Blackberry : The Motley Fool Review

Is BlackBerry Ripe for a Comeback?

BlackBerry (TSX: BB)(NASDAQ: BBRY) missed revenue estimates in six of the last eight quarters, not to mention the heavy cash burn and write-downs it had to live through during those periods, but last quarter, BlackBerry managed to post a GAAP profit.

Could this be the bottom investors have been waiting for? Frankly, taking a position in Blackberry even now is a gamble — here’s why.

The competition isn’t standing still

Last quarter, Apple (NASDAQ: AAPL) sold 43 million iPhones even after the record breaking 51 million in Q1. Of those 43 million, 66% came from overseas (BlackBerry’s bread and butter), showing that Apple is set to gain share in the emerging marketplace. Meanwhile, Google has over 1 billion Android devices activated and more than half of the market in the U.S., along with an ever-increasing offering of products within the Android ecosystem. BlackBerry is going to need a blockbuster product to attract consumers to its products.

The menace of another write-down

BlackBerry gets 71% of its revenue outside North America and while it was announced that the Z3 was launched in Indonesia along with eight new markets to follow, a write-down of inventory due to low sales is probable. Considering BlackBerry’s recent history with new products coupled with competition from the emerging market phone manufacturers, it is a danger that needs to be taken into account.

A sliver of optimism

Along the cost reduction side of the income statement, BlackBerry seems to be doing well with its strategy. It managed to post a gross margin of 48%, an increment of 5% over last quarter along with reducing adjusted operating expenses by 57% on a year-over-year basis. So while growth is not quite there yet, at least the company is now more aligned on the cost side with its anticipated revenue stream. The sale of its real estate managed to increase cash on the balance sheet to $3.1 billion, allowing management more freedom to maneuver without the threat of liquidity in the near to mid future.

New markets and executive vote of trust

It was announced last week that BlackBerry signed an accord with Amazon (NASDAQ: AMZN) to open the BlackBerry devices to the Amazon app store, giving its users access to the most popular apps on the market at the moment. Moreover, new CEO John Chen bought 50,000 shares so far in 2014 sending a signal that the top executive is bullish on the company’s prospects.

Proceed at your own risk

Whether or not you believe in BlackBerry, opening a position is speculation at this stage. With such high volatility both pre- and post-earnings release in the past years, it might be more prudent to sit this one out until the restructuring is on more sound footing.

BlackBerry rallies as Passport images/specs leak

  • Leaked pictures of BlackBerry’s (BBRY +4.8%) anticipated Passport phone show a rectangular device with an abbreviated QWERTY keyboard.
  • The enterprise-focused device reportedly features a 4.5″, 1440×1440, display (1:1 aspect ratio), 32GB of storage, 3GB of RAM, and a hefty 3450mAh battery.
  • John Chen recently announced the Passport would launch in September. The leaks come two weeks after BlackBerry announced (in a strategy shift) Amazon’s Appstore for Android would be integrated with BlackBerry 10.3 (due this fall), and that it’ll work with BlackBerry developers to migrate their apps to the Appstore.

BLACKBERRY(BBRY:NASDAQ, US)

10.01USDIncrease0.23(2.35%)Volume: 
Below Average
As of 30 Jun 2014 at 10:58 AM EDT.

 

QUOTE DETAILS

Open 9.82 P/E Ratio (TTM)
Last Bid/Size 10.01 / 63 EPS (TTM) -11.39
Last Ask/Size 10.02 / 122 Next Earnings 26 Sep 2014
Previous Close 9.78 Beta 1.19
Volume 5,636,179 Last Dividend
Average Volume 31,033,955 Dividend Yield 0.00%
Day High 10.05 Ex-Dividend Date
Day Low 9.78 Shares Outstanding 526.9M
52 Week High 12.18 # of Floating Shares 500.0557M
52 Week Low 5.44 Short Interest as % of Float 19.19%

 

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