BlackBerry today announced the BlackBerry Classic, making official the smartphone that CEO John Chen has teased for the better part of a year. The Classic has a throwback look, as its name alludes, with a full QWERTY physical keyboard, physical navigation keys, and a nearly indistinguishable design from BlackBerry smartphones from years ago, such as the Bold. The Classic is significantly smaller than the Passport, which BlackBerry launched earlier this year, and is actually possible to use in one hand, unlike the gargantuan Passport. BlackBerry says this phone will appeal to those looking for the traditional BlackBerry experience that made those devices so popular so many years ago.
The Classic has a square, 720 x 720 pixel, 3.5-inch touchscreen perched above the keyboard and navigation keys. It’s a bit smaller than the 4.5-inch screen on the Passport, and much smaller than the average smartphone’s display, but it makes it possible to use the Classic in one hand and still have the physical QWERTY keyboard. The phone is powered by an aging dual-core Qualcomm processor from 2012 paired with 2GB of RAM. That likely won’t cut it for modern mobile gaming, but it should be fine for plowing through thousands of emails a day, which is what BlackBerry expects Classic users to do. There’s an 8-megapixel camera on the back of the phone, with a 2-megapixel unit on the front.
The Classic runs BlackBerry 10, which offers productivity tools like the Hub, Assistant, and Blend. It also can run Android apps, which are accessible through the Amazon Appstore that’s preloaded on the device. BlackBerry diehards will be happy to know that the BrickBreaker game is also available on the Classic and can be played like it was on older BlackBerry smartphones.
THE CLASSIC IS A VERY SPECIFIC DEVICE FOR A VERY SPECIFIC SMARTPHONE USER
Appropriately, BlackBerry announced the Classic in the heart of New York’s Financial District, an area of the country where BlackBerry smartphones are still a fairly common sight. Perhaps even more so than the Passport, the Classic isn’t a device that’s going to appeal to the mainstream smartphone consumer, but rather it’s for people who like BlackBerry devices and aren’t looking to browse the web or play a lot of games on their phones. BlackBerry hasn’t been on the minds of consumers for years, so now the company is doubling down on its core business users, and the Classic looks like the strongest play for that field yet.
BlackBerry says the Classic is available starting today “through local carriers around the world”, though it doesn’t seem like any US carriers are offering the device. The Classic is also available unlocked through BlackBerry and Amazon’s online stores for $449.
Before the morning’s proceedings got underway, BGC Partners‘s Colin Gillis raised his rating on the stock to Buy from Hold, and raised his target to $12.50 from $11, citing a positive track record built up by Chen since he took over last year, and that sales of another device, the square-shaped “Passport,” seem to have gone well, and that the company could be at break-even on a cash flow basis when it reports fiscal Q3 results this Friday morning:
While we view the company is in the early stage of turning the business around, management has built up a track record of credibility with investors over the last year by quickly reducing costs and preserving cash, focusing on its core strengths of security and physical keyboards, successfully launching new products, and forming strategic partnerships to fill the gaps […] Sales of the Passport phone could be a source of upside in the quarter even though the company had a limited initial production run that effectively sold out. We expect sales of the Passport phone to provide $270 million in revenue with 450K units sold at an average price of $600 USD. This is 52% of our $518 million hardware revenue estimate, and we expect that the Passport should have a positive impact on overall average selling prices. We mention the phone has been well received in its target market, with 444 5-star reviews out of the 508 total on Amazon for an overall 4.8 rating. We expect the Passport to have a positive margin contribution […] The company is launching its classic phone today, continuing its emphasis on serving its core customer base by highlighting a physical keyboard […] Our view is that BES 12 and the Blackberry sales force need to turn free trial customers into revenue in order to sustain our current positive outlook […] The company is nearing the target date to turn cash flow break even before the end of the fiscal year, and it is possible the company achieves this milestone when it reports on Friday December 16th premarket if there is upside results driven by Passport […] The final reason for our upgrade is that the company has a market capitalization of $5 billion, and any modest level of success in the market can have a meaningful reflection in its current revenues, cash flows, earnings and share price. The nature of a company turning itself around is one of volatility, but the current path for Blackberry is clear and may prove profitable. Our downgrade was based on the thesis that the market may provide a better entry point- that thesis has materialized and now we are raising our rating back to BUY.
Disclosure : Jack A. Bass Managed Accounts hold long positions in BBRY