BBRY Stock: The No. 1 Reason to Be Bullish on BlackBerry Limited

BBRY StockThis Is a Big Deal for BBRY Stock

Canadian smartphone-maker BlackBerry Limited (NASDAQ:BBRY) has all but confirmed that it considers “Android” to be its future. This seems to come as a surprise to the market, as shares of BBRY stock rose almost 10% in a single trading day last December, thanks to the tripling of the company’s software and services sales.

More significantly, the software sales are recurring, which could sustain future growth and ensure BlackBerry improves sales and earnings per share in the long-term. Nevertheless, the company has not given up on its hardware yet. BlackBerry could see even more light at the end of the tunnel.

BlackBerry has announced it will release one, maybe even two more Android-powered smartphones in 2016. The very fact that BlackBerry is even considering such plans is evidence of a renewed vigor at the company, which is no longer afraid of its own shadow.

For the past two years, investors and analysts could be forgiven for entertaining serious doubts about BlackBerry’s future, especially where the smartphone market is concerned. Yet, in the week of the Consumer Electronics Show (CES 2016) in Las Vegas, the world’s primary venue for showing off new electronics and related technology, company CEO John Chen expressed his “cautious optimism,” which was a clear sign that BBRY stock is on the road to recovery and that, rather than cut back on manufacturing, BlackBerry may well expand its hardware offerings.

The big change and the motor of BlackBerry’s hardware revival is its move to use Alphabet Inc’s operating system (OS), Android, in its newest smartphone, the “BlackBerry Priv,” avoiding its proprietary “Blackberry 10” OS. The results were in line with the common sense approach of that decision. The Priv has been selling well. (Source: “Priv Sales Help Boost BlackBerry’s Sagging Fortunes,” InformationWeek, December 21, 2015.)

Strong Priv Sales

At CES 2016, John Chen confirmed that sales of the Priv, which has only been on the market for a few months, have been “so far so good.” (Source: “BlackBerry going all-in on Android phones,” CNET, January 6, 2016.)

The release of the Priv and the company’s shift away from proprietary technology to Android shows that BlackBerry’s new management is flexible enough to take seemingly unorthodox decisions to address the needs of the market, the way it is and what it wants rather than an idealized version. BlackBerry now has smart leadership, not just smartphones.

This is the kind of flexibility needed to take Blackberry stock higher and the company back to profitability, perhaps even as early as this year. Blackberry is feeling sufficiently buoyant that at CES 2016, the company said it would release a second Android smartphone (which could be the “Vienna”) this year and maybe even a third (which could be an Android version of its “Passport”) if the second offering also sells well. In any case, it seems that Android is bringing round BlackBerry’s revival. (Source: “BlackBerry expects handset profitability next year,” CNBC, November 17, 2015.)

BlackBerry sees the Android OS smartphone as the instrument through which to restore the brand’s image and performance. BlackBerry may again use BlackBerry 10, but perhaps only after Android does its magic in boosting sales. 2016 will be the year of Android for BlackBerry.

In the U.S., BlackBerry will now be offering the Priv through three other major operators. After 60 days of exclusivity, AT&T will share sales of the Android phone with Verizon, T-Mobile, and Sprint. (Source: “The BlackBerry Priv is coming to Verizon, T-Mobile, and Sprint,” The Verge, January 6, 2016.)

The Bottom Line on BBRY Stock: BlackBerry Has Turned the Corner

Ultimately, for BlackBerry to evaluate whether or not the Priv is a success and whether its Android revolution holds the secret of profitability, the company will have to wait. For now, the distribution of new smartphones has been limited. Over the next few quarters, the manufacturer plans to expand its sales into 31 countries.

BlackBerry CEO John Chen, who took over in November 2013, has been improving the company’s fortunes. BlackBerry stock will be an indicator of how Chen’s turnaround efforts have been faring and the effects of the new security software and Android smartphones should start to become clearer in the next few months.

In February 2011, BBRY stock was trading near $70.00 per share. By 2013, BlackBerry stock was trading under $6.00 a share. In January 2015, BBRY stock showed signs of recovery, though the stock never made it past the $12.60 mark. Currently, BBRY trades in the $8.00 to $9.00 range, mostly due to overall volatile market sentiment.

Yet BlackBerry stock can recover, as Chen, after focusing on deep cost-cutting efforts, can devote more effort to growth. The company even surprised investors in 2015, when it turned cash-flow-positive about one quarter ahead of schedule. It is also guiding for sustained operating profitability sometime in fiscal 2016.