BlackBerry’s slow and steady approach could pay off, this fund manager says

Will the BlackBerry World Tour 2019 signal a turnaround for the beleaguered former smartphone giant?

It’s been a while now since former cellphone maker BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) started down the road to recovery, and though CEO John Chen has said that the turnaround is now complete, the jury is still out on whether the company can meet the growth expectations now being placed on it.

That may happen, says portfolio manager Bruce Murray, but investors are going to need a lot of patience, as the recovery could be a slow and uneventful climb.

Yesterday, Waterloo, Ontario’s BlackBerry announced the kickoff of its “BlackBerry World Tour 2019,” which will take the company on a ten-stop tour beginning in Tokyo and give enterprise businesses a chance to get up close and personal with BB’s IoT connected tech, including endpoint management, endpoint protection, secure communication and embedded software.

“BlackBerry is a leader in privacy and security on a global scale, and it’s important for us to support our valued clients, as well as showcase the advanced technologies we’ve developed to secure their critical information and devices,” said Mark Wilson, CMO at BlackBerry, in a press release.

“The BlackBerry World Tour 2019 will allow us to provide a hands-on, highly interactive experience exploring the nexus of cybersecurity, artificial intelligence and the Internet of Things. We’re excited to empower our customers at each stop of the tour as we all learn, connect and endeavour together to protect the systems forming the bedrock of our hyper-connected world.”

The company’s attempts to drum up interest in its products could be a useful distraction from the stock’s dismal performance in recent years.

While BB has nicely pulled itself out of the $9.00 range over the past couple of weeks —and kept the stock from dropping to three-year lows— the overall picture hasn’t been too enticing.

BlackBerry saw promising growth in 2017 but then 2018 took the stock more or less back where it started in sub-$10.00 territory. A climb during the first few months of 2019 where the stock gained almost 50 per cent in value has met a similar fate.

Much of the disappointment can be attributed to the timeline it has taken for the company to complete its about-face, says Murray, CEO and CIO of the Murray Wealth Group, who spoke to BNN Bloomberg on Monday.

“BlackBerry has consolidated its businesses and has turned around and now is going to grow slowly off this base,” says Murray. “It’s not going to be as exciting as it was. They’re going to have five to ten per cent earnings growth for a couple of years, and if they get a couple of products going it could be a little more exciting.”

“I believe we’ll see it growing more consistently going forward given that they’re now only into software,” he says. “Software as a Service is an exciting business that they’re entering but we’ve still got a ways to go before they have some leading products out there.”

BlackBerry delivered its latest quarterly earnings in June, where the company’s numbers met or slightly exceeded analysts’ expectations, yet the stock went to the downside, ostensibly on the market’s impatience with the company’s growth, especially from its cybersecurity segment.

Murray says that BlackBerry’s wins in the auto sector, through its QNX platform, are a case in point for the slow but steady road that the company is on.

“Some of their products go into the automotive business but the autos are tough people [where] the low-cost big gets it, so you have to put a lot of money upfront and you get paid in the longer term. So, that will be a good business and they’re one of the leaders in that but it will take time,” he says.