BlackBerry Ltd: Top Priority Is The Return Of Smartphone Business


Are you a loyal BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) fan?

Are you a die-hard QWERTY keyboard user? Well, you are in luck.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) just announced that the company will be releasing a new phone, called the “BlackBerry Classic”, equipped with a QWERTY keyboard and touch screen. The company is returning to their roots after realizing that, even today, older BlackBerry 7 devices are outselling the new BlackBerry 10 smartphones.

Goldman Sachs analyst, Simona Jankowski, recently spoke with BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) CEO John Chen and after hearing several positive points, she has decided to maintain her HOLD rating and $8.80 price target. Simona stated that Mr. Chen has two ambitious goals, “(1) Mr. Chen reaffirmed that the company can achieve its target of cash flow breakeven exiting FY15 (Y/E Feb). To reach positive operating cash flow in FY16 (Feb), Mr. Chen believes the company would need to have about $500mn in quarterly opex, at least 40% gross margins and about 10mn annual smartphone units.” And, “(2) As a top priority, BlackBerry seeks to re-establish profitability in its hardware (smartphone) segment, using a multi-pronged approach involving bill-of-materials reductions, inventory management, and focus on warranty, channel fees, distribution costs, logistics, repairs and IP costs.” The company is already taking steps to achieve these goals, including a plan “to migrate a majority of its volume to Foxconn, including the Classic, which is a variable cost model that should result in positive gross margins.”

Simona has earned a +1.8% average return over S&P-500 and a 63% success rate of recommendations with her strong history of recommending mobile technology stocks. And even more impressive is her 73% success rate just recommending BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) . In this week’s Flashback Friday, we take a look at some of Simona’s BBRY recommendations to see just how successful she was.

One of Simona’s first public recommendations of BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) was in April of 2009, after (previously named) Research in Motion (RIMM) posted better-than-expected Q4 results. Simona reiterated her BUY rating and raised her price target from $57 to $65. Simona stated, “The key element of our BUY thesis is that RIMM’s likely margin expansion with help narrow the [greater than] 30% discount in the stock’s P/E multiple.” This recommendation earned Simona +28.7% over S&P-500!

While Simona did experience a -16.9% over S&P-500 loss from her June 2009 BUY BBRY recommendation, her next BUY BBRY recommendation the next year was successful. In June of 2010 Simona recommended SELL BBRY due to the fact that a “lack of product differentiation and an antiquated operating system place the company at a disadvantage in the fast-growing consumer segment.” Simona ended up earning +13.6% over S&P-500. With the recession, and consumer spending down, Simona’s SELL recommendation came just in time.

A little later, in August of 2010, Simona maintained her SELL rating after a lukewarm reception of the new BlackBerry Torch. Simona felt the launch was “underwhelming”, observing, “checks during the first two days of the launch suggest only modest interest.” She also noted that, “the vast majority of Torch sales are driven by upgrades from existing BlackBerry subscribers.” Simona ended up with +13.8% over S&P-500.

And, early in 2013, when things started to look up for BlackBerry, Simona recommended BUY BBRY with a price target of $19. At a BBRY forum, “the company highlighted success in Canada (the highest sell-through launch in BlackBerry history, with more than 50% of buyers switching from other platforms), the UK (over 33% of buyers from other platforms) and broadly improving consumer sentiment.” Simona was also pleased to hear that, “in addition to the 70k applications announced at launch, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is registering almost 1k apps per day.” Her BUY recommendation earned Simona +10.5% over S&P-500.

Simona has had success recommending BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) , but will you take her latest advice? To continue following Simona as BBRY gets ready to release its nostalgic phone, download TipRanks, and start making informed financial decisions with advice you can trust.

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4 Comments on "BlackBerry Ltd: Top Priority Is The Return Of Smartphone Business"

  1. Blackberry Classic? LOL. They’ve clearly run out of ideas and are now throwing every possible idea at the wall in hopes of finding something that will stick.

  2. It was a $8.80 PT. Sorry for the mistype.

  3. What year was this target $88?
    or am I drinking again!

  4. If the physical type handset was the correct design, Blackberry would not be in this mess in the first place. Apple has applied for a patent allowing the device to sense pressure on the touchscreen. This application will allow accidental keystroke touch not to register, making the touchscreen keyboard even better. It blows me away that Chen does not understand that technology is about the future. Attempting to bring back ” classic” means the same as bringing back the old out of date type tech. Consumers want futuristic designs when it comes to technology. Chen does not seem to understand this, yes way back when the bold and the torch was top of the line, that was then this is now. Very Very big mistake if Blackberry thinks the Classic wont flop.

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