Is BlackBerry back? Stock price has sizzled this year
BlackBerry is mounting something of a comeback in the face of long odds many experts – and media – have placed their bets against.
Some however now appear to be reconsidering their wagers.
Shares in the former smartphone leader have quietly touched new highs this week (though are down Tuesday), as the Waterloo, Ont., firm readies for a slew of new product launches this fall.
BlackBerry’s climb has outperformed some pretty big rivals this year, with shares up 45 per cent compared to a paltry gain of 2.6 per cent at Google Inc. and 18 per cent rise among Apple Inc. stock.
BlackBerry shares, which have seesawed heavily since new chief John Chen came aboard last fall, have been riding a high since last month’s release of the spring quarter’s results (see chart).Click here to view data »
The numbers from the latest quarter reveal BlackBerry’s operations are stabilizing on many fronts, experts say.
Device sales are actually rebounding at the moment, with 1.6 million phones shipping in the spring, up from 1.3 million to start the year.
Aggressive cost cutting has kept the firm on pace to stop hemorrhaging money by the end of the year, at which point, some say BlackBerry could once again be in a position to grow again (emphasis, could).
Comments from Chen, who has assembled a new leadership team at BlackBerry, combined with the slowing rate that BlackBerry is burning through money “imply the company has the assets it needs to execute a turnaround strategy,” stock experts at Scotiabank said in recent research note.
“The question now becomes whether the new products to be launched in the second half of the year will be enough to help the company return to growth,” Scotia analyst Daniel Chan said.
WATCH: Canadian smartphone phone maker BlackBerry reported much better-than-expected results in the latest quarter.
BlackBerry has moved fast since November to shrink – or “right size” — its costs to match its sales, while plowing money from its multi-billion dollar bank account into ventures that will grow the overall business.
A new device management system called BES 12 is one endevour, aimed at letting companies and organizations manage older and newer BlackBerry devices on a single platform, a means expert say, to bridge users of older BlackBerrys into the newer software and device lineup.
There’s also changes coming to reap more from BlackBerry’s services business, which includes Messenger and a device security management business.
The boldest of the new steps BlackBerry, however, will be taken between September and November.
That’s when BlackBerry will actually double down on phone-making by releasing two new handsets, the first called the Passport, and another called the Classic.
There is some natural skepticism here. “It will remain difficult for BlackBerry to maintain a profitable hardware business as a sub-scale [read: small] smartphone supplier versus larger [competitors] Apple and Samsung” Canaccord Genuity stock analysts said in a note.
There’s also Chinese vendors making ultra cheap Android smartphones eating into BlackBerry’s presence in emerging markets, Canaccord said.
Still, “there’s apparently strong interest for this [Classic] product,” Scotia’s Chan said, likely among business and government customers.
But echoing other experts, Chan adds: “Little is known about these products and we can’t help but exercise caution.”
Canaccord Genuity investment analysts go a step further: “While we remain impressed with BlackBerry’s execution on its cost reduction, we believe management’s long-term plans are still in the early stages with limited near-term sales visibility.”
© Shaw Media, 2014