Is BlackBerry Ltd. a Safe Investment?

BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) is making progress with its turnaround plan, but risks still persist. Should you buy the stock or avoid it?

| More on:
The Motley Fool

The future of BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) is still up in the air. John Chen, BlackBerry’s CEO, gave his company a 50% chance of survival back in March and then increased his prediction to 80% as he started to smell the roses in midsummer.

The big-money guys, who often sniff out a winner before everyone else catches on, are split on whether BlackBerry is ready to bloom or destined to slowly wither and die.

Third Point LLC, run by activist fund manager Dan Loeb, completely liquidated its position of 10 million shares in BlackBerry in the first quarter of 2014. Fairfax Financial Holdings Ltd. trimmed its holdings by 5.2 million shares earlier this year, but still owns just under 9% of the company. Then there’s Primecap Management, which still believes in the story, and is BlackBerry’s single largest shareholder with more than a 10% stake.

Even the analysts are unsure, with most giving the company a “hold” rating.

So, what is a retail investor to do?

Let’s look at some of the developments at BlackBerry over the past few months and try to see if there is really any hope.

Good news

The restructuring appears to be over and BlackBerry is focusing on building the business around software and services targeted at enterprise customers.

In July, BlackBerry bought Secusmart, a mobile security company based in Germany that specializes in high-security encryption technology designed for voice and data. The company’s anti-eavesdropping capabilities are of particular interest, especially for senior-level politicians.

The Secusmart deal might be more beneficial as a credibility-building tool than as a means of generating significant cash flow.

In September, BlackBerry bought Movirtu. The SIM designer owns a nifty technology that enables employees of a company to set up both personal and business accounts on the same smartphone. The potential for this technology is huge, especially for small companies that need to have an employee’s use of voice, data and messaging billed separately from the personal use.

At the end of September, BlackBerry launched its new Passport device. The square 4.5-inch display and three-row keyboard is targeted specifically at business users. It is too early to tell if the device will gain traction but it shows consistency in the direction the company is trying to go.

Bad news

Back in July, Apple Inc. and International Business Machines Corp. announced a joint venture that rattled the cage a bit for BlackBerry supporters. The arrangement between Apple and IBM will see IBM sell Apple devices to its extensive global portfolio of enterprise clients. The two companies will also co-develop a host of applications targeted at BlackBerry’s enterprise mobility stronghold.

The growing popularity of Bring Your Own Device (BYOD) policies at companies has been a problem for BlackBerry. Corporations that previously issued BlackBerry smartphones to the entire workforce have slowly moved towards the BYOD system.

Despite the new focus on software, BlackBerry still needs to sell about 10 million devices a year. If it wants to get investors excited about the stock again, it has to score big with its Passport or the new BlackBerry Classic, which is set to arrive in the coming months.


BlackBerry reported a Q3 loss of $11 million in its latest earnings report. Hardware represented 46% of revenue, another 46% came from services and the remaining 8% was generated from software and other sales. The company sold about 2.1 million smartphones in the quarter, and had a cash balance of $3.1 billion as of August 30, 2014.

What should investors do?

The next few quarters should determine if BlackBerry can carve out a profitable and sustainable niche in the enterprise market. If you believe John Chen is right, then the upside potential is probably greater than the downside risk, but investors should be prepared for some volatility along the way.

Not sure if BlackBerry is the best bet right now? Check out your FREE report offered below on the one stock every investor should own.

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 Andrew Walker has no position in any stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple and International Business Machines.

More on Tech Stocks

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

A TSX growth stock is a top pick and profitable investment choice if you missed out on the ascent of…

Read more »

grow dividends
Tech Stocks

3 Tech Stocks That Could Make You a Millionaire

Given their long-term growth potential, these three tech stocks could deliver oversized returns in the long run.

Read more »

Businessman holding AI cloud
Tech Stocks

Ready to Invest in Artificial Intelligence (AI)? 2 Stocks That Are Solid Bets

These two AI stocks provide investors with strong future opportunities as AI continues to become a part of our everyday…

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Down 88% from all-time highs, is Lightspeed stock a good buy in May 2024 and can the TSX tech stock…

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

Forget NVIDIA: 1 Tech Stock to Buy Instead

Here’s why Shopify (TSX:SHOP) stock could be a smart long-term buy for investors willing to look beyond NVIDIA’s impressive growth.

Read more »

Lights glow in a cityscape at night.
Tech Stocks

2 Artificial Intelligence Stocks to Buy and Hold for the Next Decade

Qualcomm (NASDAQ:QCOM) and another well-placed AI stock could drive substantial capital gains over the next decade. Here's how.

Read more »

Arrowings ascending on a chalkboard
Tech Stocks

This Small-Cap Stock Is up 20% This Year, and Here’s Why it Can Go Even Higher

Here's why investing in small-cap growth stocks such as Sylogist can help you beat broader market returns over time.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Tech Stocks

Up 51% This Year: This Canadian AI Stock is Still Down 65% From Its Highs – Time to Buy?

Copperleaf Technologies (TSX:CLPF) stock has shown positive momentum as the AI stock attempts a recovery. Can shares rise 180% to…

Read more »