It has been quite a year for John Chen and his team at BlackBerry Ltd. (TSX: BB)(NASDAQ: BBRY). The stock is up more than 40% year-to-date but it certainly hasn’t been a smooth ride. In fact, most investors have suffered several bouts of whiplash along the way.
Competition threats, quarterly losses, and negative analyst coverage all contributed to significant drops in the stock. On the other side, takeover rumours and software partnerships have given the stock a boost.
Investors are now focused on 2015 to see if the turnaround story will continue to be a happy one. Let’s look at three reasons BlackBerry could run higher through 2015.
1. Handset sales
BlackBerry wants to be a software company. At the same time, the devices are still an integral part of the mix.
The recent launch of the Passport went extremely well, and the device is finding success with its target market of business and medical professionals. The most important aspect of the Passport could be BlackBerry Blend. The app allows users to connect the Passport with their iOS, Android, and Windows devices.
Now, the world is eagerly anticipating the launch of the BlackBerry Classic. If the Classic is a hit, BlackBerry could regain some of its cool factor and the device group might actually prosper in 2015.
John Chen has repeatedly stated that BlackBerry is committed to helping its enterprise customers operate as efficiently and securely as possible.
The company is listening carefully to CIOs who have been forced to implement bring-your-own-device (BYOD) policies. BlackBerry’s willingness to design software that is cross-platform friendly is critical to the future success of the company, and the latest version of the BlackBerry Enterprise Service Technology (BES 12) indicates that is what the company is doing. The announcement that BlackBerry is working with Samsung Electronics Co. on a mobile-security partnership is another sign the company is headed in the right direction.
BlackBerry also has a team dedicated to carving out a profitable niche in the expanding Internet of Things (IoT) market. Project Ion is using the QNX group’s expertise to develop a cloud-based platform that will enable business customers to engage IoT in a way that is simple, secure, and scalable. If the market for helping machines talk to each other is as big as some pundits claim, the Project Ion initiative alone could be the reason for a big move in the stock in 2015.
BlackBerry already has experience in the space. Ford’s Sync 3 in-car technology is powered by a QNX operating system. QNX beat out Microsoft to win the contract and early reports suggest the latest version is extremely user-friendly.
The big catalyst that could send the shares higher heading into 2015 is a return to profitability. BlackBerry reports its latest quarterly earnings on December 19, and analysts expect a small loss. Any surprise to the upside would put the market in a holiday spirit, especially if the buzz around the December 17 Classic launch is already positive.
The shift to a subscription-based structure for billing BES 12 customers should improve the reliability of the company’s software earnings in 2015. Another revenue pop could start to come from the 90 million BlackBerry Messenger (BBM) users as BlackBerry continues its efforts to monetize the service.
BlackBerry is still a risky stock and the next few quarters could be volatile. As investors search for more stability, the Canadian market isn’t offering much choice. If you are looking to diversify your holdings a bit, it might be worth reading the following free report to get some ideas for your 2015 watch list.
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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.