BlackBerry And My Ex-Girlfriend

| About: BlackBerry Ltd. (BB)
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BlackBerry restructuring officially ends yesterday.

John Chen reiterates his guidance about cash flow positive.

BlackBerry is still a value at these prices, I retain and reaffirm my buy with a PT of $15.

A very long time ago in a far away place, a lovely ex-girlfriend of mine put the song "I Like What You Say" by Nada Surf onto a mix-CD for me. Remember mix CDs? And, yes, for those of you playing along at home, I'm 12 years old.

Yesterday, I was stopped dead in traffic when my GPS had me go the back way to meet a business associate, and the song came on in my car. At the same time, I was stopped in traffic reading the news about BlackBerry's (BBRY) restructuring coming to an end.

"I like what you say, John Chen," I thought to myself.

For those of you that haven't been keeping score at home today, Mr. Chen released an internal memo to employees that marked the end of the company's long and tedious restructuring. When Mr. Chen says it's over, I believe the last major restructuring for this company, while I'll be involved with covering it, is now over.

I trust Mr. Chen and respect the hell out of him.

This led me to think of a favorite movie quote of mine.

"It's only after we've lost everything, that we're free to do anything"

- Tyler Durden, Fight Club

Such is the case with BlackBerry, interestingly enough. They have shed as much as they can possibly shed from the company while still remaining an operating entity, and now it looks as if the next step is positioning key growth niches from within the company to leverage what the company is good at. Let's look at Mr. Chen's commentary from today.

Here's some of the memo, as reported by Yahoo. I've emphasized some extremely bullish statements in bold, for those of you that want to skip to the meat and potatoes:

BlackBerry Ltd has concluded a protracted and painful restructuring process and is back on a growth footing, according to an internal memo to all its employees viewed by Reuters.

"We have completed the restructuring notification process, and the workforce reduction that began three years ago is now behind us," said the memo from BlackBerry's Chief Executive John Chen that was sent out on Friday.

"More importantly, barring any unexpected downturns in the market, we will be adding headcount in certain areas such as product development, sales and customer service, beginning in modest numbers," said Chen, who personally thanked those that have stayed with the company through the process.

BlackBerry has shrunk its workforce by roughly 60 percent over the last three years as it attempts to reinvent itself. The company that dominated the smartphone market in its infancy has seen its sales dramatically eroded over the last four years by Apple's iPhone and a slew of rival devices powered by Google Inc's Android operating system.

Chen, who took the reins at BlackBerry roughly eight months ago, has moved rapidly to stabilize the company by selling non-core assets, partnering to make the company's manufacturing and supply chain more efficient, and raising cash via the sale of the company's extensive real estate holdings in its hometown of Waterloo, Ontario.

Chen, a well-regarded turnaround artist in the tech sector, intends to remain a competitor in the smartphone arena, but is focused on reshaping the company to build on its core strengths in areas like mobile data security and mobile device management.

In the memo, Chen told employees that he believes BlackBerry is now well on its way to recovery and that he is confident the company will meet its goal of being cash flow positive by the end of the current fiscal year.

"Back on a growth footing" says to me that the company knows they're going to be cash flow neutral/positive very soon. Of course, lest we forget the part of the memo where Chen says he is "confident" that the company will be cash flow positive by the end of the current fiscal year. Big news.

The fact that they're "adding headcount" means that they're finding very small spots to grow a little bit now that they're as small as they can get. Chen is basically now rebuilding the company in his image, with his execs running the ship.

No mention of the Apple(NASDAQ:AAPL)/IBM (NYSE:IBM) deal, as there shouldn't be - nothing tangible has come out of that corner yet, despite them announcing their deal weeks ago.

Admittedly, the Apple/IBM partnership isn't the greatest thing for BlackBerry, but I'm extremely confident in Mr. Chen's ability to adopt and act accordingly. I still think BlackBerry has a name for itself as the most secure enterprise platform in the world. I think they're going to leverage that and continue to move into the "Internet of things". I also content they're going to successfully monetize BBM at some point relatively soon. Smartphone sales in emerging markets must also be heading in the right direction for Mr. Chen to reaffirm his cash flow guidance, as well.

I continue to contend that BlackBerry represents an enormous value at these levels and that we could see a 50% upside towards the end of this year. I maintain my $15 price target and BUY on the company.

Best of luck to all investors.

Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in BBRY over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.