Could BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) live to see a brighter day? One analyst believes the Canadian tech giant will make a turnaround and improve in the near future.
BlackBerry could experience turn-around
Maynard Um, analyst for Wells Fargo, increased his estimate for BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s valuation range and revenue estimate for 2015. He also predicts by 2016, BlackBerry could see an improved cash flow after financial adjustments are made. The company’s new chief executive officer John Chen has already made some significant changes such as wiping out the old guard in management ranks. He also created deals with suppliers to create cheaper phone models and put more focus on the tech giant’s enterprise customers.
The rise of Apple and Samsung was concurrent with the huge downfall for BlackBerry. While the iPhone set the standard for smartphones, BlackBerry failed to hold their own in a market that prizes strong innovation. Although Samsung was able to win some of that market for themselves, most other tech companies failed to do the same. For some companies, namely BlackBerry, the market only seemed to pummel them further into the ground. At this point, it seems almost impossible for the company formerly known as Research In Motion to get it together. But Um believes brighter days are just around the corner.
BlackBerry needs to shift their focus to business
He expects fiscal year 2016 to be the big turnaround point for BlackBerry. CNET elaborated, “At that point, the company will have reduced its need for working capital as it shifts away from the hardware business and should lower its operating expense from the reduced need to market to consumers. Um noted that royalty payments that BlackBerry has had to make will end in November, saving the company an estimated $200 million.”
Around that time, BlackBerry should also have a new sales force that will focus on business and government clients who prize security. He also mentioned that BlackBerry needs to solidify pricing plans for their new models.