What to Expect from BBRY Stock in 2016
Stockholders are rejoicing due to BlackBerry Limited (NASDAQ:BBRY) posting a strong beat for the third quarter on Friday’s call, sparking an over 14% rally in BBRY stock in intraday trading. The question is: will BlackBerry shorts continue to bite the dust or will the stock rout again?
Let’s begin with a refresher on all the important takeaways from the call. For starters, BlackBerry beat on revenues and managed to narrow down its losses by a much wider margin than the Street had expected.
The software segment was the best performing of all segments, followed by the hardware segment, which topped the Street’s estimated sales numbers. One healthy sign was that the inventory of old devices has finally been sold out, marking a reversal of the prior inventory build-up.
Where’s BBRY Stock Headed Now?
BlackBerry’s third quarter report has only made me more bullish on BBRY stock.
First, the software side of BlackBerry’s business is looking very attractive now. While the company may have abandoned its “QNX” operating system for its hardware, making a wise switch to “Android,” QNX enjoys strong demand in the car industry. QNX powers car infotainment for almost all the big car makers, including BMW, Audi, Ford, General Motors, Honda, Hyundai, Mercedes-Benz, Toyota, and Volkswagen.
The latest news is that the QNX division is partnering with Luxoft Holding, Inc. (NYSE:LXFT) to work on next-generation semi-autonomous driving technology, which is going to contribute to a further push in the software’s demand in the auto industry in the coming year.
Also, the “BlackBerry Enterprise Server” (BES) is a strong revenue-puller for the company. The latest enterprise management system, “BES 12,” was launched only last month, but CEO John Chen cited it as already going strong. The real numbers will start showing in the next quarter, but I’m certain BES 12 will be an additional blessing in disguise for the stock. BES already enjoys a strong position in the enterprise mobility management industry, closely following the likes of IBM and VMware and beating the likes of Microsoft and SAP Software. (Source: “The Forrester Wave™: Enterprise Mobile Management, Q4 2015,” Citrix, December 4, 2015.)
One big reason why I’m very optimistic about BlackBerry’s software division is its potential in the rising Internet of Things (IoT) industry. BlackBerry’s software is always cited to be one of the most secure operating systems. As the phenomenon of IoT grows, BlackBerry’s secure software will find its way beyond cars and handheld devices to home security, entertainment media, and daily-use appliances, where privacy and security are vital to the user.
As for the hardware side, I’m more optimistic about it now than ever.
The company reported numbers for the older “BB10” sales but shied away from providing any numbers on the latest Android-based “BlackBerry Priv.” This is understandable, because the Priv has only recently made it to the market and the company is still in the process of launching it internationally. Nonetheless, if you factor in all the recent news on it being sold out at Amazon, Wal-Mart, and Best Buy soon after the launch, I believe the Priv will be a game-changer for the company, if not a massive hit.
Meanwhile, we are also hearing rumors of a second Android-based BlackBerry phone in the making, dubbed “Vienna.” Now, after having promised the stockholders the company would abandon the hardware division if he wasn’t able to turn it around by 2016, Chen would certainly not have gone for a second Android phone if the Priv was proving to be a dud.
Bottom Line on BBRY Stock
As evidenced by the latest quarter, BlackBerry’s chief is giving his blood, sweat, and tears to bring the company back from the dead. Albeit small, the company has some promising projects underway. I’m hopeful that the bottom line will soon move from the red zone to the green.
Brace yourselves, BBRY stock bears!