This Could Be Huge for BlackBerry Stock
BlackBerry Ltd (NASDAQ:BBRY) stock might look down-and-out at the moment, but the company is far from over. In fact, a new revolution in technology could bring BlackBerry back to the center stage.
Allow me to explain.
If I told you that cyber security would be one of the next big things in tech, you might feel underwhelmed. It doesn’t sound as exciting as virtual reality (VR) or driverless cars. But think about it this way: when the “Internet of Things” (IoT) becomes a reality, can we afford not to have cyber security?
Starting with smart thermostats and smart WiFi speakers, IoT devices have already entered people’s lives. According to Juniper Research, the total number of connected devices is expected to grow form 13.4 billion in 2015 to more than 38.5 billion in 2020. (Source: “Internet of Things Connected Devices to Almost Triple to Over 38 Billion Units by 2020,” Juniper Research, last accessed February 18, 2016.)
More devices connected to the Internet of Things would certainly make many aspects of our lives easier. However, the sad truth is that the world is not filled with just good people. In the past, hackers were mostly a threat in cyberspace. But with connected devices, they might be able to cause harm in the real world as well.
It might not look like a big deal if a hacker tampers with your thermostat. But what if they decide to play with the powertrain of your connected car? Don’t think that’s possible? Just take a look at the two hackers who managed to remotely disrupt the driving of a 2014 Jeep “Cherokee.” With just their laptop, the hackers were able to remotely control the Jeep’s dashboard functions, steering, brakes, and transmission. (Source: “Hackers Remotely Kill a Jeep on the Highway—With Me in It,” Wired, July 21, 2015.)
So, we know that the Internet of Things will come with risks. When more and more devices get connected, cyber security will not be an option, but a necessity.
That’s where BlackBerry could really come into play. You see, the company had a solid device management business even before IoT became a trendy acronym. As the IoT revolution takes place, the outlook for BlackBerry’s device management segment could become even brighter.
The company has made several strategic acquisitions in this segment. In November, BlackBerry completed its acquisition of Good Technology, a former rival in the secure mobile communications business. Good Technology offered secure e-mail, applications, and communications services to corporations and governments.
Buying Good Technology would bring new clients to BlackBerry’s device management business. Good Technology has experience managing devices that run on “Android,” “Windows,” and “iOS” operating systems. So the acquisition could boost BlackBerry’s cross-platform capabilities.
In terms of financials, BlackBerry expects that the acquisition would be accretive to earnings and cash flow within the first year.
Last year, BlackBerry also acquired AtHoc, a leading provider of secure, networked crisis communications. AtHoc’s platform can alert all kinds of devices to help organizations and people connect and share information in times of crisis. The company’s specialty could help BlackBerry win more enterprise customers, especially in regulated industries and government.
The Bottom Line on BBRY Stock
The neat thing about device management is that a significant part of its revenue could be recurring. Moreover, the segment does not face the same product update cycle as the hardware device business. This could add stability to BlackBerry’s financials in the future.
While we are all excited about the IoT gadgets coming out in the next few years, we should not forget the security guards protecting the giant network of devices. You wouldn’t want to face Skynet in the Terminator movie right?
On that note, it’s safe to say that BBRY stock is worth looking at.