Valuation Analysis for BlackBerry Ltd (NASDAQ:BBRY)

Thomas H. Kee Jr. has provided Research for BlackBerry Ltd (NASDAQ:BBRY).

Although blackberry made its name selling phones the main asset today is the security of its network and software.  The company is far less of a phone manufacturer today than it was a handful of years ago, and rightfully management is focusing on the company's competitive advantage to not only stabilize earnings and revenue but to set the stage for future growth, partnerships, and maybe eventually the takeover.

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The assets that blackberry has are unique, valuable, and attractive to industry participants.

The focus on these core assets and the company's competitive advantage is already taking shape and we expect that to continue, and in doing so we expect revenue stability and continued improvement in cash flow.  This would also expect positive earnings and earnings growth in the future.  Our opinion is that revenue stability and positive earnings will come later in the year in association with software sales.

Smartphone's are now a wildcard.  Consumers are fickle and if BBRY produces a Smartphone that is wildly attractive it could put BBRY right back on the map.  Right now that seems like a long shot and it does not factor into our opinion at all, but it must be realized as a possibility nonetheless.

The deterioration in revenue is a major concern.  Blackberry must stabilize revenue in order to appease the investment community.  If revenues continue to deteriorate investors will not embrace the company.  Most investors are demanding revenue stability immediately given the stability in earnings and the improvement in cash flow.

However, revenue stability might be predicated on software sales and software sales might be something that is realized in a more meaningful way later this year.  As a result, revenues may not improve materially in the immediate term but should show that a real signs of improvement as the year progresses.

Our main concern is not if blackberry will be able to solidify software sales and stabilize revenue but if investors we'll be willing to wait for those software sales to be realized.

Entire Analyst Opinion

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