Zero Hour Is Upon BlackBerry

May.13.14 | About: BlackBerry Ltd. (BBRY)

Summary

BlackBerry is launching its Indonesia-specific Z3 this week.

The results of which will likely predicate how BlackBerry approaches the emerging market handset market.

John Chen has set the company up for this moment, now it's time to execute.

Everything that John Chen has done for BlackBerry (NASDAQ:BBRY) thus far has led the company to where they are today. On May 15th, the company's Z3 that's priced under $200 will hit shelves in Jakarta as part of the company's initiative to spur some growth within emerging markets.

Shortly after Mr. Chen took the helm at BlackBerry, he let shareholders in on what his plans were going to be for the company. Aside from the obvious - cutting the fat off the company via selling assets and letting people go - Chen's plan was to monetize BBM, QNX, BlackBerry enterprise, and to create a discount mobile phone market for emerging market countries.

When Chen announced the partnership the company was taking on with FoxConn, he had a vision of the jumping off point that the company is at right now.

BlackBerry has eliminated a ton of its fat, slashed its spending, and reduced itself to its core assets necessary to do business. Chen has surrounded himself with executives that he's familiar with. The balance sheet looks strong.

The name of the game now? Launch the Z3 Jakarta and get this company to stop losing money.

(click to enlarge)Click to enlarge

Even though Chen has alluded to the fact that the company is no longer going to primarily be a handset company, and will focus on leveraging itself other ways, this launch could very well dictate what type of future the company is going to have when it comes to handsets. Additionally, this will set the tone for other low-cost phone launches in alternate emerging markets.

The issue with Indonesia and similar markets wasn't that the people didn't want to have a BlackBerry - it was that the phone was too costly. Now, with a price point under $200, the company is looking to take back of the market that it used to dominate.

All there is going to be left to do now is release the phone, and wait for the numbers to come in. Zero hour is officially upon BlackBerry.

If a failure, the launch will likely be moved aside from BlackBerry to continue trying to focus on monetizing its other assets - BBM, QNX, Enterprise, Server and its patent portfolio.

If a success, the launch will likely do well to validate yet another foray into handsets for the company, both overseas and eventually in the U.S. again.

In the U.S., BlackBerry will be releasing the BlackBerry Classic at some point before the end of the year. This phone is a return to the "old" BlackBerry style, before the touchscreen, for the company's loyal U.S. users.

Personally, the long position I initiated in the low $7 range was through in the money calls. I sold this position off a couple of weeks ago and will likely be looking to re-enter the company relatively soon. I continue to believe that BlackBerry is at least a $10 stock before the end of the year this year. As soon as the market gets the slightest taste of cash flow neutral for this company, the stock price is going to be the beneficiary.

Heading into this launch, I remain bullish on BlackBerry.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BBRY over 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.