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Why Now Is the Time to Take a Bite out of BlackBerry Ltd.

Shares of Canadian software company BlackBerry Ltd.  (TSX:BB)(NASDAQ:BBRY) ended the week up nearly 24% following impressive earnings results. BlackBerry’s switch to becoming a pure-play software company has taken shape, and the ability of the company to continue to churn out profitable quarters has some investors thinking the most recent climb in BlackBerry’s stock price may be indicative of its future movement.

Looking at the entirety of BlackBerry’s current situation, as displayed in the company’s recently released earnings report, we can see a mixed bag of fundamental factors investors must consider. The company’s year-over-year revenue decline has continued, with BlackBerry posting US$238 million in revenue compared to US$334 million last year. The switch to becoming a software-focused firm has resulted in a marked loss of revenue at a time when many investors in the tech space spend their time focusing on key fundamental ratios, such as price to sales or price to revenue; with the company’s once sought after (and pricey) handsets now out of the equation, it appears this may be the new normal moving forward.

That said, BlackBerry reported a slight revenue gain over its fiscal first quarter, indicating the company may have hit the bottom of its revenue decline curve, with anticipated growth indeed on the horizon.

The key driver here for potential BlackBerry investors is profitability. The ability of BlackBerry’s management team to trim a significant amount of fat in the organization and completely reshape the company’s operations in a bid to become profitable have resulted in a lot of short-term pain in recent years; the long-term gains CEO John Chen and others have expected have largely been anticipated to come much further down the road, and with the company now posting what appears to be consistently profitable quarters, BlackBerry is making the case that it may indeed be once again approaching its previous status as a “technology cash cow,” churning out profitability and reinvesting said profits into a booming and growing business.

Bottom line

While it may indeed be too early to declare victory for BlackBerry, one thing is for certain: this is not the same BlackBerry we have seen since the Financial Crisis. The sharp decline in the company’s stature as a world-class tech company has left many investors by the side of the road. The question is, if BlackBerry is able to ascend to its previous greatness, how many investors will jump on board for yet another upward climb?

Stay Foolish, my friends.

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Fool contributor Chris MacDonald has no position in any stocks mentioned in this article.

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