Investors should start looking at Blackberry again. Under the leadership of John Chen, Blackberry has pivoted from a mobile phone company to a software company focusing on Threat Detection, End User Management, Internet of Things (IOT) and Autonomous Vehicles.
Note. This is not a full report. It just highlights the Bull Case (Positive) and Bear Case. (Negative)
- Blackberry owns Cylance – Rapidly growing User Endpoint Management business.
- Cylance was acquired for 7x Sales, Competitor Crowd strike trades at 40x Sales.
- Cylance growing at 25 to 30% of Sales, Implies $255m to 265M Revenues in FY20
- IOTS Spark will be introduced in early August at the BlackHat Conference
- 12 to 15% Revenue Growth in IOT, Currently makes up 42% Sales – Spark improves security protocol as it incorporate Cylance Endpoint Management
- QNX Licenses adds 17 new design wins in Q1. 13 new Auto Designs wins for Infotainment systems, digital instrument clusters, Digital consolidator cockpits and telematics (Self Driving Cars)
- Blackberry is a software company focusing on Security, IOT and Autonomous Vehicles. Legacy phone business has been phased out and Company GM’s near 78% today.
- Sum of the Parts – Cylance trades at 20x sales (Crowd strike 40x), IOTs trades at 5x Sales, plus Net Cash = $14 Price target – Giving NO Valuation to QNX/Autonomous Business.
- Co’s management tend to disappoint investors frequently with over promising / under delivering.
- Mis-Conception that the company is still in the phone business.
- New Blackberry is a Rollup of Software acquisitions.
- Cylance growth rate has slowed since Blackberry acquisition.
- Meanwhile competitor, Crowd strike growth rate remains strong.
- Institutional investors have given up. Company has been left for dead.
- Risk that investors will never see a Return on Investment.
- Its Blackberry – Company should refresh image and drop Blackberry name.