BlackBerry Ltd (NASDAQ:BBRY) still can’t seem to find any love these days from investors. The company confirmed last Monday the job cut of about 200 employees, which saw BBRY stock punished yet again, closing down 4.09%. The stock has now seen about 95% of its value slashed during the last few years and 38% from its 52-week high.
But if investors can look past its ugly surface, they will find that there is a lot to like about BlackBerry, as CEO John Chen continues with his plans to turn the company around.
Move to Android
BlackBerry’s operating system is done with no chance of being resuscitated, so this strategy makes complete sense. It’s a move that could save the company.
Alphabet Inc’s (NASDAQ:GOOG) “Android” and Apple Inc.’s (NASDAQ:AAPL) “iOS” operating systems dominated the global smartphone market, accounting for about 96% of total market share. (Source: “Smartphone OS Market Share, 2015 Q2,” International Data Corporation, last accessed February 11, 2016.)
Android alone accounted for 82.8%, while BlackBerry’s own operating system made up a measly 0.3% of global market share, so it’s obvious why BlackBerry is starting to wean off its own operating system.
The release of the “BlackBerry Priv” smartphone is the first major step in this direction. Although BlackBerry has allowed the use of Android applications on its smartphones since early 2014, the Priv is the company’s first phone that completely ditches BlackBerry’s own operating system.
The move will have significant advantages for BlackBerry, as the company’s market exposure goes from almost non-existent to having access to the largest smartphone market.
BlackBerry no longer has to worry about a lack of apps or using resources to try to pull market share away from iOS and Android. Now that BlackBerry phones will have access to Android’s massive universe of apps, the company can focus on its fast-growing enterprise software. In the latest earnings, BlackBerry reported that revenue for its software and services businesses hit $162 million, up 183% year-over-year and 199% from the previous quarter.
Unlike most companies that have suffered the way BlackBerry has, the company’s balance sheet remains strong. The firm isn’t going anywhere soon, making it a safe potential investment, at least in the short-term. At Thursday’s stock price, the market is valuing BlackBerry at $3.8 billion, just barely above its book value.
BlackBerry management must also think the stock is cheap. About a week ago, management announced they are more than doubling the amount of shares they are buying back. BlackBerry management will repurchase 27 million shares, which is about 5.8% of the stock float. This is an excellent indicator for investors, as BlackBerry’s insiders must believe that at today’s price, the stock is a bargain.
It’s also a vote of confidence in the company’s turnaround.
The Bottom Line on BBRY Stock
BlackBerry is a company that does not need “iPhone”-like sales to be successful. Even if the company is able to sell about two million phones, sales will increase 70% more than the $2.0 billion in annual revenue that investors expect for 2016. (Source: “BlackBerry Ltd CEO John Chen Sees What BBRY Stock Bulls Refused to Admit,” InvestorPlace, February 8, 2016.)
BlackBerry is also pushing its “QNX” operating system for self-driving cars. If it gains traction, QNX could be a future growth-driver for the company. It might be time for investors to take a look at BBRY stock.