BlackBerry Shows Signs of Turnaround

Jacob Harper |

As 2013 concluded smartphone-pioneer-turned-pariah BlackBerry (BBRY) looked to be on its way out. It was a tragic scenario, but not one unknown in the tech world: a former industry leader fails to adapt to the innovations introduced by the second wave of competitors and falls hopelessly, irreversibly behind.

Things had gotten so bad for BlackBerry that they were looking to sell out completely to private equity group Fairfax Financial for around $4.7 billion before that last ditch effort fell through as well. Without a buyer, the company looked to run out of money by the end of 2014, completing the painful transition from market leader to cautionary tale.

However, 2014 has quieted those worst fears and, while a turnaround is still far from certain, the company has certainly changed their fortunes considerably. Since January BlackBerry has been on a tear, as its shares have climbed over 50 percent in just three months time.   

While BlackBerry phones like the Q10 have become largely passé for individual consumers and have been remaindered to the enterprise market, BlackBerry possesses one very attractive, lucrative service that remains highly sought after.

BlackBerry’s messaging service BBM is exceedingly popular throughout the world, and thanks to a competitor looks to be much more valuable than previously thought. In the wake of the Facebook's (FB) $19 billion acquisition of messaging service WhatsApp, the tech world’s hunger for cheap messaging service that undercut traditional telecoms is becoming more voracious. While BlackBerry’s messenger only sports 85 million users to WhatsApp’s 450 million, WhatsApp’s $19 billion sale price would give BBM a value comparable to what the entirety of BlackBerry was worth a scant two months prior.

The market value of WhatsApp certainly makes BlackBerry attractive. More so is the much-needed change in leadership, with freshly installed CEO John Chen energizing investors by doubling down on what BlackBerry does best.

That is, instead of trying to compete with Apple Inc. (AAPL) and Samsung on the cutting edge, Chen is focusing the company on its strengths in enterprise and messaging. With new enterprise-targeted phones and a growing (and now more valuable) messenger base, BlackBerry might not only fetch a much higher price in a sale than previously thought, but actually become a viable competitor in the tech world once again.   

Since the beginning of the year, BlackBerry has gained 34.41 percent to hit $10.29 a share. 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 109.95 0.84 0.77 26,195,462
BBRY BlackBerry Limited 7.57 -0.05 -0.66 2,068,373
DBVQF DBVQF n/a n/a n/a 0

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