Is a beaten down BlackBerry a bargain?
BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) has been on a terrible skid this year with the stock now down almost 50 per cent, but with all of its IP and IoT assets in hand, there’s good value in the stock, says fund manager Bruce Campbell, who things that BB is now worth another look.
“BlackBerry disappointed on earnings and had come back down and now the long-term chart looks pretty flat over the past five years,” said Campbell, chairman of Campbell, Lee & Ross, speaking to BNN Bloomberg on Tuesday.
Campbell points to BlackBerry’s embedded systems platform QNX as a valuable asset, one which is currently being deployed in the connected automobile industry.
“They’ve obviously refocussed away from phones and it has been a bit of a struggle for them. There was a real hope that QNX was going to save it, and at one point it was valued at $15 or $16 and the stock was at $13 and it looked like we were going to go — it almost reached the $16 mark at one point,” he says.
“I suspect that the net asset value of the assets might not be $16 anymore, but if they’re $12 and you have to move to $9 from here, that would be worthwhile…”
“It’s probably worth a re-look at this point, given that we’re down below $7,” says Campbell. “I would do some homework on this, because it’s down to a point where it might be worthwhile. I suspect that the net asset value of the assets might not be $16 anymore, but if they’re $12 and you have to move to $9 from here, that would be worthwhile.”
BlackBerry started 2019 on a good note, climbing more than 40 per cent by late March. But it’s been all downhill since then, as investors seemingly grow impatient with the company’s turnaround, one which CEO John Chen said earlier this year has already been competed — and yet, the results haven’t been there in the company’s quarterly earnings.
BlackBerry’s share price slid in late June with the release of its fiscal first quarter results which while in line with analysts’ expectations and showing improvement on both revenue and net earnings, nevertheless failed to excite the markets, reportedly due to the lack of a strong showing from the company’s newly-acquired cybersecurity company Cylance.
Similar negative sentiment again pulled the stock lower in September with the company’s fiscal second quarter, which while showing impressive revenue numbers from BlackBerry’s IP licensing revenue still showed underperformance from its Internet of Things and Cylance cybersecurity segments.
Yet CEO John Chen remains upbeat about BlackBerry’s growth prospects, saying 2020 will be the year for the company and argues that the second quarter results showed signs of improvement.
“In the quarter, our QNX, Cylance and Licensing businesses executed at or better than our expectations. We achieved break-even non-GAAP earnings per share and generated free cash flow even with increased investments in sales and product development to support future growth,” said Chen.
“We are encouraged by the positive reception on BlackBerry Intelligent Security, and we have a number of exciting new product launches in the next six months,” he said.