BlackBerry has gone through some hard times in recent years, but that is all a thing of past now. CEO John Chen, though still a lot remains to be done, has steered the Canadian firm to stability as the company sits on its largest pile of cash ever at $3.2 billion. Now the biggest question facing shareholders is what will BlackBerry do with this cash?
BlackBerry could go for acquisitions
A report on Seeking Alpha by Money Investor suggests that the Canadian firm can utilize its cash pile to fund growth through acquisitions. In support, the author cites an example of Lexmark, which is in the process of transforming itself into a software and services company. The company recently announced a $1 billion acquisition, which came as welcome news for investors.
Comparing BlackBerry with Lexmark, the author says that the Canadian firm is in the same position as the latter, “sitting on a cash pile and expecting to see that cash pile continue to grow.”
Over the past 12 months, BlackBerry has made a few small acquisitions, which it is already making use of by “increasing the overall offering package” to clients.
Presently, the market is valuing BlackBerry on the basis of its hardware, software and services portfolio, says the report. This is somewhat incorrect, as Chen, during the most recent conference call, told analysts that the company expects to see software growth on the back of future acquisitions.
Where the opportunity lies
BlackBerry holds an important place among enterprise and government customers, giving “insight into critical gaps in security, device management, and other software services at the corporate level is critical,” says the author. This, according to the report, gives an opportunity to BlackBerry to go for acquisitions, helping it to “integrate with existing customers” and provide value from the start.
Even though the Canadian firm will grow its high margin software offerings through mobile device management, rewards for investors will come from the “right bolt-on acquisitions,” says the report. This would also allow the company to offer a broader portfolio of products to customers.
So with this, the author concludes by saying, “With the ship now steadied,” $3.2 billion in cash on hand and more to be earned, “the risk is unequivocally to the upside.”