Blackberry, Inc. (NYSE:BB)

CAPS Rating: 2 out of 5

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17 Outperform
5 Underperform
 

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Recs

0
Member Avatar rhallbick (97.02) Submitted: 3/4/2018 3:17:29 PM : Outperform Start Price: $12.55 BB Score: -13.76

In Oct, 2017, BlackBerry moved its shares from NASDAQ (BBRY) to the NYSE (BB), with the same ticker symbol it uses on the Toronto Exchange.

This once-dominant Canadian smartphone manufacturer lost its market leadership with the emergence of the successful Android and iOS platforms. While there are still about 10 million active BlackBerry phone users, BlackBerry pivoted away from smartphones in 2016, and has been focusing its efforts on software development. Today, the manufacture and sale of the Blackberry smartphone is licensed to the Chinese company, TLC Communication.

Since acquiring Certicom (a pioneer in Elliptical Curve Cryptography) in 2009, BlackBerry has become a world leading expert in encryption security, with over 450 patents and pending patents worldwide. BlackBerry acquired QNX Software Systems in 2010, whose QNX microkernel operating system has been used on cell phones and tablets, and also in automotive telematics, infotainment, and navigation units. QNX has evolved over the years and variants appear in most of the major car models today, most commonly in infotainment systems.

Since late 2017, some car manufacturers have released one or more of their models that replace their infotainment system's QNX operating system with Linux-based variants, Automotive Grade Linux, or Android-based systems. Each model's move away from QNX reduces Blackberry's royalty revenue stream.

In 2017, CEO John Chen outlined the company's Internet of Things (IoT) strategy, saying that the company is starting with automotive, while healthcare and oil and gas infrastructure are next on its list of target industries.

Blackberry began partnering with many automotive component suppliers in the development of more sophisticated vehicle electronics, including fully integrated cockpit systems, and autonomous or self-driving platforms. Some of these clients are Baidu, Aptiv (f/k/a Dephi Automotive), Visteon, Bosch, Magna, Qualcomm and Denso.

In mid-January, 2018, CEO Chen introduced BlackBerry's new cyber-security system, "Jarvis", at the North American International Auto Show. This cloud-based code analysis solution scans binary code and offers insights on how to improve the code and its security. Self-driving and connected vehicles require some of the most complex software ever developed, which must comply with industry and manufacturer-specific standards, all the while defending against hacking attacks by cyber-criminals. Jarvis scans and delivers insights in minutes, a process that would normally be quite tedious. Jarvis will be offered on a pay-as-you-go basis and customized for the needs of the manufacturer.

Blackberry's Nov, 2017 3rd quarter SEC filing shows 536.3 million common shares outstanding, and quarterly revenue falling from $289MM to $226mm, as compared to the same quarter in 2016. At the same time, operating margin improved from 67% to 74%. For the first three quarters of 2017, GAAP earnings were reported at $0.78 per share.

However, 2017 9-month financials contain several large one-off items that overshadow the basic operating earnings. If excluding all of the one-off items, non-GAAP earnings come in at -$0.33 per share. On the plus side, a couple of the one-offs did put $782 million of cash in their bank account, more than their 9-month revenue.

Analysts are divided on the company's immediate prospects, with 4 buys, 10 holds and 2 underperforms. Their average price target is $11.46 based on an average estimate of $0.10 in 2018 earnings. Individually, their earnings estimates range from -$0.04 to $0.43 per share.

Short sellers also seem divided with 5% of float sold short.

CAPS pick thesis: Purely speculative, as the success of their many new initiatives can only be guessed at, while eventual significant decline in the legacy QNX infotainment licensing revenue seems inevitable. Newly revamped as a software company, most of their financial metrics are much lower than industry averages. If they can at least establish small, but continuous improvement in revenue and operating earnings, they will be viewed as significantly underpriced. On the other hand, they could crash and burn a second time.

Recs

0
Member Avatar ERojo (< 20) Submitted: 2/21/2018 3:31:33 AM : Outperform Start Price: $12.16 BB Score: -13.22

software services
Well positioned in enterprise world

Recs

0
Member Avatar ritesh024 (59.55) Submitted: 1/24/2018 11:39:46 PM : Outperform Start Price: $13.24 BB Score: -16.43

It will continue to grow it software security business which will be used in autonomous cars

Leaderboard

Find the members with the highest scoring picks in BB.

Score Leader

CMFJambo

CMFJambo (73.13) Score: +15.31

The Score Leader is the player with the highest score across all their picks in BB.

Top
Pick
Member Name Member
Rating
Start
Date
Call Time
Frame
Start
Price
Stock
Gain
Index
Gain
Score Commentary
CMFJambo 73.13 3/13/2018 Underperform 3Y $12.73 -16.10% -0.79% +15.31 0 Comment
Fox660Player 99.89 2/27/2018 Underperform 5Y $12.39 -13.80% -0.21% +13.59 0 Comment
XMFTheGuruEbby 70.56 2/13/2018 Underperform 5Y $11.78 -9.34% +3.14% +12.48 0 Comment
stockcommander 96.45 4/9/2018 Underperform 5Y $10.27 +3.99% +5.12% +1.12 0 Comment
gpierson128 96.89 4/11/2018 Underperform 5Y $10.37 +2.98% +3.93% +0.95 0 Comment
TechJunk13 68.13 4/5/2018 Outperform 1Y $10.39 +2.74% +3.36% -0.62 0 Comment
bckearns 79.71 4/26/2018 Outperform 5Y $10.49 +1.81% +3.56% -1.75 0 Comment
kkconway 99.57 6/22/2018 Outperform 5Y $11.41 -6.37% -0.21% -6.16 0 Comment
Julien88 70.05 5/15/2018 Outperform 3Y $11.51 -7.21% +1.33% -8.54 0 Comment
freecapital 78.97 4/2/2018 Outperform 5Y $11.36 -5.99% +4.64% -10.63 0 Comment

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