A new phone isn’t saving BlackBerry, this investor says

A new 5G enabled BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) smartphone is set to hit store shelves in 2021, but for those investors imagining a share price surge based on the iconic phone with the keyboard, think again, says Scotia Wealth fund manager Cole Kachur, who says there are plenty of better tech options out there.

BlackBerry officially got out of the smartphone-making business four years ago through a deal with Chinese communications company TCL, which was making Android phones under the BlackBerry name.

That contract is now over but BlackBerry recently announced a new partner in US company OnwardMobility, who will deliver a 5G phone for the market next year.

"Enterprise professionals are eager for secure 5G devices that enable productivity, without sacrificing the user experience,” said OnwardMobility CEO Peter Franklin in an August 19 press release.” BlackBerry smartphones are known for protecting communications, privacy, and data. This is an incredible opportunity for OnwardMobility to bring next-generation 5G devices to market with the backing of BlackBerry and FIH Mobile.”

But the 5G smartphone landscape is quickly getting crowded, and investors hoping for a return of BlackBerry handset to anything like a competitive position in the smartphone racket are likely to be disappointed, says Kachur.

“The handset is interesting but how many people at this point are going to go back to that? I don't think it’s as many as one might think. The iPhone and Google and all these other devices are pretty competitive in that front,” says Kachur, speaking on BNN Bloomberg on Wednesday.

“So then you just look at the company and for a long time it was software specifically for vehicles and that type of thing, [but] I just think there are so many other technology companies out there that are better,” Kachur said. “Every time you invest in something there's an opportunity cost of not investing in something else. So I think that, in my opinion, I would just move on from Blackberry and look at some of these cloud companies in the US and other tech companies.”

“I think you'll find a better spot for your money,” Kachur argued.

BlackBerry’s share price has pretty well climbed back to where it was 12 months ago but the stock has certainly seen better days, even in the recent past. BB hit a high of C$18.00 back in early 2018 but it’s been on a notable slide ever since and now lives in the C$6.00 to C$7.00 range.

BlackBerry’s reemergence as a software and security company has seemingly stalled, with the company seeing COVID-hampered revenue in recent quarters, where its connected tech for the automotive sector has taken a hit. For its most recent quarter, delivered in June, BlackBerry’s revenue fell by 17 per cent year-over-year and by 27 per cent sequentially, while the company took a net loss of $636 million or $1.14 per share. (All figures in US dollars except where noted otherwise.)