A Few Reasons Why BlackBerry Is Firmly on the Comeback Trail

After reporting a solid first quarter, BlackBerry is set for a successful turnaround.

Jun 24, 2014 at 11:00PM

BlackBerry (NASDAQ:BBRY) seems to be coming back from the dead. The company's turnaround looked realistic last month, and it delivered handsomely by posting Wall Street-beating numbers. Armed with a partnership with Amazon.com (NASDAQ:AMZN) and foray into new markets, it is likely that BlackBerry will sustain its terrific run. A look at the company's strategies will reveal why BlackBerry looks destined for a turnaround.

Positives to watch
BlackBerry posted a net income of $23 million in the previous quarter, reversing its year-ago loss of $84 million. This profit can be attributed to the cost-cutting measures adopted by CEO John Chen. Although its revenue fell considerably year over year, going forward, the company is betting on new devices and new markets to reignite growth.

The latest results have given confidence to investors, who were initially skeptical about management's turnaround efforts. However, after Blackberry reported its results, the company's shares rose remarkably, indicating that Wall Street has faith in the company's comeback.

BlackBerry CEO John Chen has employed some excellent strategies that have worked well in the turnaround. His credible game plan includes lowering costs and reducing risk by outsourcing some of its manufacturing.

Impressive moves
BlackBerry made significant progress on various fronts. In the Blackberry Enterprise Service, or BES, department, it saw a strong demand for its EZ Pass program. This is good news as BlackBerry is seeing robust monetization with this product. Moreover, with the launch of BES 12, it has already bagged six beta customers. The company has six more beta installations in the cards starting July. 

The company's smartphone strategy is also looking solid. BlackBerry recently launched its new smartphone, the Z3, in Indonesia amid extensive promotions. Demand for the phone was very strong as inventory ran low during launch day. The Z3 is a budget product that is designed to appeal to customers in the emerging markets. After receiving a positive response in Indonesia, the Z3 will be launched in Vietnam, India, and various other emerging markets. 

Looking forward, the company has planned even more exciting product launches. BlackBerry will launch a new device called Passport, which is the company's version of a phablet. Its launches for the fiscal year include BBM for Windows, BES12, and QNX Cloud. So, the company has a strong product roadmap that should help it deliver robust growth.

The Amazon partnership
Another good news is BlackBerry's partnership with Amazon for mobile apps on Blackberry 10.3, which will add more than 240,000 Android apps to the platform. This is an impressive move as Amazon's app store will strengthen BlackBerry's scant and expensive app store. In addition, Amazon will allow BlackBerry to focus on apps for enterprises and businesses.

Amazon's app store is growing at a robust pace, and contains some popular apps such as Instant Video, Cloud Drive Photos, and Prime Music that can stream around a million songs. In addition, BlackBerry users will now have access to apps such as Netflix, Hulu Plus, IMDB, Spotify, etc. Thus, this is a smart move by BlackBerry to license Amazon's app store.

Cloud and the Internet of Things
Blackberry is also entering the cloud space with a strategic investment in NantHealth. This will provide a cloud-based intelligent health care platform for connecting physicians, patients, payers, researchers, and clinical labs. Currently, this platform is installed in 250 hospitals and connects more than 16,000 medical devices. Using NantHealth, BlackBerry plans to use its QNX platform to power complex medical devices, secure cloud-based networks, and allow secure exchange of information over BBM protected.

Blackberry has also started a project named Ion to target the Internet of Things. This involves a secure public cloud platform powered by the QNX technology, as well as the Blackberry Secure Enterprise Mobility Management. This is a smart move because the Internet of Things is expected to become a significant opportunity. According to Cisco, the Internet of Things will become a $19 trillion opportunity by the end of 2020. So, BlackBerry is moving in the right direction with this initiative.

The bottom line
BlackBerry has got its act together finally, and it is making good progress. The company's focus on trends such as cloud and the Internet of Things will help the company get better in the long run. In addition, BlackBerry is gradually trying to improve its smartphone business, which will complement its other initiatives. It's not wrong to say that BlackBerry is a turnaround candidate worth considering for an investor's portfolio.

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Mukesh Baghel has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. 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.

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