2016 Is BlackBerry’s Year

Few investors should express surprise when BlackBerry (BBRY) reported quarterly results that sent its share price soaring. After reporting a 14 percent sequential increase in revenue, helped by strong service revenue, BlackBerry settled at above $9 in recent sessions. Chances are good the stock bottomed months ago and will head steadily higher for this 2016 year.

Not just smart phones

Interest in BlackBerry’s shares improved after the company set out to deliver an Android-based secure smart phone. Awkwardly dubbed “Priv,” the thin device has a slide-out keyboard and offers the highest level of security possible on Android. The odd naming is proving to be a core strength in terms of marketability for BlackBerry’s new device. The campaign uses black and white images and sells privacy and privilege to potential customers. Before BlackBerry launched the Priv, security was an afterthought for consumers. After its release, BlackBerry proved a market for such devices exists. In the last quarter, ASP (average selling price) rose sharply, from $240 per unit (last quarter) to $315.

Samsung and BlackBerry

The high correlation between the keywords “Priv,” “BlackBerry + Security,” and “Samsung + BlackBerry” between November 30 and December 15 2015 foreshadowed the rebound in BlackBerry’s stock price:

Source: https://www.tickertags.com/

BlackBerry is not just a smart phone device maker. It is leading the charge in secure mobile device management in the enterprise. The high correlation between Samsung and BlackBerry also suggests the public anticipates more solutions from the two firms. BlackBerry already manages Samsung’s Knox security solution.

Stable balance sheet

BlackBerry is on stable footing in terms of its balance sheet. Helped by lower operating expenses and higher software sales, investors should expect continued positive free cash flow generated from all business units. BlackBerry lowered its opex to $280 million in its third quarter. This is down from $368 million year-over-year. The firm ended the quarter with positive FCF of $15 million.

More Android devices

When BlackBerry presents at CES 2016, expect updates on IoT and QNX for automotive. The firm may surprise media outlets with another Android-based device release. Chances are good the company will release a device having a non-slideout keyboard. Like the Priv and the BBOS10-based Passport, the keyboard will have capacitive touch. This allows for using the keyboard as a way to navigate. This enhances screen real estate as the user’s fingers do not block the view.

Bottom line

Chances are good BlackBerry’s stock bottomed last month in December. So long as revenue in the software enterprise space grows, the stock will respond. 2016 may be BlackBerry’s year for its stock to hold at above the $10 - $11 level.