There’s no good reason to invest in BlackBerry, this fund manager says

Everyone likes a good hometown story but these days you’d be hard-pressed to dig up reasons to invest in BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB), says Bruce Murray of the Murray Wealth Group.

BlackBerry had a nice lift in the weeks following the market pullback of February and March but the stock has been hard-pressed to return to the $8.00 range of this past January, let alone the relative highs of two and three years ago.

By 2018, the erstwhile phone-maker had all but completed its reinvention as a software and security business and had investors’ hopes high that BlackBerry would do well in the still-evolving connected tech field.

Fast-forward a couple of years and the market has shown little faith in BB’s reemerging as a contender, and it’s no wonder, says Murray, who argues the competitive landscape of BlackBerry’s chosen fields is pretty rough.

“We were major shareholders in BlackBerry many years ago and we get tempted to go into Blackberry and come back into it with the products that they have now,” says Murray, CEO of Murray Wealth, who spoke to BNN Bloomberg on Monday.

“Their company is really security for the phone system and they also have play on the automotive industry for electronics and that kind of business. [But] the security industry has come and gone and there's just so much competition that they're not able to really make excess profits like they did when they had the BlackBerry phones in the market,”Murray said. “And the auto business is also brutally competitive for pricing, [for example,] General Motors takes quotes on all the cars and so the pricing is very tough.”

“So, we're still looking at it, we're still holding it. We have not yet seen a reason to invest.
We would like to see a reason to invest, but we just haven't found it as of yet,” he said.

BlackBerry’s business has taken a hit due to the COVID-19 pandemic, with the company’s revenue dropping by 17 per cent in its latest quarter, its fiscal first of 2021, delivered in late June. BB had a net loss of $636 million or $1.14 per share, which included an impairment charge of $594 million related to its security and endpoint management business Spark.

BlackBerry made business headlines last week with the news that a 5G-enabled smartphone will hit the market next year, complete with the iconic BlackBerry keypad.

Years ago, BlackBerry licensed out its name to partners, notably Chinese communications company TCL, to make smartphones but the TCL contract has ended and the company has now found another partner in Texas-based OnwardMobility.

“BlackBerry is thrilled OnwardMobility will deliver a BlackBerry 5G smartphone device with physical keyboard leveraging our high standards of trust and security synonymous with our brand,” said BlackBerry CEO John Chen in a press release. “We are excited that customers will experience the enterprise and government level security and mobile productivity the new BlackBerry 5G smartphone will offer.”