BlackBerry Ltd (BBRY): What’s Next?

Blackberryuser1462590383 / Pixabay

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) had a disastrous year in 2013. The Canadian company’s stock plunged more than 40%, its key products failed to sell, and its weak management failed to turn the business around. Even worse, BlackBerry couldn’t even find a suitable buyer at one point. In its latest quarter, BlackBerry lost 67 cents a share with $1.2 billion in revenues, missing Wall Street consensus on both parameters.

Successful monetization of BBM crucial for BlackBerry

However, investor sentiment began to improve when BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) named John Chen as its new CEO. Shortkly after taking the helm, Chen signed a five-year deal with Taiwanese vendor Foxconn Technology Co., Ltd. (TPE:2354). The deal significantly reduced the supply chain risks for the Waterloo (Ontario)-based company. Foxconn plans to launch its first low-cost BlackBerry smartphone this April in Indonesia.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO Chen aims to make the company profitable by 2016. That seems a bit unrealistic as analysts expect BlackBerry to lose $1.83 per share in FY2014 and $1.34 in FY2015. Though the company still has strong penetration in emerging Asian markets, those markets are now flooded with cheap Android phones. Furthermore, BlackBerry still has a long way to go to successfully monetize BBM.

Investors grew more optimistic about BBM after Facebook Inc (NASDAQ:FB) recently acquired WhatsApp for a whopping $19 billion. The social networking giant paid $42 per user to buy the mobile messaging service. That sent BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares soaring as much as 9% to $9.82 on February 19. But Bret Kenwell of The Street says that whatever valuation investors may attach to BBM, the messaging service by itself won’t be able to bring Blackberry back to profitability.

Shorting BlackBerry may prove risky

Going forward, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is unlikely to spin off BBM. The company will likely try to monetize the app on its own. Kenwell says he would be apprehensive about shorting the stock given the recent optimism. Overall investor sentiment is also much better than last year. The company will be reporting its fiscal fourth quarter results on March 28. Any takeover chatter or signs of sooner-than-expected profitability could also push up the stock.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) shares slipped 0.75% to $9.28 as of 12:59 PM EST on Friday.

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About the Author

Vikas Shukla
Vikas Shukla has a strong interest in business, finance, and technology. He writes regularly on these topics. - He can be contacted by email at vshukla@valuewalk.com or on Twitter @VikShukla10

3 Comments on "BlackBerry Ltd (BBRY): What’s Next?"

  1. I extensively studied all three major platforms and I’m not saying BlackBerry’s is bad at all, but only comparable to all others. If Blackberry wants to survive, the wow and cool factor needs to be developed surpassing their competitors to win.

  2. Wow, great response! The only thing I hate about your response is that I did not write it!

  3. Seems to me that in order for the buying public to realize what a great operating system Blackberry 10 is, Chen is going to have to aggressively market his products to change public awareness and perception of not only the new operating system Blackberry has rolled out but also of the awesome new mobile devices that were introduced last year. Specifically the Blackberry Z30, Z10 and Q10. If and when he changes consumers perception of the company, is when profitability will come around, and that will only happen with an aggressive marketing campaign. Blackberry already has the products including hardware, software and enterprise solutions that can already compete with the competition in the meantime, but nobody really knows it. Blackberry must advertise their products they currently have to get the message out that Blackberry is still in the game, but they better hurry and create at least one more high end device very soon because consumers want nothing but the best. Even in emerging markets! Why a low end device for emerging markets? I understand the market is huge around the globe but don’t sell yourself cheap! Get aggressive Blackberry….time is running out!

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