BlackBerry Stock Looks Good Here on a Profitable Key Partnership

After identifying many positive catalysts that are likely to arise for BlackBerry (NYSE:BB) stock in the coming weeks and months, I remain very bullish on BlackBerry.

A BlackBerry (BB) sign out front of a corporate office in Silicon Valley, California.
Source: Shutterstock

Blackberry CEO John Chen previously predicted that the new additions to the company’s sales team would start making a positive impact in the middle of next year.

Moreover, one of BlackBerry’s key partners looks poised to obtain lucrative government contracts.

Finally, the company recently announced a deal  that indicates that it is further penetrating the large and lucrative Chinese auto market.

In the June Q1 earnings call, Chen predicted that new, high-quality sales professionals the company was hiring would start contributing to its financial results in the middle of 2022. The CEO noted that the firm had planned to increase its sales force by about 23% between February and  the end of July.

Meanwhile, last month, Microsoft (NASDAQ:MSFT) participated in a meeting at the White House regarding the need to address cybersecurity threats as a country.

Microsoft has been a key BlackBerry partner.

“Cybersecurity is a national security and economic security imperative for the Biden Administration and we are prioritizing and elevating cybersecurity like never before,” according to a White House press release.

The White House added that Microsoft said it would invest $20 billion over the next five years to accelerate efforts to integrate cyber security by design and deliver advanced security solutions.

Microsoft’s Plan and BB Stock

In the past, Microsoft and BlackBerry have partnered on multiple, key initiatives related to cybersecurity. For example, in June 2019, the two companies announced that they would enable Microsoft’s offerings on mobile devices to be secured with BlackBerry’s Dynamic system.

Last October, BlackBerry announced that its “AtHoc” program, which is used to help organizations effectively respond to crises, would be integrated with Microsoft Teams.

Of course, Teams is Microsoft’s employee cooperation tool.

Given the partnerships between Microsoft and BlackBerry in cybersecurity and BlackBerry’s strength when in the latter area, there’s a good chance that BlackBerry will greatly benefit from Microsoft’s upcoming investments in the space.

A New Deal in China

On Aug. 26, BlackBerry announced that Chinese automaker Great Walls Motors would use an advanced digital cockpit controller platform developed by BlackBerry and its partner Nobo.

The platform was built on the BlackBerry QNX Neutrino Realtime Operating System (RTOS) and QNX Hypervisor. Great Wall Motors intends to use the system for its new SUV.

An SUV maker, Great Wall generated revenue of 103.3 billion CNY, or slightly over $16 billion last year, according to Reuters.

After BlackBerry won a deal to develop autonomous driving systems with Baidu (NASDAQ:BIDU) in 2018 and then expanded the agreement earlier this year, the deal with Great Wall shows that the Canadian tech company is continuing to make major inroads in the huge Chinese auto market.

Other Positive Catalysts

On Aug. 24, BlackBerry announced the results of tests of two of its IT security products that use AI.

In the trials, carried out by SE Labs, BlackBerry’s systems detected and protected fully against all of the threats.

“In every case, the threats were unable to move beyond the earliest stages of the attack chain,” BlackBerry reported.

Generally, the results of the tests once again show that BlackBerry develops top-notch IT security products. More specifically, they indicate that the company has done a good job of integrating Cylance’s AI technology into its IT security offerings.

Finally, I continue to believe that two other upcoming positive catalysts will move the needle in a positive direction for BB stock: the launch of an auto app store in partnership with Amazon (NASDAQ:AMZN) and the sale of a large portion of BlackBerry’s patent portfolio.

Chen had seemed to suggest that the patent deal would be completed by July 31.

Subsequently, I thought that we could get an announcement of the deal over Labor Day Weekend. Neither scenario panned out, but I have little doubt that Chen will shed more light on the issue when BlackBerry reports its fiscal second-quarter results on Sept. 22.

Chen has said that a beta version of the app store would be launched next month. Hopefully, we’ll learn more about the kickoff on Sept. 22.

After actually seeing the app store, Wall Street will, I believe, become much more excited about its potential.

The Bottom Line on BB Stock

Microsoft’s decision to spend a great deal of money on cybersecurity and the increased proliferation of BlackBerry’s systems in China are excellent news for Blackberry. Meanwhile, the company’s new sales professionals should boost its results over the medium-term and the long-term.

Moreover, BB stock already had multiple, strong catalysts before these recent developments. Given these points, I continue to recommend that investors buy BB stock.

On the date of publication, Larry Ramer held a long position in BlackBerry. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer. 

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