The deal between BlackBerry Ltd (NASDAQ:BBRY) and large auto parts maker Delphi Automotive Plc (NYSE:DLPH) has refuted almost all of the bear theories about BlackBerry and BlackBerry stock. Now it’s just a matter of time until investors realize the tremendous future earnings power of BlackBerry, enabling BlackBerry stock to reach $20 and beyond.
Much of the bear thesis on BlackBerry stock was based on the idea that BBRY was a loser company whose products were largely useless, old, uncompetitive and irrelevant. Before the Delphi deal, there were many signs that this was not the case, as I and a few others have pointed out.
For example, BlackBerry’s enterprise mobile management software received great ratings from well-respected IT research firm Gartner, multiple central banks have bought its EMM system, Ford Motor Company (NYSE:F) partnered with it to develop advanced software for automobiles, and FedEx Corporation (NYSE:FDX) bought its Radar tracking system.
BlackBerry Stock Before Delphi
But before the Delphi deal, the bears still had some plausible arguments as they attempted to suggest that BBRY and BlackBerry stock were doomed to mediocrity at best. They could point to the large amount of competition in the EMM space, say awards don’t really mean anything, claim that the FedEx deal was just a small trial that wouldn’t go anywhere, suggest that the Ford deal wouldn’t really develop into anything significant either, and point out that some automakers were dumping QNX.
There is, however, no credible way for the bears to refute the tremendous positive implications of the Delphi deal. This is not a small trial, as Delphi plans to incorporate the QNX operating system into its only autonomous driving system. Moreover, Delphi could have chosen many other companies and/or types of software to run the platform. And in a statement in conjunction with the disclosure of the deal, Delphi’s CTO said that “safety in high performance computing systems is paramount to a production ready autonomous driving solution.”
The paramount nature of safety in the software that will operate self-driving vehicles—and the belief that QNX was best positioned to provide such safety—is a thesis that we bulls have pushed and bears have rejected. The Delphi deal proves who was right on that count. Furthermore, it’s a pretty good bet that Delphi and Ford will not be the only huge companies who adopt this viewpoint.
Nor can anyone deny that self-driving cars will be a huge trend that’s going to generate a great deal of revenue for the automakers and software companies that are successful in the space.