BlackBerry (BB.TO)

If you want a technology play, this is really not in the game. It’s on life support.

This lived through a period when things really looked questionable. They’ve managed to change the profile from a hardware phone maker company, to a software company. They now have very, very good relations with the auto industry. At current prices, it is discounting a pretty positive future, so he would be a little cautious.

The chart shows a channel of just below $9 and below $11.20. Recently, they came out with better than expected earnings and made money with adjustments. Then they had the QUALCOMM settlement, which helped boost the company. However, that is not a part of the company. He would be concerned that the stock might pull back a little. Wait for it to show a little more strength going forward.

It was just announced they are getting $815 million in royalty payments from QUALCOMM (QCOM-Q). That works out to be about $1.50 per share in cash. The balance sheet now is pretty strong. She is not a buyer as they are still making that transition from hardware to software. It is not clear where future growth revenues will come from. Not a lot of visibility on how they are going to grow their top line.

The stock was up today because they got a settlement with QUALCOMM (QCOM-Q) and were paid about $85 million US. That puts their cash up to about $2.5 billion. The company is going through a very, very tough transition. He doesn’t think it is going to be able to generate sufficient returns to justify a further investment. The company is cash flow negative right now, and sales have been declining for the last 8 years.

He is happy to hold it. He likes management. They hit their targets. Now they have huge debt. He can see it doubling. They have huge analyst coverage. (Analysts’ target: $8.32).

He has been short for a while. It is negative on all metrics. No cash flow or earnings. They have a good balance sheet, but they keep doing write downs. On momentum they score on the bottom 20%. They are a laggard. Something needs to turn around.

Management has done a good job at trying to turn it around. They made a lot of good moves by shutting down the hardware business or at least slowing it down, and getting into software. It’s a tough task. ROC is very low, and in fact is negative. It is still a long way away from being a good turnaround idea.

When you read the company’s press releases, they are highlighting a lot of successes, but they are in very niche areas. He doesn’t see anything yet that is going to be universal enough to replace the BlackBerry.

A company in total transition. Management has been doing a pretty good job. They have taken their manufacturing area and moved it to China, which have created some new phones which appear to be attractive. BlackBerry is going to focus on the background stuff. They’ve always had a good reputation for safety and protecting info. Becoming a software company rather than a manufacturer, and maybe that is the best place to make your money.

This is a tough one, given the secular structural issues around that whole business, and now it is going to be a question of if they are going to be successful in this new business model. This is a classic value trap.

Had bought this when he thought the company was going to be taken over, and is now underwater. The company has had all kinds of difficulties. Their revenue has gone way down and the debt load has gone up a lot. However, they have deep pockets behind them. Thinks they are going to turn around, but this is a huge ship to turn around. He is happy to hold this.

A lot of people had this dead and buried years ago, and they survived. They are shifting their emphasis and are going to be more into apps and the electronic side, than just producing phones, etc. They still have a lot of good patents. That they survived makes him think the company has a future. It is still a potential takeover. The longer they survive, the more likely they are going to get back into growth or be taken out.

He is thinking this is dead money. The pillars that are driving this company aren’t. The remaining assets are the remaining contracts with governments. He thinks they should have been bought out. This thing is not working out. Mr. Chan has been dealt a hand he cannot win at.

John Chen is doing a great job trying to transition from hardware/software to a strictly software and selling it. Integrating their security systems into the automotive business, it is almost a commodity software business these days. He tries to stick with the real leaders that have all the real cash flow and capital to be investing in artificial intelligence, machine learning, augmented reality and cloud computing.