Even a “hard pivot” won’t turn BlackBerry around quickly, says Cormark

Cormark analyst Richard Tse says the fact that new BlackBerry CEO John Chen has yet to articulate a going-forward strategy doesn’t take away from the fact that there are few options available to it. BlackBerry’s unrelenting series of new lows is expected to extend tomorrow, when the company will report its third quarter earnings. The street consensus is that the Waterloo-based company will lose $0.41 a share, and that revenue will fall 42% to $1.59-billion.

Cormark analyst Richard Tse thinks the quarter will be even worse; he expects BlackBerry will lose $0.56 a share on revenue of $1.3-billion.

Early in November, BlackBerry announced that former Sybase CEO John Chen would replace embattled Thorsten Heins as CEO, albeit on an interim status. The move followed the failure of the company’s would-be savior platform, BlackBerry 10, to make a dent in the mobile market.

Tse says the fact that BlackBerry is currently stuck in limbo and has yet to articulate a going-forward strategy doesn’t take away from the fact that there are few options available to it, and any plan would be unlikely to generate short term value. He says a “hard pivot” to become a pure play enterprise vendor of mobile device management solutions will be fraught with complexity.

The Cormark analyst says the the bottom line is that BlackBerry’s underlying assets are likely worth more than its current share price, but the probability of value eroding is exceptionally high.

In a research update to clients this week, Tse maintained his Market Perform rating on BlackBerry, but lowered his one year price target from $9.00 to $7.50.

At press time, shares of BlackBerry on the TSX were up 2.2% to $6.61.

________