If there’s one thing that BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) is, it’s resilient. Industry pundits are nearly in agreement that the long-standing turnaround of the company is now complete, and after years of posting losses and declining revenues, BlackBerry can now turn its focus on to growth and posting profits. Meet the new BlackBerry BlackBerry is very much a different company now than it was several years ago, when CEO John Chen initiated a strategic change of focus. Back then, BlackBerry was primarily viewed as a device manufacturer of small-screen devices that lacked many of the features users wanted, yet the devices…
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If there’s one thing that BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) is, it’s resilient. Industry pundits are nearly in agreement that the long-standing turnaround of the company is now complete, and after years of posting losses and declining revenues, BlackBerry can now turn its focus on to growth and posting profits.
Meet the new BlackBerry
BlackBerry is very much a different company now than it was several years ago, when CEO John Chen initiated a strategic change of focus. Back then, BlackBerry was primarily viewed as a device manufacturer of small-screen devices that lacked many of the features users wanted, yet the devices still carried a premium price tag. Lacklustre sales and limited marketing of those devices led to a spiraling decline and an eventual shuttering of the hardware division altogether.
Chen has done well to refocus the company on to a lucrative niche that BlackBerry knows best — enterprise and security. Throughout the past few quarters, the amount of revenue attributed to the software and services segment has steadily increased, although this has gone largely unnoticed by many who still look at the device sales figures as a gauge of BlackBerry’s overall heath.
The focus on software and services also allowed the company to push the proprietary software suite known as Hub+ to all users in the Android market, not just those running BlackBerry-built devices. This is another colossal shift for the company, which, under previous regimes, was known for being incredibly closed to any sort of integration with non-BlackBerry devices.
The Hub+ deal will not only increase awareness of the suite of BlackBerry-built software, but it will expose the company to a huge number of new users and previous BlackBerry owners that still long for the efficiency and productivity that BlackBerry now offers on different hardware.
More recently, BlackBerry announced another new application which shields user details on screen in what the company dubs as a Privacy shade.
Perhaps one of the most surprising and potentially lucrative opportunities for BlackBerry relates to the automotive sector. Most users don’t realize that infotainment systems in their vehicles have BlackBerry’s QNX operating system. QNX is a secure and scalable system which is already used in over 60 million vehicles today.
BlackBerry recently signed an agreement with a major automotive manufacturer to work directly on further developing QNX’s capabilities with the automotive teams, rather than bolting down the functionality as an afterthought. This allows BlackBerry to be involved earlier in the process and could lead to additional deals and further revenue opportunities.
Let’s not forget about handsets
BlackBerry took a step away from building hardware, but it never really ceased selling devices. Thanks to a series of licensing agreements, BlackBerry has partners developing and bringing to market new BlackBerry-branded devices.
In the past year, those licensing agreements have resulted in three new devices coming to market with the BlackBerry name — more than what BlackBerry could release on its own in the previous three years.
While the revenue prospects from these device deals may not be significant, they allow the company to grow the lucrative software and services segment.
Is BlackBerry a good investment?
While BlackBerry continues to remain a risky investment for most investors, that risk appears to be decreasing by the day. The continued growth of the software and services sector continues to impressive with each passing quarter, particularly considering that a growing segment of the revenue from that segment is recurring customers.
If BlackBerry continues to show growth in the automotive, security, and software segments, the company will quickly become a favourable investment again. If nothing else, BlackBerry is carving out a unique segment of the market with a huge long-term opportunity.
Iain Butler, Lead Adviser of Stock Advisor Canada, recommended this little tech darling to thousands of loyal members last March... and those that followed his advice are up 127.7% (they've already made 2X their money!).
Not to mention this tiny Eastern Ontario company has already been recommended by both Motley Fool co-founders, David and Tom Gardner, because of its amazing similarity to an "early stage" Amazon.
Find out why Tom Gardner was recently on BNN's Money Talk raving about this company, and how you can read all about it inside Stock Advisor Canada. Click here to unlock all the details about his Canadian rule breaker!
Fool contributor Demetris Afxentiou has no position in any stocks mentioned.