Across all of the would-be turnaround stocks that are on the market, the one that I keep coming back to with increasing interest is BlackBerry (TSX: BB)(NYSE: BB). The company underwent a very public decline several years ago, lost nearly all of its once-leading market share in the smartphone market, and, to this day, there are still plenty of people that think the company folded operations years ago.
BlackBerry is fortunately still in business, and the company has made impressive strides over the past three years that should provide would-be investors with plenty of ammunition to contemplate including BlackBerry in their portfolios.
Here are a few reasons to consider the company that may surprise you.
Hardware is not a priority, but it is growing in popularity
When BlackBerry shuttered its hardware segment, many of the most loyal users of the company’s devices decried that an end of an era was at hand. Non-BlackBerry users may not see the appeal in a small-screen/physical-keyboard device, but for productivity- and power-efficiency-seeking users, there was (and arguably still is) no better device.
BlackBerry has, thankfully, moved on to focus on a variety of enterprise-first software solutions while leaving the hardware gap to be filled by partners. Through a series of agreements, BlackBerry effectively licensed the development of new devices to several partners around the world by their respective market. The devices created by the partner companies still bear BlackBerry’s name, and BlackBerry still has input over the devices that are being released, which include BlackBerry’s productivity software.
Earlier this summer, BlackBerry announced a series of devices, including a new full-touch series of devices dubbed Evolve for the markets in India, Sri Lanka, Nepal, and Bangladesh. The Evolve series of smartphones features a large 18:9 aspect ratio screens, dual-cameras, and a massive 4,000 mAh battery, which should attract the attention of both fans and critics of the brand.
The Evolve release followed the announcement of another device earlier this summer — the appropriately named Key2, which was released to North America and European markets. As the successor to the wildly popular KeyOne, the Key2 provides a physical keyboard option and greatly enhances the internals, security, and features of the device over the previous model.
BlackBerry is embracing its niche and finally marketing it
One of the things that really excites me about the new BlackBerry is the company’s renewed focus on security and its enterprise clients. This is something that was lost during the BB10 era under Chen’s predecessor, as the company dabbled with trying to enter the consumer market at the expense of its enterprise following.
Fortunately, the results of that focused effort are finally beginning to show. In the most recent quarter, BlackBerry reported non-GAAP revenue of US$193 million from its software and services segment, representing a healthy 145 year-over-year improvement. Even better is the fact that 86% of that revenue was recurring and will likely continue to grow over time.
Earlier today at BlackBerry’s security summit in London, BlackBerry made several new partnership announcements that ultimately translate into more solutions, cloud services, and applications for customers.
BlackBerry is diversifying into new areas that will provide revenue for at least a decade
While jettisoning its hardware segment and focusing on a new generation of products may have been the right thing for BlackBerry’s recovery, the company is still hardly what most investors would refer to as an incredible opportunity.
That’s not to say that BlackBerry doesn’t have potential, because the company does pose a significant upside for investors, particularly within the realm of autonomous driving, IoT asset tracking solutions, and security solutions.
BlackBerry has already forged partnerships with automotive manufacturers on further integrating QNX into vehicles beyond the already 120 million vehicles that are already using the platform in some capacity.
Should you buy?
BlackBerry may not appear as the brightest of investments at this moment, but the company does have long-term potential for growth-seeking investors. The key for investors contemplating the stock as a viable investment to keep in mind is that this is a very different company over the handset manufacturer it was a decade ago and shouldn’t be used as a comparison.
