Traders Bet on BlackBerry Return To The Black
BlackBerry, $BBRY, is losing less money and a lot more business. And that, say investors on StockTwits.com, is progress capable of returning the company to profitability. Though not enough to show the beleaguered smart phone company’s turnaround plan has taken hold.
$BBRY Mixed bag…BlackBerry lives to fight another day is how I'd frame it.
— matthew stafford (@vanhalenboss) Mar. 28 at 08:17 AM
BlackBerry reported quarterly earnings Friday morning that beat Wall Street consensus estimates for EPS but badly missed sales expectations. Blackberry posted a loss of $0.08, excluding some items, on $976 million in revenue. Wall Street analysts had expected a $0.57 EPS loss on $1.11 billion in sales, according to estimates on the Analyst Ratings Network. Sales fell 64% from the same period a year ago.
Still, the stock rose more than 6% in the pre-market. Though it shed much of those gains during the conference call leading up to the opening bell. It opened 2.76% higher.
Some cashtaggers expressed surprise that the gains didn’t hold through the open. The company can’t be expected, they argued, to stabilize sales as it slashes expenses.
$BBRY Do you really expect BB to imrove revenues in a single quarter?! restructuring takes time and judge in the next few quarters
— Khaled (@TwitsTrader) Mar. 28 at 08:18 AM
Sentiment on the stock is 89% Bullish, according to StockTwits’ analytics. Traders see positives in BlackBerry’s ruthless cost reductions, allowing it to promise break-even results by the end of fiscal 2015.
“BlackBerry is on sounder financial footing today with a path to return to growth and profitability,” said CEO John Chen in a statement. “We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule.”
The company has plenty of cash to absorb more losses while Chen continues to implement the company’s turnaround plan. Blackberry said it has $2.7 Billion in cash, cash equivalents, short-term and long-term investments as of March 1, 2014.
$BBRY long term outlook still remains bullish though.
— StandpointCapitalLLC (@StandpointCapitalLLC) Mar. 28 at 09:00 AM
— Syntec Ventures (@SyntecVentures) Mar. 28 at 08:17 AM
Traders also see bullish signs in the growth of BlackBerry’s messenger application.
$BBRY BBM crossed 100M users , actual 113M :))
— Wilson (@LittleRedDot) Mar. 28 at 08:32 AM
Much has been made of the importance of messaging applications since Facebook purchased messaging application service WhatsApp for $19 Billion in February. At the time of Facebook’s mostly stock purchase of WhatsApp, the company had 450 million users.
Some traders argue that the simple math of dividing the purchase price by the user base, puts a value of $42 on each messenger user. Applying that worth to BlackBerry’s 113 million messenger users would value BlackBerry Messenger alone at $4.7 billion. The entire company has a market cap of $4.69 Billion.
Of course, the simple calculation doesn’t include WhatsApp’s growth. WhatsApp is adding users at the rate of a million per day, faster than BlackBerry.
Other traders see positives in BlackBerry’s security platform. Just yesterday, The National Institute of Standards and Technology approved BlackBerry’s BES10 secure mobile work space for use by the U.S. and Canadian governments.
$BBRY he's doing what tech companies do, giving away BES10 to new customers to grow user base. Then charge for upgrades to BES12. Whatsapp.
— Duke Duke (@duke2duke) Mar. 28 at 08:51 AM
$BBRY Nobody can touch us from a mobile enterprise solutions or come close
— leadbelly (@leadbelly) Mar. 28 at 08:44 AM
Still, the company has work to do. Lower costs are only half of the equation. Chen must prove that BlackBerry’s brand can survive competition with Google’s, $GOOG, Droid phones, Apple’s iPhones, $AAPL, and Microsoft, $MSFT, Windows devices.
Cashtaggers say give him time.
$BBRY Chen brought on board 4 and a half months ago. Give him some time to get this turned around. Do not bet on ER…
— Syntec Ventures (@SyntecVentures) Mar. 28 at 08:51 AM
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