The Classic Can Help Continue BlackBerry's Bull Run

BlackBerry (NASDAQ:BBRY) is still trading above my usual $10.50 profit-taking level. I speculate that this excitement is due to the coming commercial launch of the QWERTY-style BlackBerry Classic. BBRY was also trending higher last year when the BlackBerry Z3 and the Passport was about to launch.

BlackBerry missed revenue estimates last quarter (partly due to weak smartphone sales), which indicates that the expensive weird-looking Passport did not find enough commercial success. The hybrid keyboard of the Passport may also have been strange to people accustomed to the classic QWERTY keyboard of older BlackBerry phones.

The BlackBerry Classic is therefore a return-to-the-roots strategy. John Chen's experimental foray with the unique-but-weird looks of the Passport is proving to be a hard sell. Corporate users, who remain loyal to their BlackBerry Bold/Q10 handsets because they disliked the Passport, may now consider upgrading to the Classic.

 

Looking at the picture above, corporate slaves will likely prefer the smaller, more traditional physical design of the Classic. The ergonomics are also in favor of the Classic when it comes to doing daily tasks on the phone. The optical track pad and the four dedicated function buttons are more familiar to long-time BlackBerry phone users.

BlackBerry's previous attempts to modernize its phone by creating iPhone-like (touchscreen handsets like the Z30 and Z10) were also unsuccessful. BlackBerry phones' global market share is still less than 2%. John Chen's objective of selling at least 10 million handsets per year will be difficult to achieve if people continues to have little interest in the Z3 and the Passport.

The release of the Classic is therefore another gambit by Chen to entice current BlackBerry Bold/Q10 (and owner of older models) to switch to a new smartphone. The Classic has the looks and the old feel of a BlackBerry. It was available for pre-order last December 17 and the price tag was only $449 - a lot cheaper than the Passport's $599 U.S. pricing.

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Disclosure: The author is long BBRY.

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Comments

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Derek Snyder 5 years ago Member's comment

Whats your on what's happening with those Samsung buyout rumors? I know there have been denials but do you think there could be any truth to them?

Derek Snyder 5 years ago Member's comment

I meant *what's your take on* what's happening...

Alcaraz Research 5 years ago Author's comment

i submitted an article at SA arguing there might be a little truth to the rumor but the Seeking Alpha editor rejected it. BBRY and SSNLF management both denied the rumor but I am not stupid.

John Chen hates leakage of any sort. reuters source might be an insider involved in the rumored negotiations.... chen must be hunting the source of the leak now :-)

Alcaraz Research 5 years ago Author's comment

Thank you for taking time to read this long write-up.

IB Trading thanks for clarifying the lid-up issue.

George Lipton 5 years ago Member's comment

You said above that you had an article about this, but Seeking Alpha rejected it. I'd love to read it, why not publish it here?

IB Trading 5 years ago Member's comment

I think it's early to judge the impact of the Passport. As mentioned on CC and interview with BBRY's CEO John Chen, most PP sales have NOT been recognized in the last quarter, for 2 reasons:

1. Most shipped late in the quarter and

2. Blackberry only recognizes units when they are lid up

Farah Kincaid 5 years ago Member's comment

Lid up? What does that mean?

IB Trading 5 years ago Member's comment

As Chen explained it, Blackberry doesn't count sales when phones are sold to carrier distributors or even direct, But only after they are turned on and activated.

Susan Miller 5 years ago Member's comment

I've always liked Blackberry. They've been losing steam to all the iphones and android devices but I'm glad to see it has some life in it yet. I've tried those phones and while the bells and whistles are nice, I need a real keyboard.

Danny Straus 5 years ago Member's comment

I'm amazed Blackberry is still in business. But after reading this, I'll give it more serious consideration as an investment option.

Alcaraz Research 5 years ago Author's comment

thank you for publishing this.