BB:CC - Is BlackBerry Stock a Buy Sell or Hold?
2024-04-25 20:45:00 ET
BlackBerry ( TSX:BB ) has been on a volatile ride from the beginning. From its early days of success in the handheld phone market to its transformation into a cybersecurity/Internet of Things (IoT) business, the one constant was volatility and uncertainty. Of course, BlackBerry’s stock price has reflected this and today, it stands battered and bruised, trading below $4.
Yet, there’s a lot to get excited about. And for those of us who haven’t been burned too many times by investing in BlackBerry, there might be a glimmer of hope.
BlackBerry Q4 results exceed expectations
BlackBerry’s fourth quarter (Q4) was quite strong, beating expectations and delivering earnings per share (EPS) of $0.03 when analysts were calling for a loss of $0.03. This was driven by strong revenue growth of 16% versus last year. The IoT business posted a 25% revenue growth rate, and the cybersecurity business posted a 5% growth rate.
At this time, the IoT segment accounts for 38% of BlackBerry’s total revenue and this is where the real growth driver exists going forward. The quarter was the segment’s strongest quarter ever for revenue despite continued automaker delays with software programs. BlackBerry saw record design wins and backlog. Backlog increased 27% to $815 million as QNX continued to make headway in the digital automotive market. Importantly, digital cockpit systems were a big driver.
New key partnerships
In other news, BlackBerry announced two partnerships on April 9 and April 10. The first one is a partnership with AMD to “advance foundational precision and control” for the robotics industry. This partnership will use BlackBerry’s QNX software expertise in conjunction with AMD’s hardware. It’s yet another important vote of confidence for BlackBerry.
Also, on April 10, BlackBerry announced a partnership with ETAS. This is a leading solution provider for the realization of software-defined vehicles. In this partnership, BlackBerry and ETAS will jointly sell and market software solutions for software-defined vehicles. The partnership will simplify the whole process for automakers and their suppliers, which will encourage quicker adoption.
Looking ahead to better days
I know; we’ve been in this never-ending cycle of excitement and anticipation with BlackBerry. Many of us have given up. Yet, the value of BlackBerry’s automotive software cannot be understated. And this is beginning to show up in the numbers — both revenue and backlog are growing fast.
While automaker delays have caused a delay in BlackBerry’s IoT business, the growth trend remains. Once the new software-defined vehicle programs are launched, the floodgates will open up, and BlackBerry’s revenue will really get a boost.
Cost savings finally hitting the bottom line at BlackBerry
In the meantime, BlackBerry is working to extract efficiencies, rightsizing the cybersecurity business, rationalizing it and generating cost savings. Beyond this, BlackBerry continues to work on future cost savings for the business. From its corporate structure to back-office infrastructure to rationalizing labs, there’s more work to be done over the next couple of years.
This is expected to result in BlackBerry exiting this fiscal year with positive EPS and cash from operations. If this happens, this should send BlackBerry’s stock price rallying.
So, in conclusion, in my view, BlackBerry stock is a buy. But only for those investors who are able and willing to invest in a high risk stock such as this.
The post Is BlackBerry Stock a Buy, Sell, or Hold? appeared first on The Motley Fool Canada .
Fool contributor Karen Thomas has a position in Blackberry. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024