Pity poor BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB). Wandering in the cellphone darkness for years, the company has finally emerged with a new mission in software and security and the IP muscle to back it up.
But can it get any respect? Nope, says Stephen Takacsy of Lester Asset Management, who, for those of us unbelievers, counts up the pluses to owning BlackBerry.
Is BlackBerry Rodney Dangerfield? Stephen Takacsy says the company deserves respect…
“I would definitely not sell [now]. This is a hated company that is hugely undervalued,” said Takacsy, president, CEO and chief investment officer at Lester, in conversation with BNN Bloomberg on Thursday.
Once valued as high as C$150.00 per share during the company’s mobile handset heydays, BlackBerry’s share price dropped like a stone in the early 2010s and has tumbled further in 2019. Currently trading in sub-C$7.00 territory, the stock is back to prices not seen since before the cellphone boom.
For this year, much of its slide has been attributed to a lack of perceived follow-through on the company’s revenue growth promises, particularly related to its billion-dollar purchase this past year of California-based cybersecurity firm Cylance, whose numbers in recent quarters have disappointed.
But the doubters can’t see the forest for the tress, says Takacsy, who lists off the company’s attributes, saying, “They have a hugely undervalued IP portfolio which I think that the board of directors should seriously consider monetizing to unlock value on their patent portfolio. That would then unlock value in their other three businesses.”
“They bought Cylance in cybersecurity, which is doing very well, they’re the world leaders with their QNX system in the automobile and they’re growing their market share there and signing a lot of agreements with manufacturers. The ESS business is the one that has had a little bit of trouble competing against Microsoft,” he says.
“I would definitely not sell [now]. This is a hated company that is hugely undervalued…”
BlackBerry’s latest quarterly report came in late September where the company posted a net loss of $44 million compared to a profit of $43 million a year earlier. Revenue was up 22 per cent year-over-year, but its enterprise software and technology solutions segment dropped its revenue by five per cent to $134 million, missing analysts’ forecasts. (All figures in US dollars unless where noted otherwise.)
With the quarterly results, management also lowered its guidance for its fiscal 2020, dropping the revenue forecast from between 23 and 27 per cent to between 23 and 25 per cent.
CEO John Chen, who last month bought shares in the company, has been adamant that BlackBerry has turned a corner, earlier this year declaring that the company’s remodelling is now complete.
In the latest quarterly earnings release, Chen said, “I am very encouraged by BlackBerry’s leadership opportunities in the fast-growing Enterprise of Things and by our strategy to capitalize on these significant future opportunities with BlackBerry Spark, our platform to securely communicate and collaborate between smart endpoints.”
In the end, Takacsy says that he likes the company’s prospects.
“This company is worth a lot more than this. It’s good to see John Chen buy some shares but I think that the board has really got to look at how to surface shareholder value at this point because it’s not getting any respect.”
File under: BlackBerry Rodney Dangerfield