BlackBerry earnings/call were actually bullish ✅ via /r/wallstreetbets #stocks #wallstreetbets #investing

BlackBerry earnings/call were actually bullish ✅

credit to u/Rivaaal

I see many paper-handed individuals dumping their shares for cheap because OMG BB has missed its revenue expectations for Q4. (for reference $8.50 -8.7% 31st March 2021)

Can we please dig a little bit deeper? Thank you.

During the quarter BlackBerry entered into an exclusive negotiation with a North American entity for the potential sale of part of the patent portfolio relating primarily to mobile devices, messaging and wireless networking. The Company has limited its patent monetization activities due to the ongoing negotiations. If the Company had not been in negotiations during the quarter, we believe that Licensing revenue would have been higher.

Boom pure and simple explanation for why the revenue missed. It’s not on weaker demand. It’s only because they are about to sell their side business and consequently they had to significantly cut that stream of revenue. Which also means that negotiations are advanced.

What will happen then they sell? they will receive a big fat cheque (don’t quote me on this but I imagine north of $500m if not a billion+ ; pure speculation) + according to the CEO they will collect royalties for 7 years. And they get to focus on their core businesses: cybersecurity, EV software, internet of things.

Is this good strategy-wise? Absolutely. Focus on your top projects with higher gross margins. Let go of the past and embrace the future.

any analyst reaction? Yes indeed Canaccord upgraded the stock to Hold from Sell this morning.

Canaccord sees 'building blocks coming together'

Seeing the business "turning the corner towards stronger trends”. The firm notes BB's weaker than expected Q4 results driven by licensing headwinds due to sales negotiations for part of its mobile patent portfolio.

Canaccord says BlackBerry management has "created a cogent long-term strategy," but the firm is on the sidelines waiting for more evidence of product roadmap execution and emerging cross-selling opportunities.

The firm says a deal to sell the licensing business would "unlock value and provide a capital infusion to drive accelerated software and services growth."

So even boomers traditionally late to the technology party are starting to see the whole BlackBerry’s strategy aligning. But these guys stay on the sideline because they don’t like early tendies. They lack the vision to say it’s an actual Buy especially at these levels. They will probably wait that a bigger broker moves first. And they will.

a quick look at the numbers BlackBerry has a $5bn market cap with $1bn+ yearly revenue and $800m in cash. I imagine investors can put 2 and 2 together. What do you think will happen to their balance sheet when they cash in the incoming sale of their portfolio. Way more cash to execute their plans and potential M&A if needed and no need for new shares issuance as confirmed by the CEO (no dilution in sight ; enough money in the bank). We could be in the coming weeks in a situation where BB has in cash the equivalent of 25%+ of their market cap…

how about their core strategy? QNX now has design wins with 23 of the world's top 25 electric vehicle OEMs and remains on course to return to a normal revenue run rate by mid-fiscal 2022. BlackBerry IVY also made encouraging progress, with positive engagement from a number of leading automakers and the launch of our BlackBerry IVY Innovation Fund.

In just one quarter they added 4 more EV OEMs with QNX (from 19 to 23 now).

They are well positioned to be involved in autonomous driving: BlackBerry expands its partnership with Baidu to power next generation autonomous driving technology. and BlackBerry QNX Black Channel Communications to be used in Motional's driverless platform. These are weeks-old news but it’s funny how it seems to go under the radar when it comes to price the company. Correct me if I’m wrong but Baidu could be the first and/or major player in autonomous driving in Asia.

QNX is still in SpaceX rockets. And I start to hear rumors that Tesla could consider using it too (very speculative but at least you’ve heard it).

And for the people who have ended up here randomly BlackBerry IVY is a joint venture with Amazon AWS for intelligent vehicle data platform. When the IVY deal was released BB shot past $9. AWS boss/founder at the time is now Amazon CEO.

So yea the revenue has missed by a few millions for an one-off reason. Have the fundamentals changed? Actually yes they have improved as they are well on track to pursue their strategic goals.

The question you should ask yourself is whether you are pricing BlackBerry based on their FY2020 or on what they are about to become?

I probably bought more June calls together with some shares (please don’t do like me).

Definitely not a recommendation to buy, hold, sell any security. Besides I have no knowledge in IoT, programming, software etc. I can only read.

TLDR why are you selling BB? if that’s because the revenue has slightly missed because they are selling a big chunk of their unneeded business for big money then you should ask yourself why you are in this ship in the first place. Even boomers analysts upgraded the stock this morning: they are starting to see BlackBerry business model happening.

Bonus: when will the sale happen? 🔮 crystal ball said before the next ER so in a few weeks (totally random and speculative).

Submitted April 01, 2021 at 09:36PM by nosehairshaver
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