BlackBerry Returns to Its Roots With This Recent Move

BlackBerry plans to double down on keyboards as its turnaround continues.

Jan 8, 2014 at 2:42PM

New CEO John Chen has big plans for struggling Canadian smartphone maker BlackBerry (NASDAQ:BBRY). They just don't involve anything new.

In a move that some might find surprising but seems perfectly sensible, Chen recently gave word that BlackBerry's future, if there is indeed to be one, will be rooted firmly in its past -- the keyboard.

Blackberry Q

Source: BlackBerry.

Back to the basics at BlackBerry
In a recent interview with Bloomberg, Chen, who took over as CEO last November, said he sees BlackBerry's future smartphones as "predominantly" keyboard based. 

Chen's decision signals a major reversal from the previous regime, in which then-CEO Thorsen Heins launched several touchscreen handsets in hopes of stemming the mass defection toward other high-end smartphones such as Apple's iPhone Samsung's Galaxy S4.

So far the results have been disastrous at best. Since the second quarter of 2010, BlackBerry's share of the global smartphone market has plummeted from 18% to less than 1% in the third quarter of 2013 according to IDC. During the same period, the global smartphone market has grown by more than 300%. The reasons for BlackBerry's fall from grace have been well documented at this point. Plagued by corporate infighting and a failure to execute, BlackBerry quickly faded from relevance against Apple and Google in the very smartphone market it helped create.

Chen has already made several shrewd moves to help keep BlackBerry afloat since his appointment, and refocusing on keyboards, where the company still has its fair share of loyalists, is clearly another one. However, what's still hugely unclear is just how positive an impact the renewed concentration on keyboards could have on BlackBerry's bleeding bottom line.

Righting the ship
Although BlackBerry's most recent earnings report was about as ugly as they come, Chen also used the report to introduce several key moves. He overhauled BlackBerry's organizational structure centered around four key areas -- enterprise services, messaging, QNX embedded business and devices. Of equal, if not greater, importance, Chen also announced BlackBerry would begin a five-year strategic partnership with hardware assembly giant Foxconn to handle production of its devices. The Foxconn deal alone helps to greatly reduce the massive inventory risks that have plagued BlackBerry over the last several years.


Source: Wells Fargo.

The market cheered the news, sending BlackBerry's stock up significantly in reaction to the news. This news, as well as other moves Chen has made since his hiring, has helped paint a picture of a more stable BlackBerry.

But is BlackBerry a buy?
It's without dispute that Chen has done wonders to help stabilize BlackBerry, both operationally and psychologically. BlackBerry stock is up 30% since Chen's arrival, although it still remains firmly in the red over more extended time horizons.

With its current market capitalization currently north of $8 billion, it's still somewhat hard to see how BlackBerry presents an attractive value given its business struggles. Analysts are currently projecting BlackBerry to lose money in each of the next nine fiscal quarters, which is as far out as I can find estimates. And it has plenty of cash on its balance sheet and investors who have shown a willingness to double down to save it.

Looking at valuation more closely, BlackBerry currently holds more than $2 billion in net cash on its balance sheet. Assigning another $2 billion in value to its massive patent portfolio values BlackBerry's operations at roughly $4 billion at least as far as back-of-the-envelope figures are concerned.

At that price, I'm not sure I'd be a buyer, and I'm not alone. Although I always take them with a grain of salt, the average analyst rating of the 33 analysts currently issuing ratings on BlackBerry is $6.75. With BlackBerry's shares currently trading hands at right around $8.50, this represents a pretty significant premium to what the pros believe BlackBerry's worth.

Don't get me wrong. BlackBerry and John Chen certainly deserve some credit for making meaningful progress in turning around the ailing Canadian smartphone maker. However, in looking at BlackBerry from 30,000 feet, I find myself worrying that its stock price might appear overly optimistic where we find it today.

A better bet than BlackBerry for 2014
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Fool contributor Andrew Tonner owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers