Everyone remembers BlackBerry’s glory days. In fact, BlackBerry Ltd. (NASDAQ:$BBRY) was once a household name, rivaling the likes of Apple Inc. (NASDAQ:$APPL) as our mobile device of choice. While the Canadian tech company was widely considered the most successful of its kind, BBRY stock has performed abysmally for a while now.
Blackberry’s revenue has plundered a cool 95% since 2011. For most of the time, the company worked at a turnaround basis. Its stock perked up earlier this year, only to slide once again. Here, we provide 3 pros and 3 cons on why you should reconsider BlackBerry stock.
Cons
#1: Turnaround is Taking Forever
Blackberry’s new hire, CEO John Chen, earned $89.7 million in 2014. What does that figure get him? Title of being the highest-paid Canadian executive in that year. He predicted that Blackberry’s turnaround would take about a year and a half. It’s now been 4 years. In addition, Blackberry is operating at less than $250 million in revenue, a revenue run rate of less than $1 billion per year. Since 2014, the company’s stock price has been relatively flat.
#2: What Happened to BB10?
Some investors still held hopes for its BB1 operating system. However, even internal management have given up on it. There was an absence of promised updates, supporting apps, and partnerships with popular apps such as Snapchat Inc (NASDAQ:$SNAP)
#3: Software Sector Uncertainty
The degradation of the hardware business has distracted investors from softwares. The year-over-year revenue of the sector is only growing at a 12% rate.
Pros
#1: Benefits of a Dwindling Hardware Business
The same reason that most people are giving Blackberry a tough time for may actually be the one that saves the company. Specifically, the dwindling hardware business will only account for one-fifth of overall business revenue. Once Blackberry becomes a pure software company, it will reckon growth once again.
#2: Strong Balance Sheet
It’s important to note that BBRY stock isn’t cheap on a valuation basis. The company has a net cash position of $1.5 billion, which is actually promising. Further, Blackberry has seen 6 acquisitions, mainly in the security space, since Chen took over. The company still has much financial freedom left to purchase more firms.
#3: Your Naturally Low Expectations
When you have been at the bottom for so long, you can only go up. That is the sort of mentality Blackberry faces in the upcoming year. For some people, relying on Blackberry’s decade long legacy is enough to invest in the underdog tale once more.
Featured Image: twitter
