Just a few months ago, it seemed there was a real possibility that BlackBerry (Nasdaq: BBRY) was going away. Its share of the global smartphone market was eroding quickly while its stock prices were reaching all-time lows. But today, some analysts have stated that the tech stock may even outperform the much-vaunted Apple (NASDAQ:AAPL).
To set the stage for the reversal of BlackBerry's fortunes, consider that just a year ago, its stock had hit an all-time low of $6.22 per share on September 24, 2012, from a peak $150 in 2008, and its market share in the U.S. as of the fourth quarter of 2012 had fallen to just 2 percent from a high of over 40% three years ago. But the successful launch of its BlackBerry Z10 touch screen smartphone with its new B10 operating system has helped it to recover both value and market share. BlackBerry reported that it had sold one million Z10s when it released its fourth quarter 2012 results in March 2013, which also revealed that it had earned a profit of $94 million on revenues of $2.7 billion, its first in three quarters. Some 55% of the buyers were reportedly converting from their Apple, Samsung (OTC:SSNLF) and Nokia (NYSE:NOK) handsets.
The results were a staggering turnaround from the net loss of more than $500 million that it reported in Q1 2012. The company has also successfully launched its Q10 smartphone in the UK, which features a traditional QWERTY keyboard and is sure to appeal to BlackBerry loyalists who have been holding out for a new model with a physical keyboard. In its first weekend, the Q10 reportedly sold thousands of units per hour despite the lack of advertising. The Q10 is scheduled to launch in the U.S. in June.
Meanwhile, BlackBerry is launching other products and services that could boost the company's sales. Its new services include the revamped enterprise server BlackBerry Enterprise Service 10 (BES10), the free software package BES10 Express and the BlackBerry Device Service that offers advanced administration services for BlackBerry 10 devices and Playbook tablets. These services are intended to not only enhance the BlackBerry users' experience but also boost the sales of its smartphones.
In addition, it is launching a low-end smartphone, the Q5, in emerging markets such as Indonesia and Brazil. The new phone is expected to gradually roll out in Asia, Latin America, Europe and the Middle East starting in July. The Q5 features the classic QWERTY keyboard as well as a 3.1-inch touch screen and has a full range of features, including a 5MP camera and 8GB expandable memory, and comes in five bright colors. Pricing of the Q5 is seen to be in the $299 - $399 range in order to make it competitive, and those who take two- to three-year contracts with providers to get the smartphone will essentially be getting it for free. The Q5 is set for release in July.
In another bold move, the company is also making one of its most popular features, the BlackBerry Messenger, available to other operating systems like the Android and iOS platforms as a free app. By making it more widely available, BlackBerry hopes that users who enjoy using Messenger could eventually be drawn to its devices. It is also launching its own social networking site, the BBM Channels, which will run using Messenger. BBM Channels allows users to connect with each other in real time by creating and sharing posts and receiving timely updates from their friends.
Analysts believe that BlackBerry's new initiatives hold risks as well as the potential for great rewards. Its low-priced Q5, for example, could cannibalize sales from its more expensive smartphones. By making BB Messenger more widely available, it could also make its smartphones less relevant. The popular messaging service currently generates over 10 billion messages daily from 60 million users. On the other hand, the cheaper Q5 could help BlackBerry gain market share against Android-powered devices and help expand its customer base. By enabling Android and iOS devices to communicate with BlackBerry smartphones, the company could boost the sales of its smartphones and other mobile devices.
The Bottom Line
Analysts believe that now is a great time to buy into BlackBerry because the shares can be bought at a bargain and prices have nowhere to go but up. Presently, the stock is trading at less than $15 a share, making it an excellent entry point for investors. And since any of its initiatives could help return BlackBerry to a strong market position, share prices have plenty of room to increase. There are even some analysts who believe that BlackBerry stock could reach as much as $56 per share by the end of the year, provided it is able to successfully meet the challenges it faces on its way back to profitability.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.