It’s been a long few years for supporters of BlackBerry Ltd (TSX:BB)(NASDAQ:BBRY).
Although it appears that the company has now turned the corner and seems poised to reinvent itself as something other than the handset maker, it was touch and go there for a few years. The company went through two different CEOs before settling on John Chen, all while watching its position in the market get overtaken by the two newly dominant forces in the sector, Apple and Samsung. Writing off billions in unsold phones back in 2013 certainly didn’t help either, nor did burning through more than $1 billion in cash.
But now that Chen has cut costs, gotten rid of the inventory problem by moving to a demand-based manufacturer, and repositioned the company as a security and software company first, things are finally starting to look up. Shares recovered from a low of $6 each in late 2013, finishing Wednesday at more than $13.
That’s a nice recovery, but it may just be the tip of the iceberg. I believe BlackBerry has the potential to double again from these levels, and possibly in a year or two. Let me give you three reasons why I think it could happen.
There’s a reason why the president of the United States uses a BlackBerry. They’re widely recognized as the most secure devices on the planet.
For most consumers, this point is moot. We want the latest cool phone, not something that will keep hackers out. Most people I know don’t live in constant fear of getting hacked. Businesses, on the other hand, worry about that kind of stuff everyday.
There’s just one problem. Businesses can save millions if they allow staff to bring their own device to work. Staff are happy as well, since this means they’re not carrying around an extra cell phone for work purposes. Everything happens on one device.
This is where BlackBerry steps in. It has agreements with Samsung, and most recently, Google, to supply both companies with security solutions for their smartphones and mobile operating systems, respectively. Considering today’s cyber security threats, I wouldn’t be surprised to see this part of BlackBerry’s business grow substantially.
2. QNX and the Internet of Things
Over the next six years, it’s estimated that $19 trillion will be spent on everything from thermostats to security systems that can communicate through the Internet. It’s called the Internet of Things and it’s going to be the next big tech craze.
BlackBerry is well positioned to be a big player in this space via its QNX software, which is the brains behind many of these items. QNX is already used by almost every major auto manufacturer in their in-dash entertainment systems, as well as in countless other web-connected items. Amazingly, QNX has been around since 1980.
The potential of QNX can’t be understated. According to the company, its software is in everything from the next generation of breathalyzer tests to military drones. This will only increase as demand for these items skyrockets.
This last reason might seem a little light on logic, but hear me out.
In North America, there are millions of people who once owned a BlackBerry and were pretty happy with the device. I still own my BlackBerry from 2008; it’s put away in a drawer somewhere.
Many of these former BlackBerry owners are investors. It’s obvious why most stayed away from the company in the midst of its turnaround, but now that it’s on the verge of successfully transitioning from a smartphone maker to a software/security provider, investors who sat on the sidelines will slowly start returning to the stock. People want to bet on a BlackBerry revival.
We constantly underestimate how important investor sentiment is to a stock’s success. That’s why BlackBerry fell to $6 in the first place, because investor sentiment was bearish. As the turnaround continues in Waterloo, so will investors’ opinion of the stock.
I can’t guarantee BlackBerry will be higher a year from now, but my money is invested in the company because I think it still has huge potential. That’s about as big of an endorsement as I can give.