Is BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) the real deal? The jury’s been out for years now, but with a new partnership with Amazon and an anticipated earnings report coming next week, investors should be paying attention. So says portfolio manager Bruce Campbell, who says the stock looks interesting.
“BlackBerry is really a name from the past but in the last few weeks here it’s really started to pick up again,” said Campbell, president of StoneCastle Investment Management, speaking on BNN Bloomberg on Tuesday.
“They just announced this deal with Amazon Web Services, and if you look at where things have been headed in the last while with autonomous cars and the technology in vehicles, that’s something that BlackBerry has been working on,” he said.
“If you go back almost a decade ago now they announced that this was an area they were going to work on, and there was a lot of criticism of it. Now it seems like it’s really coming into its time,” Campbell said.
Stuck in neutral for months and dealing with a multi-year decline in share price, BlackBerry hit the pedal to the metal last week as the stock climbed almost 40 per cent in the blink of an eye. The change came from news that AWS would be joining forces with BlackBerry on its Intelligent Vehicle Data (IVY) platform. And while the details are vague at this point, the idea is that automakers have been looking for a secure and, crucially, standardized platform to not only read sensory data from individual vehicles but to deliver personalized in-vehicle apps and offerings. And, according to BlackBerry, IVY will serve that purpose, backed by Amazon’s cloud-computing prowess.
“AWS and BlackBerry are making it possible for any automaker to continuously reinvent the customer experience and transform vehicles from fixed pieces of technology into systems that can grow and adapt with a user’s needs and preferences,” said Andy Jassy, CEO of Amazon Web Services, in a December 1 press release.
“Through this joint effort with BlackBerry, we will provide automakers with the insights, capabilities, agility, and speed they need to thrive in an increasingly connected world. As automakers seek to race ahead in their digital transformations, BlackBerry IVY empowers them to build their brands and set the standard for connected vehicle services across the automotive industry,” Jassy said.
The announcement is very much welcomed by BlackBerry shareholders who have been punished in recent years for their faith in the company’s turnaround. As the story goes, BlackBerry brought in CEO John Chen to sift through the wreckage of what once was the world’s best-selling smartphone company and pull together something new, in this case, a software and cybersecurity business banking on connected tech and its QNX operating system, now embedded in over 75 million vehicles worldwide according to the company.
Early reports looked promising but as the years dragged by, investors grew antsy to see stronger signs of growth. Last year, for example, BB took a drubbing in its September earnings due to a revenue miss and weak guidance for the second half of 2019. 12 months later in September 2020, the market again reacted dimly to the company’s fiscal second quarter, where the company pointed to struggles in the auto sector due to COVID-19 as a drag on quarterly numbers.
At the time, however, Chen said things would pick up over the second half of the year and thus all eyes will be on next week’s quarterly release.
“We don’t own it. It’s certainly one to watch, though,” said Campbell. “It looks very interesting with the deal that they just announced with AWS and we’ll have to see what else comes out. I believe they’re reporting their earnings next week and so we’ll have to see what what comes out of that and the conference call that they have following the earnings announcements.”
For BlackBerry’s Q2 fiscal 2021, delivered on September 24, the company managed $259 million in revenue compared to $267 million a year earlier. That broke down to $151 million from Software and Services and $108 million from its Licensing and Other business. The company registered a GAAP loss of $0.04 per share with net cash from operating activities of $31 million. Both revenue and earnings came in ahead of analysts’ expectations. (All figures in US dollars.)
Although BlackBerry’s patent business has been a revenue generator for years (the company reportedly owns 38,000 patents), a report surfaced last month that BlackBerry has been looking to sell its cache. As first reported by IP industry journal IAM and later confirmed by the Globe and Mail, BlackBerry has hired US investment bankers Tech+IP to handle the sale. The Globe and Mail speculated that selling its patents, many of which are related to its mobile handset days, could net BlackBerry over US$450 million.