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How high can BlackBerry (NASDAQ:BBRY) go at the moment? I think the answer is much higher than it already is, given certain parameters.

Honestly, if nothing changes over the next several years and if the market continues to price software enterprise companies the way it does today (meaning very rich), then BlackBerry can easily go to $20 a share, without doing much more than it already does. And if you haven't noticed, all BlackBerry really does today is being an MDM company and not much else.

Assuming that BlackBerry can consolidate itself in the MDM space, that alone is enough for the stock to gain further. Let me explain why I think so.

For Q4 2013 (March 28, 2013) the company reported $1.05 billion in services and software revenue. For Q1 2014 (June 28, 2013) the company reported $899 million from the sale of services and software. In Q2 (September 27, 2013) it reported $816 million from the sale of services and software, and for Q3 (December 20, 2013) the company reported $720 million in revenue from the sale of services and software. For the same period total revenue has decreased from $2.7 billion to $1.2 billion.

What is evident from these figures is that while services and software revenue has been coming down, it still constitutes a very large portion of BlackBerry's revenue. In addition, please remember that margins in the services and software segment are very high.

Assuming that BlackBerry's new management can stop the bleeding, and revenue from services and software remain at about $700 million per quarter, this means that even with no hardware sales, the company will be bringing in about $2.8 billion in revenues per year.

Now if the market continues to pay for software companies the multiples it pays today, then it is not hard to envision that BlackBerry could be valued at 3-5 times sales by the market, or anywhere from $18 to $25 a share.

Furthermore, BlackBerry will soon be out with a cloud solution, so a server will no longer be needed. I do not know if the market will price BlackBerry as a cloud company, but if one looks at the SaaS space and what companies like Workday (NYSE:WDAY), NetSuite (NYSE:N) and Salesforce.com (NYSE:CRM) sell for these days, it is mind boggling where BlackBerry's stock can go to in the future, if the market prices BlackBerry even partially as it does the SaaS space.

Of course for this to happen, not only do we first have to verify that the bleeding has stopped (and we will get a first indication on March 28), but BlackBerry also has to actually make money and hopefully show that it can grow. But if this is confirmed, then BlackBerry's stock will take off and in my opinion, $20 a share (or at least $10 billion in market cap) will be the bare minimum the stock will be worth.

Please note that because of the deal BlackBerry struck with Foxconn (OTC:OTC:FXCOF), BlackBerry has little or no inventory risk. What this means is that even if it still makes and sells hardware, it is still a pure software company, buy virtue of the fact that is has little or no risk on the hardware side. How many companies out there design and sell hardware but have little inventory risk? Now many.

Several days ago Terry Gou, chairman of Foxconn said that:

We are working with them (meaning BlackBerry) to design a new device, and we will showcase multiple devices at the trade show in Barcelona in February.

Please note that he said multiple devices. Currently we know of one device that will be rolled out soon, but we do not know anything about "multiple devices" (please consider: BlackBerry's Next Phone Code Named 'Jakarta').

Now I am not getting my hopes up that BlackBerry will become a household name in mobile device sales in the U.S. or anywhere else anytime soon, however a successful launch of anyone of these "many devices", in certain emerging markets, is enough to make a big difference to the company and change the way the market perceives it.

Having said that, if and when we do get any good news from BlackBerry's device initiative, that will only be an added bonus to the minimum price tag of about $10 billion for the company.

The bottom line

While BlackBerry has rallied from just under $6 to $10, in reality the company is still valued at only $5 billion. This is still a very small value based on the fact that BlackBerry is a pure play software company today.

However in order for BlackBerry's stock to go to $20 or above, the company has to turn profitable, even at the margin. This will hopefully happen over the next 12-18 months or so. And if does indeed happen, then $20 a share will be the floor in the stock.

At the same time, if BlackBerry manages to score points on the hardware front, then that is simply additional icing on the cake.

Source: Why BlackBerry Is Worth A Minimum Of $20 A Share, If It Stops Bleeding