BlackBerry (BB.TO)

This is always a big trading stock. Rumours are going to allow you to make 10% if you are on the right side. He is starting to warm up to this one a bit. His biggest problem with this is really the industry. There are companies out of China that are coming out with ultra low cost handsets. The handset side is probably going to go to almost zero margins for this company. The software side is very attractive. Security is a really nice niche in this business.

He thinks you have missed the boat on this. It was a stellar story from 2000 up to about 2008. After that, it has been all downhill. It has the best email system, but the market is fixated on the lowest app, and as a consequence, the ecosystem that supports that, continues to get smaller. It is now a corporate product, not a retail product.

He likes this turnaround story. It was one of his ‘coming out of the blue’ picks. This means the stock price has a positive transit of EBV -3. Likes what John Chan is doing. It does not have a model price because we don’t have earnings yet. This is a software company. The handsets are a circus.

Could be worth zero or could be worth a lot more. The risk is the technological obsolescence and the worry that people who are using blackberries, are all going to switch to iPhones. Have been trying to convert more to a software based platform, benefiting from the strength of their software system. With the pretty cheap valuation and the strong balance sheet, he wouldn’t be surprised to see this as a takeout candidate.

This is a tough one. The new CEO seems to be getting some traction. People seem to believe that he is able to deliver. The trick is whether they can get the new product to market, and gain some traction, remains to be seen.

Management has done a surprisingly good job here. It is too risky for him and he does not see a future for Blackberry handsets.

John Chen had been put in place to turn the company around, and the big shareholders are going to give him leeway. Has brought costs down from a quarterly run rate of $2 billion down to $500 million a quarter. They are re-launching products and hopefully they’ll get some traction there. Expectations are very low and the market share is very low, so there is some room for some improvement. Trying to transition more to a software business and away from handsets, but that will take time. As they refocus on the mobile device management segment in corporate enterprise over the next 2 years, we should see the benefits. The last 3 quarters have been free cash flow positive.

When John Chen came on he felt they had a good jockey. He has a lot of insight into the industry. The company has a lot of value. They still have huge, huge revenues. Thinks this could go up quite a bit. When a well known company like this has takeover rumours, it can move very, very quickly up, and potentially down.

His view on this is that it is a bit of a broken story, so he wouldn’t put his money at risk where it might not work. He is not aware of any tech company that has ultimately turned around very, very successfully and gone on to become something else, especially a single product story.

It is hard to see where it will go from here. It is a difficult environment. He thinks it would work better if Amazon bought them out. He is not sure BB-T will be around in a year.

They still have negative earnings, so it can’t be in his portfolio with negative earnings. He doesn’t see this turning in their favour. This is not a stock that he would own at this point.

The trend is still to the upside. It is below its 20 day moving average, so it is a mixed technical picture.

For a long time this has been extremely speculative, and too speculative for him. The future is uncertain. Anybody buying the stock is betting on the fact that they will be able to turn things around. He doesn’t feel there is enough evidence or data to make an educated decision on whether this company will turn it around or not. There are easier ways to pick your way through the market.

This is a company that has surprised to the upside in 4 of the last 5 quarters. That doesn’t mean they are profitable yet, but they certainly appear to be making a turn. Looking at the analysts’ consensus on the stock, it is still not a really loved stock. If you saw them produce some positive numbers and the analysts all revised up at the same time, the stock could have a bit of a move.

CEO has done a masterful job of trying to figure out where the company wants to be in its next life, but just too much of a punt at this point in time. Taking their core competencies, the brand, their technological advantage around security, they are in the midst of a transformation.