BlackBerry Ltd’s (TSX:BB, NYSE:BB) hardware heydays may be a thing of the past but the company’s reinvention as a software and security operation is doing fine, says Bruce Murray, CEO of the Murray Wealth Group.
The past half-decade has been truly transformative for Waterloo, Ontario’s BlackBerry, who went from smartphone originator to also-ran in the mobile phone sector, only to begin its rebuild at the hands of CEO John Chen in 2013. Since Chen’s arrival, shares in BlackBerry have gone from the low $6.00 range to their current $17.00 status, with 2017 alone seeing a doubling of BB’s share value.
The CEO’s role in the revival just got underlined, as Chen was recently given a five-year extension at the helm, which includes ten million in restricted stock grants (worth US$128 by current valuation). The package means Chen will only benefit from seeing BB’s stock rise, something that Murray says is a distinct possibility.
“I think the phone business is well behind [BlackBerry], and the stock has been gradually recovering over the last couple of years as people begin to respect its other businesses, which are security and self-driving technology and automation for cars,” said Murray in conversation with BNN.
John Chen has a history of selling the asset to somebody else at the end of the game. Now, he’s got five years to finish it off…
“The security business is not particularly exciting but it’s solid, and they’re the leader in it,” says Murray. “The automotive business is where some of the sexiness may come, but when you deal with a lot of companies, you tend to get very low margins out of them —huge contracts but they watch closely at what you’re making. I’m sure the stock is fine and will continue to do well. John Chen has a history of selling the asset to somebody else at the end of the game. Now, he’s got five years to finish it off.”
Shares in BlackBerry climbed on Monday with the news of an agreement between BB and Microsoft Corp., which involves BlackBerry supplying its Enterprise Bridge security for Microsoft’s Office suite of mobile apps such as Excel, Word and PowerPoint.
“BlackBerry has always led the market with new and innovative ways to protect corporate data on mobile devices,” said Carl Wiese, president of Global Sales at BlackBerry, in a press release. “We saw a need for a hyper-secure way for our joint customers to use native Office 365 mobile apps. BlackBerry Enterprise BRIDGE addresses this need and is a great example of how BlackBerry and Microsoft continue to securely enable workforces to be highly productive in today’s connected world.”
Central to BlackBerry’s newfound success has been the cache of patented technology it has built up and acquired over the years. Earlier this month, the company filed a patent infringement lawsuit against Facebook, which owns the WhatsApp and Instagram apps. BlackBerry claims the mobile messaging apps have co-opted elements of BlackBerry Messenger including security, user interface and functionality enhancing features.
“We have a strong claim that Facebook has infringed on our intellectual property, and after several years of dialogue, we also have an obligation to our shareholders to pursue appropriate legal remedies,” BlackBerry spokeswoman Sarah McKinney said in the filing.