BlackBerry is one of my top picks, says John Zechner

The company’s smartphone business may be dead but don’t count out BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB), says fund manager John Zechner, who thinks there’s plenty of untapped value in the name.

The iconic BlackBerry phone with the build-in keyboard might have just breathed its last, as news broke last week that TCL Communications, the Chinese company which a few years back took over the job of making the BlackBerry mobile, announced it would be shutting things down by August, saying its right to design and manufacture the product had expired.

And while the revelation will be a tough blow for the handset’s dwindling band of diehard fans, the loss should mean little to BlackBerry the company and its CEO, John Chen, who should be getting more accolades for his remodeling of BlackBerry into a software and cybersecurity firm.

So says Zechner, chairman and lead equity manager for J. Zechner Associates, who has named BlackBerry one of his top picks over the next 12 months.

“I think John Chen should get CEO of the Year,” said Zechner on BNN Bloomberg on Monday. “This guy took this dying company and he’s transformed it into a security software company. He’s done that while generating positive cash flow, they’ve got cash on the balance sheet and they’re in an area now where they’re growing revenue by 15 to 20 per cent a year in a highly valued field, with things like QNX, the smart car, the Internet of Things.”

“It’s a great software company for machines that talk to one another and they’ve become a leader in that,” Zechner added. “People are still looking at them as the old BlackBerry and nobody has one anymore.”

“I think there’s going to be a wakeup and you’ll realize that this is a changed company. They’ve done a transition that’s really hard to do in tech and I think that the stock will pay off at some point,” he said.

BlackBerry’s share price, which has been on the decline for the past two years, got a nice bump in December on the company’s third quarter earnings which featured revenue of $267 million, up from $226 million a year earlier, coupled with a loss of $32 million compared to a profit of $59 million a year prior.

On an adjusted basis, BlackBerry hit $280 million in revenue, which was better than the $276 million forecasted by analysts. The company also beat on earnings per share where it hit $0.03 per share excluding one-time items compared to the consensus expectation of $0.02 per share. (All figures in US
dollars.)

BlackBerry last week announced a partnership with long-haul logistics company Trimble, where BlackBerry Radar asset monitoring software will team up with Trimble’s logistics and fleet management capabilities.

“BlackBerry Radar offers fleet operators unique benefits to help them manage their operations more effectively, reduce costs and offer customers more value,” said Christopher Plaat, Senior Vice President and General Manager of BlackBerry Radar, in a press release.

“Accessing the critical information and insights that BlackBerry Radar is able to provide, from right inside Trimble's solutions, will no doubt lead to significant technological efficiencies for the countless employees at freight brokerages, 3PLs, shippers and fleets who rely on these systems for their day-to-day operations,” he wrote.