BlackBerry Ltd (NASDAQ:BBRY), whose handheld e-mail clients were ubiquitous among smart lawyers and deal makers with aching thumbs a decade ago, is back. Or at least, BBRY stock is … today, anyway.
BlackBerry shares approached a level last seen in December 2015 in Wednesday’s early trade after word got out that the company won $814.9 million from Qualcomm, Inc. (NASDAQ:QCOM) in an arbitration dispute over license royalties.
The cash, which should come in next month, will look very, very good on the Blackberry balance sheet. BBRY had total revenue last quarter of $286 million, and lost $47 million (9 cents per share) on that.
It is time for a party in Waterloo. That’s in Canada, outside Kitchener. About 80 minutes west of Toronto.
Blackberry, in case you missed the reference, is no longer in the technology mainstream.
Blackberry has morphed from a hardware giant into a software and intellectual property licensing company. And the Qualcomm award is a very big deal for them.
Its new strategy is to ignore its past, those days when it dominated mobility, and license the heck out of its software. Instead of selling hardware, Blackberry is now putting its PRIV security systems onto some Android phones licensed by Alphabet Inc (NASDAQ:GOOGL), winning that company’s praise.
More typical is its deal with Ford Motor Company (NYSE:F), announced last fall. QNX, a version of real-time Unix that dates to 1980, is said to soon become part of Ford’s autonomous car effort. Ford is even taking on 400 Blackberry employees, helped by $154 million in Canadian government aid aimed at keeping it in the country.
Deals like this have many pounding the table for BBRY stock today, saying the plans of CEO John Chen are bearing fruit.
But before you join the rush into Blackberry stock, consider the other side of the story.
The Bearish View
Outside the Qualcomm award, Blackberry revenues are not growing. The award amounts to over $1.50 for each Blackberry share, which just about covers its early April 12 gains.
But what comes next?
Blackberry’s future is as an enterprise security company, less about delivering security than offering older software that helps plug the gaps in security. It’s not going to be enough, for investors, for BBRY to get the most out of the software it wrote decades ago. BlackBerry must deliver something new with the money that’s coming in.
Blackberry’s recent results were as based on its cutting costs to the bone and selling like mad to get revenue against the lower number. That is not a growth strategy. Software grows stale just like hardware, not as quickly, but it does go stale.
BBRY says it is now putting its name onto wearables and appliances. That sounds great, but Blackberry is not going to market with these products. Again, it’s looking for licensing deals.
Want a Blackberry refrigerator?
The Bottom Line on BBRY Stock
Blackberry’s numbers are going to look very good the next time the company reports them, on June 30. The pre-Qualcomm whisper number was for a loss of 2 cents per share on revenues of $264 million, but you can toss those numbers out the window.
But after the cheering has died down on the party in Waterloo, remember what you are getting if you buy BBRY stock today. You’re getting a software licensing concern, one that can play hardball to get the most out of its past.
But what of its future?
Dana Blankenhorn is a financial and technology journalist. His latest novel is Bridget O’Flynn vs. Something Big & Ugly. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing, he did not hold a position in any of the aforementioned securities.