BlackBerry is now a “show me” stock, this investor says

It’s been a long time since BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) was king of the smartphone market and had its share price up to $150.00.

But even as the company puts the finishing touches on a remodeling job, there are still lingering questions about how and when BB will emerge as a legitimate contender in its new software and security niche.

“I think that the mistake they made was trying to go into the consumer market and that ultimately created the opportunity for Apple,” says Darren Sissons, vice-president and partner at Cambell, Lee & Ross, who spoke to BNN Bloomberg last Friday. “Then all that happened was BlackBerry had the enterprise market and ultimately is now a shadow of its former itself.”

Sissons’ comments are echoed by Chuck Howitt, former reporter and copy editor at The Waterloo Record, whose new book entitled BlackBerry Town chronicles the rise and fall of the Canadian tech darling and speaks of the legacy that BlackBerry, formerly Research in Motion, left on the city of Waterloo, Ontario, and the thriving tech environment that it helped create.

“In mobile, definitely they led the pack,” said Howitt to 570 News on Saturday. “They looked like they were going to be around for a long time.”

“I think they got a bit complacent. They were number one and they eased off on the throttle a bit,” he added. “They wanted to take on the consumer market, but they took baby steps.”

Improved results are not enough to recommend BlackBerry stock, Sissons says…

Much has been made of BlackBerry’s multi-year turnaround, crafted by CEO John Chen, who was brought in six years ago to create a functioning company out of BlackBerry’s remaining patents, R&D and infrastructure. And while BlackBerry has impressed with its results in recent quarters, bringing forth positive earnings and growing its top line, the results are still lacking, says Sissons.

“I think that to some degree it’s now a ‘Show me’ story and I think that we still need some time on that,” Sissons says.

“But I think that it’s an interesting story here. Security is a big deal,” he says. “I think that anything that can keep you safe and maintain your privacy, anyone who comes up with a solution in that area and helps protect your computing power is obviously an opportunity.”

BlackBerry’s share price climbed with the rest of the market over the first few months of the year but the stock has trailed off since, sliding below $10.00 per share, a range that the stock hasn’t occupied much since early 2017. (All figures in Canadian dollars unless where noted otherwise.)

Ahead of the company’s second quarter fiscal 2020 earnings expected later this month, BlackBerry’s share price dropped on its Q1 delivered in June, which saw BB meet analysts’ estimates with revenue of US$267 million, up 23 per cent year-over-year, and earnings of US$0.01 per share.

“I’m kind of an agnostic here,” said Sissons. “I wouldn’t be buying but I am watching it. Obviously, it’s a local Canadian story and I would like to see it succeed but at this point I definitely wouldn’t be putting any new money into it.”