4 Terrific Reasons To Buy BlackBerry’s Turnaround (BBRY)



  • BlackBerry’s focus on the enterprise is a smart move, giving it solid runway for growth.
  • BlackBerry is reviving its smartphone units with a smart strategy, and its tie-up with Amazon will aid growth.
  • BlackBerry’s focus on the cloud and the “Internet of Things” is key to its turnaround.
  • BlackBerry has a strong balance sheet, and its earnings are expected to grow at a robust rate in the next five years.

BlackBerry (BBRY) shares have gained an impressive 35% in the past one month on the back of several positives. The company’s tie-up with Amazon.com (AMZN) is expected to increase the number of apps on BlackBerry’s platform, while its move into the “Internet of Things” will be another catalyst. Moreover, BlackBerry reported a solid first quarter recently, as its losses came in way behind than what was expected.

Now, going forward, the company looks set to benefit from some key trends that should allow it to continue its terrific growth. Let’s take a look.

Enterprise focus

BlackBerry is making significant progress on its plan to return to growth and profitability, and it is highly focused on enterprise. The EZ pass program on BlackBerry Enterprise Services is gaining popularity. More than 2,600 customers have registered with it. BlackBerry has issued more than 1.2 million licenses, and the competitive MDM platforms, notably Good Technology and Mobile Iron, have traded over 10% of those licenses.

BlackBerry has completed six beta customer installations in Europe and North America for its BES 12 platform, and has six more starting in July. There’s positive feedback for its features, functionality, and stability.

A solid smartphone strategy

BlackBerry successfully launched the Z3 smartphone in Indonesia last month. The device saw strong sales on launch day as the company aggressively promoted the device with television ads. In fact, the Z3’s first-day sales turned out to be the strongest among recent BlackBerry 10 handsets, and they were sold out on the first day in Indonesia. This signifies that the BlackBerry brand is still strong in the country. Moreover, demand in Indonesia is robust, as the company ran out of stock a couple of times.

To tap the success of this smartphone, BlackBerry recently launched the Z3 in Vietnam, and plans the same for a number of additional countries, including India, where the device is seeing strong support and interest. So, the company is doing the right thing by attacking emerging markets with a low-cost device, where budget phones are in vogue.

Also, BlackBerry recently partnered with Amazon for mobile apps on Blackberry 10.3. The initiative is expected to add more than 240,000 Android apps, including popular consumer apps.

Going forward, this agreement is expected to free BlackBerry and its resources to follow secure enterprise class applications, while leaving the application part to Amazon. The partnership also addresses the key issue of customers not adopting the Blackberry 10 devices due to an expensive application ecosystem.

Moreover, Blackberry plans to continue on its strong execution of the product roadmap. It plans to launch a brand new device called Passport in September in London. As reported on NDTV:

“Based on a BlackBerry developer listing, the Passport smartphone is said to sport a 4.5-inch display with a resolution of 1440×1440 pixels and offer a pixel density of 453ppi. Other than the screen information, company has not shared any more details of the device.

Other rumored innards of the BlackBerry Passport include 3GB of RAM, a 13-megapixel rear camera, and a 3450mAh battery. BlackBerry on Wednesday, along with the announcement of its deal with Amazon for 240,000 Android apps, also said that it would be shutting down its music and video stores on BlackBerry World.”

Other major releases planned for 2015 include BBM for Windows in July, the release of BES12 in November, and QNX cloud expected to be launched in December. So, the company seems to have a solid smartphone strategy that should appeal to erstwhile BlackBerry loyalists and also address the needs of customers in the emerging markets.

Focus on the Cloud and the Internet of Things

BlackBerry is currently working with NantHealth, which provides a cloud-based intelligent healthcare platform used to connect physicians, patients, payers, researchers, and clinical labs. With such a move, the company is transforming itself into a cloud and Internet of Things player.

In fact, BlackBerry recently announced Project Ion for addressing the Internet of Things opportunity. It involves a secure public cloud platform powered by the QNX technology, as well as the Blackberry Secure Enterprise Mobility Management. Project Ion is also focused on building a robust ecosystem of carriers and application partners.

Now, the Internet of Things is a huge opportunity. According to IDC, there will be 212 billion connected things by 2020, making the Internet of Things an $8.9 trillion market. As reported on ZDNet:

“According to IDC, the Internet of things will change everything and be “a new construct in the information and communications technology world.” IDC put the Internet of things technology and services spending at $4.8 trillion in 2012 and expects the market to be $8.9 trillion in 2020 and have a compound annual growth rate of 7.9 percent.

IDC added that it expects smart cities, cars and houses to drive growth along with the infrastructure that goes with them. However, IDC also noted that vendors and enterprise have numerous hurdles ahead such as a lack of standards, scalability and a young application ecosystem. Meanwhile, end customers aren’t aware of the possibilities yet.”

BlackBerry’s focus on machine-to-machine connectivity and the Internet of Things is a smart move, and the company should gain strongly from the growth of this concept going forward.

Fundamentals and final words

BlackBerry is still running deep in losses, but the company is no doubt making the right moves. In fact, analysts are also pointing toward a revival in BlackBerry’s fortunes. In the next five years, the company’s bottom line is expected to grow at a CAGR of 18.5%, which is a terrific improvement over an annual loss rate of 19% in the last five years. In addition, its balance sheet is in good shape, as BlackBerry has cash of $2.68 billion, which is double of its debt figure of $1.34 billion.

The company has gained some consistency, and has beaten analysts’ estimates comprehensively in the last two quarters. Taking a look at the moves that it is making and the strategies that it is adopting, BlackBerry should be able to sustain its solid run going forward.

Reference: Seeking Alpha (*highly recommended*)

My Comments:

I touched on all the points mentioned above (even if very briefly) in my original post about investing in BBRY. Re-read my 1st post and see how this post is both similar and different. This blog post here supersedes my own, yet misses some key details which I have managed to pick up on my first blog. Alas, there are some key details here about BBRY future success which I have neglected to mention in my first blog. Read and Compare!


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