BlackBerry (BBRY) has been fast asleep for a few years now but is definitely showing signs of having woken up and getting its act in order. New leadership, new product, new operating system, a full product pipeline, and a beat up stock present a unique opportunity over the next year to make a nice return with minimal risk.
Here are my ten reasons to go long BlackBerry:
- New Leadership - Thorsten Heins has to be the most refreshing CEO I have seen in a long time. What Mr. Heins lacks in polish and style he more than makes up for in straightforward approach and a sort of homespun integrity. He does not exaggerate, oversell, or spin. Just the facts, and if he believes a competitor gets it right he says it. Like when he gave Apple (AAPL) credit for doing a great job in the tablet space. I believe that this CEO has his head screwed on right and is the perfect mix of smarts and prudent management. Mr. Heins definitely showed his skills when he became CEO and right away downsized the company so they did not run out of cash and ensured BlackBerry had the finances in place to get BB10 and the new phones developed and launched.
- Product - The Z10 not only catches up with the competition with the basic functions of a touch screen smartphone, it surpasses them. Features such as the best touch screen keyboard on the market, the Hub to organize all email and social media in one spot, and Balance which separates corporate and personal data securely, not only catch up, but leap over the competition and leave them chasing BlackBerry.
- Stock undervalued - BBRY has been punished for missteps over the last few years, and the stock has lost most of its value even to the point where many called for the company to be sold for scraps. It has since bounced off of those lows and now is poised to run, and once it does and the shorts bail, it could be up for a quick double. Even a moderate success will give the fundamentals to support a higher stock price, and if it really takes off the sky could be the limit.
- Product Pipeline - When the Q10 is released BlackBerry will own the marketplace as the only Qwerty keyboard smartphone. That combined with the BB10 features and touch screen in the same device will be a formidable combination! I bet within a year someone will copy and release its own version of the Q10 and not let BlackBerry have this space to itself. The key here is that the competition will be chasing BlackBerry and that is refreshing.
- Low Risk - No debt and 3 billion plus in the bank provide a great foundation for this turnaround. Worst case let's assume that the Z10 and Q10 are only successful in keeping the existing 80 million BlackBerry users happy and over the next 3 years they only achieve the turnover of those, that will add up to more than 25 million handsets per year. That will easily result in a huge jump in revenue, profits, and stock price. Early reports from the CEO of BlackBerry however show that a reasonable number of Z10 purchases have been migrating from competitors' smartphones, boding well for exceeding expectations.
- Security - BlackBerry is the undisputed leader in security and their handsets are the most secure smartphones on the market. If you are a government agency or large corporation which smartphone manufacturer would you like to be handling your top secret communications? One that is proven and secure or one that uses an operating system any hack can get a hold of and manipulate?
- Operating system - QNX and the BB10 operating system give BlackBerry a secure and efficient environment. Android's open system makes it an easy target for malware and viruses, and iOS is showing its warts in not being able to match the efficiency of BB10, and this will only become more obvious as time goes on.
- BlackBerry Enterprise Service - BlackBerry is pulling off a genius maneuver in opening up its BES system to BYOD companies, which will ensure BlackBerry is on the inside of this market, and its implementation. BlackBerry will be intimate with all other devices and their security shortcomings, which will give them an inside track, thus becoming the experts that large corporations can depend on. Additionally revenue from managing these BYOD systems can be huge and those revenues can be bigger than you think; look at how this worked for IBM (IBM).
- International scope - One thing BlackBerry has done very well has been to expand globally. It has a major presence in almost every major market around the world, and that will allow them to bring all of their products to market quickly and make sure they have what those markets are demanding from both a product and a service standpoint.
- Applications - At the launch they had 70,000 apps, by the US launch they will have 100,000 apps. By the end of the year at this pace they will have 230,000 apps. I am sure by the end of the year any stubborn hold-outs will come on board. They also made a genius move designing it so that Android apps can be ported across to the BB10 platform. Quantity of apps has been the major negative towards BlackBerry since the Z10 launch, but this is quickly becoming a mute point.
All of this adds up to a great and exciting time for BlackBerry and their shareholders, and presents investors with an opportunity that is not seen very often.