BlackBerry's Strategic Repositioning and Steady Growth for the Next 5 Years

At a current price of $11.05 (CAD), I strongly believe BlackBerry is a long-term investment due to BlackBerry’s strategic partnerships and overall value. Company Overview: Background: Blackberry Limited (TSX:BB, NYSE:BB) founded in 1985 by Mike Lazaridis and Douglas Fregin. Previously known as Research in Motion Limited (RIM) but had an official name change in 2013 to BlackBerry (BB). BlackBerry is well-known for its smartphones during the early to mid-2010s that were highly popular to the corporate demographic due to their easy access to emails and its Web functionality. Since then, the company has shifted their focus to software and enterprise services. Mission: BlackBerry’s goal is to become the world’s leading provider of the most secure and trusted end-to-end mobility solutions. Strategy: Lead embedded enterprise software space, and grow technology and IP licensing Major Shareholders: Primecap Management Co. (10.56%), Hamblin Watsa Investments (8.31%), The Vanguard Group (2.24%) Key Business Segments by Revenue (2020): Enterprise Software (44%), Licensing (31%), Technology Solutions (22%) Geographic Segmentation: North America (66%), Europe, Middle East and Africa (25%), Asia Pacific (8%), and Latin America (1%) 2020 Valuation and Financial Results (All Values in CAD $BILLION unless noted otherwise) Enterprise Value: $6.19 Market Cap: $6.13 Total Debt (2021): $1.07 Revenue (2021): $1.19 Cash ($M): $262 Gross Profit Margin (2021): 51.62% Operating Margin (2021): -16.69% Fundamentals: Price to Earnings Ratio (P/E): 108 Sector Average is 193.65 Price to Book Ratio (P/B): 3.82 Return of Equity (ROE): -55.60 Debt to Equity Ratio: 56.05 Current Ratio: 2.34 Recent Acquisitions/Partnerships: BlackBerry has previously demonstrated its commitment to growing the company both organically and also through acquisitions. In 2019, the Cyclance deal is evidence of management’s willingness to acquire companies and products and enhance BlackBerry’s offerings.  Details on 2019 Cyclance deal: Acquired for 1.4 (USD $B) in cash in 2019 4,000+ new customers 300+ engineers and data scientists Blackberry has also shown their ability to position themselves among numerous high growth industries by serving the need of leading corps. and governments.  Partnership with Baidu: Baidu’s HD maps will be run on BB’s QNX Neutrino Real-Time Operating System (RTOS) and will be mass-produced in forthcoming GAC New Energy Aion models from GAC Group’s EV arm. BB’s RTOS will be the foundation for Baidu’s ‘Apollo’ autonomous driving platform. Partnership with Amazon:  Multi-year agreement with Amazon’s cloud service business, AWS. The agreement plans to develop and market Blackberry’s Intelligent Vehicles Platform (IVY). This deal with Amazon is expected to bring in regular revenue over multiple years. An analyst predicts that  Blackberry will be able to generate roughly around $1B in annual revenue from  IVY by 2028 as a result of this partnership. Final Thoughts:  Although BlackBerry is a company still mainly focused on its product development and customer acquisitions, they are still a good investment opportunity and are at the end of their corporate repositioning and have now established themselves as a major player in security and autonomous vehicle industry. 

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undervaluedplayer

Apr 23, 2021

18.39%

Change % Since Posting

10.82

Price When Posted

1.99

Change Since Posting

BB.TO

BlackBerry Limited

12.81

-0.04
-0.31%
Current Price

BlackBerry's Strategic Repositioning and Steady Growth for the Next 5 Years

bullish

At a current price of $11.05 (CAD), I strongly believe BlackBerry is a long-term investment due to BlackBerry’s strategic partnerships and overall value.

 

Company Overview:

Background: Blackberry Limited (TSX:BB, NYSE:BB) founded in 1985 by Mike Lazaridis and Douglas Fregin. Previously known as Research in Motion Limited (RIM) but had an official name change in 2013 to BlackBerry (BB). BlackBerry is well-known for its smartphones during the early to mid-2010s that were highly popular to the corporate demographic due to their easy access to emails and its Web functionality. Since then, the company has shifted their focus to software and enterprise services.

Mission: BlackBerry’s goal is to become the world’s leading provider of the most secure and trusted end-to-end mobility solutions.

Strategy: Lead embedded enterprise software space, and grow technology and IP licensing

Major Shareholders: Primecap Management Co. (10.56%), Hamblin Watsa Investments (8.31%), The Vanguard Group (2.24%)

Key Business Segments by Revenue (2020): Enterprise Software (44%), Licensing (31%), Technology Solutions (22%)

Geographic Segmentation: North America (66%), Europe, Middle East and Africa (25%), Asia Pacific (8%), and Latin America (1%)

 

 

2020 Valuation and Financial Results

(All Values in CAD $BILLION unless noted otherwise)

Enterprise Value: $6.19

Market Cap: $6.13

Total Debt (2021): $1.07

Revenue (2021): $1.19

Cash ($M): $262

Gross Profit Margin (2021): 51.62%

Operating Margin (2021): -16.69%

 

Fundamentals:

Price to Earnings Ratio (P/E): 108

  • Sector Average is 193.65

Price to Book Ratio (P/B): 3.82

Return of Equity (ROE): -55.60

Debt to Equity Ratio: 56.05

Current Ratio: 2.34

 

Recent Acquisitions/Partnerships:

BlackBerry has previously demonstrated its commitment to growing the company both organically and also through acquisitions. In 2019, the Cyclance deal is evidence of management’s willingness to acquire companies and products and enhance BlackBerry’s offerings. 

Details on 2019 Cyclance deal:

  • Acquired for 1.4 (USD $B) in cash in 2019
  • 4,000+ new customers
  • 300+ engineers and data scientists

Blackberry has also shown their ability to position themselves among numerous high growth industries by serving the need of leading corps. and governments. 

Partnership with Baidu: Baidu’s HD maps will be run on BB’s QNX Neutrino Real-Time Operating System (RTOS) and will be mass-produced in forthcoming GAC New Energy Aion models from GAC Group’s EV arm. BB’s RTOS will be the foundation for Baidu’s ‘Apollo’ autonomous driving platform.

Partnership with Amazon:  Multi-year agreement with Amazon’s cloud service business, AWS. The agreement plans to develop and market Blackberry’s Intelligent Vehicles Platform (IVY). This deal with Amazon is expected to bring in regular revenue over multiple years. An analyst predicts that  Blackberry will be able to generate roughly around $1B in annual revenue from  IVY by 2028 as a result of this partnership.

 

Final Thoughts: 

Although BlackBerry is a company still mainly focused on its product development and customer acquisitions, they are still a good investment opportunity and are at the end of their corporate repositioning and have now established themselves as a major player in security and autonomous vehicle industry. 



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20.00

Target Price

9/ 10

Confidence

3+ Years

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