It’s hard to believe, but the last 52 weeks have been great for BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY) shares.
This time last year was tumultuous, to say the least. Prem Watsa’s quest to acquire the company fell short when he couldn’t drum up the needed institutional support. It was also hemorrhaging cash after reporting sales numbers that were considerably weaker than the market expected. Shortly thereafter it announced a massive write-off of nearly $3 billion of intangible assets, as well as unsold Q10 and Z10 model smartphones.
Needless to say, it was not a good time to be owning the stock. Pundits called BlackBerry’s bankruptcy inevitable. Speculation was that new CEO John Chen was shopping the company to every competitor under the sun, hoping one of them would make a bid to buy the husk of Canada’s former tech darlings. One investor I know said, “BlackBerry is more done than Nortel Networks.”
And yet, Chen managed to turn the company around.
One year and more than 70% added to the share price later, BlackBerry looks to be in a pretty good place. Its new line of Passport phones is selling moderately well. Losses have been minimal thus far in 2014. The balance sheet is in great shape thanks to a convertible debt issue. Even the inventory issue is taken care of, thanks to a new ship-on-demand deal with Foxconn, Apple’s preferred handset supplier.
But that’s not all. Chen has also made some sharp decisions that haven’t been as noticeable, but still impacted the turnaround. Management cut staff, sold real estate assets, and has even created a new division which will finally monetize BlackBerry’s huge patent portfolio.
In short, it’s been a textbook recovery. Now that the company has recovered from its near-death experience, what’s next?
Well, a few things, actually — any of which could send the stock higher.
BlackBerry has quietly become a force to be reckoned with in the world of software. Its QNX software forms the DNA for many of the in-dash entertainment systems you see in new vehicles. It recently got the contract to supply Ford with the software that powers its well known Sync platform, beating out tech giant Microsoft for the business.
The company is also doubling down on one of its strengths, security. It recently acquired a German company called Secusmart, which provides encryption for the mobile phones of top German leaders, including Chancellor Angela Merkel. Considering the fallout from the NSA hacking into Merkel’s phone over the summer, more senior officials around the world will be interested in making sure their phone is secure.
Plus, the company’s messaging service BlackBerry Messenger is on the cusp of being monetized in a big way. Improvements include being able to schedule meetings on the app, as well as allowing advertised content to show up on certain channels, which allow companies and brands to keep in touch with interested customers. Think of channels as liking a Facebook page.
Messenger has more than 91 million users around the world, spread all over different devices. It’s important for the company to find a way to monetize the service because it could eventually lead to management spinning it out on its own. Analysts estimate that based on comparable services, Messenger might be worth as much as $5 billion.
And finally, there’s Project Ion, BlackBerry’s venture into a huge potential market, the Internet of Things. Imagine how cool it would be to start your coffee maker with your phone while still sitting in bed, or to unlock your door from the office when your kid gets home from school. In just a few short years, many of these technologies will be a reality, and BlackBerry looks to be right in the middle of it.
Put all these factors together, and there are many potential catalysts that could send shares soaring in 2015 — $20 per share certainly isn’t out of the question.
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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 Nelson Smith owns shares of BlackBerry. David Gardner owns shares of Facebook and Ford. Tom Gardner owns shares of Facebook. The Motley Fool owns shares of Facebook, Ford, and Microsoft.