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BlackBerry’s turnaround effort may be falling behind, says Cormark

BlackBerry
BlackBerry
The BlackBerry Classic.

At Mobile World Congress in Barcelona, Cormark analyst Richard Tse says BlackBerry (BlackBerry Stock Quote, Chart, News: TSX:BB, Nasdaq:BBRY) did not have a great showing.

Tse notes that while his investment thesis is partly based on a rollup strategy, he noticed that some competitors were showcasing more developed solutions at the world’s largest mobile industry exhibition. While the analyst has in the past pointed out that things like Mobile Device Management and Enterprise Mobility Management (MDM/EMM) would be keys for BlackBerry going forward, he says he now sees increased risk in them.

“In particular, while incumbents like AirWatch continued to maintain a big presence, we noticed an equally well-rounded portfolio of EMM solutions from Samsung KNOX and IBM’s MaaS360 which were arguably further along when it comes to an integrated platform than BlackBerry,” says Tse.

“All that is to say that even with a pivot, growing competition heightens the level of risk to owning this name. The market is moving quickly and from what we saw at MWC, we believe the risk to BlackBerry from a market perspective is considerably higher than we thought going into this year’s trade show. ”

From the Mobile World Congress, BlackBerry issued press releases touting its acquisition of Encription Limited, a UK-based cybersecurity consultancy, also that its BlackBerry’s Enterprise Solutions and Services will be available to Microsoft users via the Azure cloud platform, a move the company says would offer users of Microsoft’s cloud architecture will have full access to their BES12 licenses without having to build their own IT infrastructure, and highlighted an expanded partnership with Sharecare, a digital health engagement platform, launching a BBM Sharecare channel to provide consumers with insights into their health.

BlackBerry CEO John Chen talked about the Encription deal.

“BlackBerry is the gold standard when it comes to security and we’re always evolving to maintain this high standard as the complexity of enterprise mobility and security increases,” he said. “We recognize that security vulnerabilities are a top risk concern for public and private sector organizations alike. The creation of our Professional Cybersecurity Services practice and acquisition of Encription reinforces our commitment to providing customers the industry’s most secure mobility solutions and helping them to assess and mitigate risks.”

Another space Tse believed BlackBerry could have success in pivoting to was the Internet of Things, particularly in asset tracking, where the company is expected to soon have a product launch. But the analyst says he some advanced solutions that were already deployed in the market with large logisitics companies. One offering from AT&T caught his eye with an “impressive” demo that offered similar functionality to BlackBerry’s proposed offering.

In an update of several coverage companies to clients from Mobile World Congress, Tse maintained his “Buy (Speculative)” rating and one-year price target of (U.S.) $11.00 on BlackBerry.

Founded in 1987, Mobile World Congress attracts nearly 100,000 attendees and 2200 exhibitors to Barcelona this year for the five day conference. Speakers included Facebook founder and CEO Mark Zuckerberg, Intel CEO Brian Krzanich, and Cisco CEO Chuck Robbins.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

Comment

  1. BlackBerry buys Good and effectively owns 45% of the EMM market. Sounds like a failure *eyeroll*

  2. The Forrester Wave report on EMM is an excellent summary of the current landscape and Blackberry is there. They are up against Air-Watch, Cisco, Microsoft and IBM (Apple) among others, and Microsoft alone has a cash cushion over an order of magnitude larger and knows the cloud is where SAAS lives. Good turned down months earlier an offer double what it sold itself to Blackberry for, and stock holding employees were not pleased. Acquisitions make for grand announcements but it is one thing to grandly trumpet that you bought all the winemaking supplies at a distressed sale, and another to successfully produce wine. Purchasing Good purchases market share of a money losing company but can Blackberry assimilate the disgruntled employees and grow market share?
    Blackberry devices, so long as they last, are a good marketing tool, but embracing Android dilutes or at least blurs the security marketing distinction BB10 offered. To be fair, all chipsets employ a “root of trust” unique silicon identifier which manufacturers employ in security. Unlike Blackberry, Apple offers a thorough, one-stop-shop, easily found whitepaper on their security. It is a challenging read but meant to be read.
    I think the executives are acquiring in the hopes of becoming acquired and giving the appearance of activity for as long as they can to keep their high pay coming. Prem just wants out.
    https://www.apple.com/business/docs/iOS_Security_Guide.pdf
    https://www.forrester.com/report/The+Forrester+Wave+Enterprise+Mobile+Management+Q4+2015/-/E-RES125290

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