BBRY Stock: Three Reasons to Keep BlackBerry Ltd on Your Watch List

BBRY StockThere is no other way to put it: BlackBerry Ltd (NASDAQ:BBRY) stock has been doing terribly. And there is a good reason for it—the company has been deep in the doldrums. But before you delete BlackBerry stock from your watch list, here are a few things to note.

Surging Software Revenue

Earlier this month, the company reported earnings. Just like previous quarters, BlackBerry’s software segment was the highlight of the report. For the fiscal quarter (ended February 29), the company’s non-GAAP software and services revenue more than doubled year-over-year to $153 million. For the entire fiscal year, revenue from software and services surged 113% to $527 million. (Source: “Q4 Fiscal 2016 Results Announcement,” BlackBerry Ltd, April 1, 2016.)

The neat thing with software and services is that they don’t face the same product update cycle as hardware products. At the same time, revenue from the segment is likely to continue to the future. In the case of BlackBerry, around 70% of its fourth-quarter software revenue was recurring.

The company is also winning enterprise customers. Last time it reported, BlackBerry added 2,713 enterprise customers. This time, growth has sped up to 3,600 enterprise customer wins.

Synergies from Acquisitions

In case you haven’t been following, BlackBerry made several strategic acquisitions last year. One of them was Good Technology, Blackberry’s former competitor in the enterprise mobile security business. Good Technology has experience managing mobile devices running on “Android,” “iOS,” and “Windows.” So the acquisition could boost BlackBerry’s cross-platform capabilities.

The deal was completed last November and is already producing solid results. Combining the strengths of both companies, BlackBerry launched its new “Good Secure EMM Suites” this January. According to BlackBerry’s executive chairman and CEO, John Chen, reception of the product has been great. In the first 60 days of the release, the company managed to have 90 customer wins. (Source: “BlackBerry’s CEO John Chen on Q4 2016 Results-Earnings Call Transcript,” Seeking Alpha, April 1, 2016.)

More Android Phones in 2016

There has been a lot of debate about whether BlackBerry should continue its hardware business. Since it lost the battle to Apple Inc. (NASDAQ:AAPL) years ago, the company’s smartphone business never really picked up.

But there is still a fan base for the Waterloo, Ontario-based company. And if it were to continue its smartphone business, it will need to go beyond its BlackBerry operating system, which, let’s be honest, has seen declining usage for some time.

Luckily, that’s exactly what BlackBerry did. The company launched its first Android smartphone, the “Priv,” last year. By using the Android operating system, users have access to all the apps in Android’s app store. The Priv also has BlackBerry’s classic QWERTY keyboard, so it still has some appeal to BlackBerry fans.

Now, BlackBerry is thinking of releasing more Android phones in 2016. Chen said the company will create at least one new Android phone this year, with a second Android device also being a possibility. (Source: “BlackBerry Will Launch More Android Phones in 2016,” Know Your Mobile, March 14, 2016.)

The Bottom Line on BBRY Stock

Of course, a company in transition will face scrutiny, especially if it has just lost a big battle. Going forward, BlackBerry will have to travel without its proprietary operating system. But there are still quite a few things going for the company, and BBRY stock still has a chance to climb back up.