BlackBerry Ltd (BBRY) Journey from Storm To Priv

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s prospects in the industry are finally looking up after years of uncertainty marred with bankruptcy concerns. All the positive sentiments on the Street have to do with the way its software business has taken off in various fields of application. Real buyers are now eyeing the stock as its valuation continues to soar. The handset business, however, remains a point of concern, as it has yet to attain the much-needed grip in the highly competitive field.

Banking on BlackBerry Priv

A change of sentiments in the recent past means short sellers may be in trouble as BlackBerry Ltd (NASDAQ:BBRY) continues to make substantial ground on various fronts. CEO, John Chen has done a great job curtailing all the negatives and preventing the stock from going to $0.

Focus now shifts to how the company will fare on the handset business. Chen has already hinted that they are working on a string of other products to bolster the handset unit. The sentiments should help avert concerns that the company may consider exiting the business altogether should it fail to gain traction with BlackBerry Priv.

Concerns over BlackBerry Priv

BlackBerry Priv is the latest masterpiece that the Canadian company hopes to use to rejuvenate its prospects in the handset business. The Android-powered device is already making a name for itself in the higher end market. How well the new phone performs over the next 12 months will have a huge bearing on the next course BlackBerry decides to take with the handset unit.

There is a strong belief that BlackBerry Ltd (NASDAQ:BBRY) will always be in the handset business no matter what happens to BlackBerry Priv. The fact that the company continues to produce a vertical channel of mobile security solutions all but affirms Chen’s commitment to the business.

A point of concern for some people is that the new smartphone will find it hard to compete against the likes of Samsung Galaxy’s and iPhones that have already made a mark for themselves in the high-end marketplace. The handset business is still a wildcard for BlackBerry, having felt the full wrath of competition in the recent past.

BlackBerry’s Software Business

BlackBerry Ltd (NASDAQ:BBRY) has already made it clear that its future lies in the software business. The fast-growing segment is already doing more than enough to offset weaknesses in the smartphone and service access business. The software unit is the company’s key valuation driver at the moment. With $3 billion in cash and $1.7 billion after accounting for debt, BlackBerry’s valuation has never looked better than now.

The only concern with the software business has to do with the fact that BlackBerry Ltd (NASDAQ:BBRY) hasn’t been breaking down individual financial and operating metrics for each product. There is a wave of uncertainty as to where a good chunk of the revenues come from and whether they are recurring.

Efforts geared towards solidifying the company’s business in the mobile security space are some of the things that investors are closely watching. The efforts are already paying off as BlackBerry continues to win thousands of customers. Its security solutions are already finding their way into mobile devices as well as cars. With all the negative sentiments aside, the company does not look like one that is poised to implode.

There has been enough negative news ever since BlackBerry Ltd (NASDAQ:BBRY) lost its mark in the smartphone business. Investors don’t like to hear the negative news. It may be time to give BlackBerry a break as its financial metrics continue to point to a bright future.

The software business is the only segment that many investors are closely watching as they weigh their investments in the company. For the current year, revenues from the unit could clock highs of $500 million. Estimates put the number at about $1.1 billion as Blackberry continues to show signs of growth.

EMM and QNX Prospects

BlackBerry is currently the largest player on the Enterprise Mobility Market EMM with a 19.2% market share, having acquired its key rival Good Technology. With the ongoing transition to the cloud, the company’s security solution is in high demand. Revenues from this front can only continue to grow thanks to the reputation BlackBerry has built for itself over the years.

The QNX platform is another software front that continues to spur BlackBerry Ltd (NASDAQ:BBRY)’s sentiments on the Street. It is already the platform of choice for applications such as infotainment systems, thanks to its low hardware requirements. The expected growth in the Internet of Things market is another opening expected to drive meaningful volume growth for QNX.

Patents Licensing

BlackBerry Ltd (NASDAQ:BBRY) has not limited its operations to the hardware and the software businesses. It has slowly been monetizing its patents with the signing of collaborative licensing agreements. The company’s patent portfolio is believed to be one of the youngest in the telecommunication industry.

Some of the areas of applications that the patents could be of great value include hot areas of secure communications as well as wireless technology and Internet of Things. The licensing of the vast patents should provide earnings and margin upside going forward

BlackBerry Messenger is another product with the potential of providing a further upside going forward. The platform could act as a consistent source of revenue as BlackBerry Ltd (NASDAQ:BBRY) moves to monetize its user base through advertising and mobile payments.

Conclusion

Overall things look to be on track for BlackBerry Ltd (NASDAQ:BBRY) and the worst might just be over.

Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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  • DEVVVV

    The Priv wont save BlackBerry due to the complete wrong design. I predicted the Z10 would flop due to the attempt to copy Apple The Q10 flop due to the physical and tiny 3.1in square screen. The Passport flopped due to it was almost as wide as it is tall. The leap failed due to another attempt to copy others. The Priv will now flop due to adopting mechanical type features with will fail if sticky type liquids are accidentally spilt on it and texting cant be performed with one hand using the physical type keyboard.

    • MartinJdub

      The Priv isn’t intended to ‘save BlackBerry’, the software business detailed in this article (which you read in full obviously) will do that for them.

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