Although Blackberry's second quarter performance was disappointing, the expectations for the results of subsequent quarters are high because the company’s successful launch of BlackBerry Passport. The third quarter’s revenue is expected to reflect revenue generated from the sales of new device, while the fourth quarter will also include the revenue generated from the hardware and software to be announced at the BlackBerry enterprise event in November.
Even though BlackBerry is making positive advancements in its endeavor to regain its market position, its market and financial positions cannot be compared to the major competitors in the industry. Apple announced a net profit margin of 20.1% for its third quarter of fiscal 2014, while Google announced a net profit margin of 18.14%. In comparison, BlackBerry’s net loss margin for the quarter is 22.6%. Figure 2 represents the financial performance of BlackBerry over the past five quarters.
Figure 2: Financial Performance of BlackBerry
Although the financial performance of BlackBerry has remained disappointing in the second quarter, the success of BlackBerry’s new device is expected to have a positive impact on its financial performance in subsequent quarters. This expectation surrounding its financial performance and the enterprise event in November is anticipated to have a positive effect on the stock performance of the company. Therefore, it can be concluded that the positive trend in the market performance of the company will continue in the short term, however the fate of company’s stock in the long term will be determined after the financial results of upcoming quarters are disclosed. In light of this analysis, BlackBerry’s stock can be given a “buy” rating in the short term and a “hold” rating in the long term.
