BlackBerry Ltd: “The Restructure Is Over”

Rumours are high about BlackBerry Ltd’s (TSX:BB)(NASDAQ:BBRY) new strength. Is the news true?

| More on:
The Motley Fool

“The restructure is over” — those are the words that started to emerge from the offices of BlackBerry Ltd (TSX: BB)(NASDAQ: BBRY) on Tuesday. So that’s it then, all is back to normal, pay no attention to the past few years, and don’t forget your gift bag on the way out.

Wait, what?

No, this ordeal is far from over for BlackBerry. It’s easy to forget that it has been only eight months since John Chen took over the company, but it’s not easy to forget that in the past five years the company was forced to cut about 10,000 jobs, or 60% of its total workforce. The Playbook bombed, and several years of poor performance have eroded the financials of this once-anointed prince of the tech sector.

Is this memo a smokescreen, or is it actually the first glimmer of a brighter future? Is that a light of hope at the end of the tunnel or the speeding locomotive of reality bearing down on the company?

The memo

The yet-to-be-authenticated internal memo written by John Chen goes on to say that, “We have completed the restructuring notification process, and the work force reduction that began three years ago is now behind us”. The memo also indicates that the company is now in the position to start hiring again.

John Chen laid out the possible areas for growth in the memo, apparently stating that “barring any unexpected downturns in the market, we will be adding headcount in certain areas such as product development, sales and customer service, beginning in modest numbers”.

There are also rumblings inside the company that it “is now in a position to make strategic acquisitions to strengthen areas that are likely to drive future revenue growth.”

The future of the brand

Since taking the reins, John Chen has made the decision to outsource some of the company’s consumer smartphone hardware to China in an effort to refocus its Canadian resources. In doing so, the company is believed to be pursuing the “high security” phone market, such as government, military, and big business customers.

This summer will be a bit of a lull for the company as many of its newest hardware products won’t hit shelves until the end of the year. Other areas of growth could be in the mobile data security sector, as is evident by the company’s purchase of Secusmart, a private German company known for its data and voice encryption capabilities.

Project Ion

Project Ion is the code name given by BlackBerry to a series of projects designed to take advantage of the Internet of Things. This technology creates an infrastructure for devices, sensors, phones, and computers to communicate with each other.

BlackBerry recognizes this as an opportunity to tap into the untold number of devices that  need to be connected in a usable manner. This is not the public internet; this is a series of privately controlled networks whose information can be more easily secured, controlled, and licensed by BlackBerry.

One example that has been given is the amount of sensors in everyday cars that could be programmed to sense when a car hits a pothole. This would create a GPS marker, and if enough of these markers are created, it would alert the local city or municipality that something might be going on with that particular patch of road.

This foray into the internet of things by BlackBerry would put it directly against the industry’s current leader, Sierra Wireless, Inc. (TSX: SW)(NASDAQ: SWIR). While BlackBerry is starting to turn around, this competition could turn ugly for both companies very quickly.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Cameron Conway has no position in any stocks mentioned. David Gardner owns shares of Sierra Wireless. The Motley Fool owns shares of Sierra Wireless.

More on Investing

Dividend Stocks

Buy 3,000 Shares of This Super Dividend Stock For $3,300/Year in Passive Income

Are you looking for a super dividend stock to buy now and generate a whopping passive-income stream? Here's an option…

Read more »

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

BIP (TSX:BIP) stock fell dramatically after year-end earnings, but there could be momentum in the future with more acquisitions on…

Read more »

Utility, wind power
Dividend Stocks

So You Own Algonquin Stock: Is It Still a Good Investment?

Should you buy Algonquin for its big dividend? Looking forward, the utility is making a lot of changes.

Read more »

Big Bitcoin logo.
Investing

2 Cheap Stocks to Add to Your TFSA Before They Get Expensive

If you want to buy the dip and sell the rally, these two TSX stocks are a bargain you don’t…

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

New to Investing? This Step-by-Step Guide Will Get You Started

New to investing? Then follow this guide to help you get started, by paying off your debts and saving towards…

Read more »

stock data
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $1000/Year

Dependable income stocks like Enbridge can help you earn worry-free passive income regardless of market and commodity cycles.

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

2 Stocks Ready for Dividend Hikes in 2024

Building a passive income is one way to keep up with and even beat inflation. These two stocks can help…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

3 Ways Canadian Investors Can Save Thousands in 2024

If you've done the budgeting and are still coming out with less money than you'd like, consider these three ways…

Read more »