Deep Insight
On July 16th, Apple Inc announced a partnership with International Business Machines Corp (IBM, Financial) to improve 'Enterprise Mobility'. This is all based around Apple Inc's new iOS platform. This caused a shock to BlackBerry Ltd's share price as it fell from $11.3 to below $10 in one day.
Apple Inc (AAPL, Financial) has recently bought Beats music and electronics. The deal was around $3bn, of which $2.6bn will be going to Dr Dre (the creator). This is set to increase the subscription base that Apple Inc holds for music and gives Apple headphones that are far better than their current mass produced ones. However, $3bn seems a lot for what Apple's getting in return so this may be something to be weary of.
Blackberry (BBRY, Financial) have announced that they will be releasing software included in the BlackBerry OS 10.3 that will be similar to Apple Inc's Siri and will be named the BlackBerry Passport. This is supposed to put BlackBerry Ltd in closer competition with Apple Inc but the competition could be too close that it may be a wasted investment.
Another important feature, that could be more effective than the BlackBerry passport is the battery. The battery will be far more powerful than Apple Inc's iPhone batteries and could be of worth to customers sitting on the fence. Apple Inc's iPhone batteries have been under scrutiny as they seem to drain pretty quickly so this could be a competition winner for Blackberry Ltd.
BlackBerry Ltd has seen some strong growth with its BlackBerry Enterprise Server (BES), especially among the Accounting and Law firms in the UK. It's estimated that the top 74% of these companies use the BES system. This could be a chance to shift the emphasis away from smart phones onto Enterprise aimed products and a key part to the company's turnaround.
HTC Corporation (HTC, Financial) have reportedly accidently revealed their latest product; a HTC software run smart-watch. Whether it was accidental or intended, this could be the first sign of competition for Apple Inc's smart-watch. Apple Inc haven't yet released this or released an image of what it will look like and have been very vague as to whether they are actually going to release one at all but if HTC Corporation do release it, especially before Apple Inc, they could cause some disruption for Apple Inc.
HTC Corporation have also announced that they plan to release a cheaper and much more accessible 4G phones in Taiwan. This will allow customers wishing to upgrade from 3G to 4G the chance to at a much lower cost. They are going to sell some 3G phones cheap to do the same for those wanting to upgrade from 2G. This certainly allows HTC corporation to gain land in an emerging market, something that may make this company unique compared to the others.
Financial Analysis
Blackberry Ltd made $6.8bn sales in the twelve months ending March 1st 2014. They also made a Gross Loss of $43m and a $5.87bn loss. For every $1 of assets they own, they have $0.52 of debt.
Apple Inc made $171bn sales in the twelve months ending September 29th 2013. Of this, 37.62% was Gross Profit and 21.67% was Net Profit. For every $1 of assets they own, they have $0.40 of debt.
HTC Corporation made $194bn sales in the twelve months ending 30th June 2013. Of this, 17.48% was Gross Profit and a Net loss of $1.3bn. For every $1 of assets they own, they have $0.54 of debt.
Conclusion
I would rate BlackBerry Ltd as a SPECULATIVE BUY on the grounds that a turnaround plan could lead to capital growth (and share price growth). However, it's speculative as there are still dangers as we've seen with the partnership between Apple Inc and IBM. If everything goes well, it could pay off but if it doesn't, it could lead to downward spiral. The last year has seen some ups and downs with the share price but hopefully they've turned a corner.
