BlackBerry Is Ready for a Massive Turnaround: Buy Now

BlackBerry Ltd's (BBRY) turnaround seems to always be around the corner. The company has been hoping to turn its fortunes around under the leadership of John Chen, however, it has been unsuccessful till now.

Finally, it appears as if the company is finally making some strong progress. And although it may have taken longer than expected, there are signs of major turnaround.

Here are the major talking points

In the second quarter, BlackBerry reported earnings per share of $0.00, $0.05 greater than the estimates.
However, on the revenue front, the company missed the estimates by $42 million, with sales declining 28% year-over-year.

The company has reported more than 10 successive quarters in which its revenue has plunged over 25%.

BlackBerry has faced severe problems in the past, but it is now taking some smart steps to make a turnaround. The company has focused on repairing its balance sheets and returning to profitability.
BlackBerry Is Ready for a Massive Turnaround: Buy Now
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Moreover, the company is investing in key growth areas like enterprise software, Internet of Things, as well as connected cars. Apart from this, it is also building a new business model by licensing both its technology and its intellectual property.

Most importantly, the company recently publicized that it will stop manufacturing its own smartphones and contract out the manufacture of imminent devices to its partners instead, a decision that it should have taken long time ago. The company also detailed that this move will greatly decrease capital requirements and improve return on invested funds.

Apart from this, world’s one of the largest automaker, Ford Motor Company (F), decided to use BlackBerry’s QNX system in its new Sync 3 platform. Initially, Ford used Microsoft Corporation's (MSFT) Embedded Automotive operating system in its infotainment and navigation systems, but bad reports of frozen screen, unresponsive touch controls, and arbitrary reboots forced Ford to replace Microsoft’s OS with BlackBerry’s QNX.

Ford projects its number of Sync-equipped vehicles to reach approximately 43 million by 2020 from 15 million today around the globe. As per HIS automotive, QNX is the best embedded operating system in the connected car market, and currently being used in more than 50 million vehicles globally.

Strong sales of connected cars will possibly fortify BlackBerry’s QNX business, which produces majority of its revenue from BES, an enterprise control panel for keeping an eye on employee’s mobile devices.

The time to buy is now

BlackBerry has successfully trimmed the fat and looks like to be on track to return to profitability. I expect BlackBerry’s turnaround to gain pace soon. This could be the start of a multi-year run for BlackBerry stock.
Published on Oct 10, 2016
By Akshansh Gandhi

Copyrighted 2016. Content published with author's permission.

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