BlackBerry Ltd. (BBRY) Stock Is Ready for Launch After Qualcomm Win

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Today’s big arbitration announcement from BlackBerry Ltd (NASDAQ:BBRY) is without a doubt a game-changer. Just after it reported strong software sales in its quarterly earnings report, BlackBerry discovered it will earn a $814.87 check from Qualcomm, Inc. (NASDAQ:QCOM). BBRY stock shot up more than 16% on Wednesday as a result.

BlackBerry Ltd. (BBRY) Stock Is Ready for Launch After Qualcomm Win

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The news is not great for Qualcomm, obviously, but I’m sure the two companies will stay friends.

In the binding arbitration decision, Qualcomm will pay back nearly $815 million from overpayments made by BlackBerry. For QCOM — which has more than $7 per share in cash — the payment is a relative drop in the bucket. Nor does the decision set back the relationship between the two companies.

In a press release, BlackBerry CEO John Chen said: “BlackBerry and Qualcomm have a longstanding relationship and continue to be valued technology partners.”

The win sure is significant for BBRY shareholders. Excluding debt, BlackBerry has more than a billion dollars in cash on hand. The $815 million win will add more cushion to its balance sheet.

But this victory is almost overshadowing what is an already vastly improving fundamental story for BlackBerry.

How BlackBerry Is Turning Its Tech Around

BlackBerry is winding down its investments in mobile devices. It handed off the hardware implementation of BlackBerry Android devices to TCL; BBRY retains the software ownership and development. This partnership should bear fruit for the two companies.

Although the Android operating system is less fragmented, it is still filled with security holes and does not run optimally. BlackBerry demonstrated, first with the expensive PRIV, that it had the know-how to develop a decent Android device. The company followed-up with the release of an inexpensive DTEK50 and then a more powerful DTEK60.

BlackBerry’s KEYOne, first thought to be delayed from April to May, shows promise. It is the only phone in the market that has a truly usable physical keyboard. The production start of the device does not add any costs for BlackBerry. TCL is behind all aspects of the launch.

Already, BlackBerry is boosting its spending in the right places: R&D and sales. The company overhauled its BlackBerry Enterprise Server (BES) software. Version 12.6, or BES Unified Endpoint Management (UEM) is greatly improved. The company simplified the way Apple Inc. (NASDAQ:AAPL) iOS devices and Android devices are connected to the server.

BlackBerry’s integration of Good Technology, a company it acquired for $425 million in September 2015, will surely lift profit margins for every license sale made on BES UEM. Good Technology offers an endless number of useful enterprise apps. All of the solutions are focused on giving mobile users productive, secure solutions.

Hiring more sales staff is paying off. The company also put an emphasis on giving the best possible software support for the BES product.

Bottom Line on BBRY Stock

While the arbitration settlement will squeeze out the shorts (the most recent short float stood at more than 10%), the real story is in BlackBerry’s improving fundamentals. BBRY may even take on a bigger role in promoting its hardware devices. Making a strategic acquisition is possible, too, but the company has enough in-house R&D resources to build on its existing product line.

The arbitration results give a meaningful boost to the morale of BlackBerry’s management and BBRY stock holders. Expect positive developments in its suite of software solutions.

When BlackBerry sells solutions that its customers need, the top and bottom lines will grow once more.

As of this writing, Chris Lau was long BBRY.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get actionable insight to achieve strong investment returns.


Article printed from InvestorPlace Media, https://investorplace.com/2017/04/blackberry-ltd-bbry-stock-is-ready-for-launch-after-qualcomm-win/.

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