Why Investors Are Turning Bullish on BlackBerry Ltd Stock

In this segment from the Motley Fool Money radio show, the team discusses the unexpected success that BlackBerry (BB 1.09%) has enjoyed reinventing itself as a software company. Its mobile devices may be a relic of the past, but its reputation for security-focused solutions remains strong with enterprise customers. The question now is where BlackBerry will focus its business going forward.

Chris Hill: Surprising comeback. Shares of BlackBerry -- yes gentlemen, BlackBerry -- up 13% on Friday after fourth quarter profits came in higher than expected. The company that once had 40% market share on smartphones is attempting to remake itself as a software and services company. Jeff Fischer, how's it going?

Jeff Fischer: It's going better than you might expect.

Hill: I expected zero, so it is going better than I expect.

Fischer: [laughs] The company is probably going to pull it off. They have more than $1 billion in net cash, so they're sitting pretty in that regard. They have now just more than $1 billion in revenue. And I will point out, that compares to $20 billion in revenue in 2011. So, quite a descent there. And yet, it's profitable. You know, Chris, what was BlackBerry known for, really, aside from the little ...

Hill: They had the keyboard on the phone and security.

Fischer: Really security. Security is it. They're moving into enterprise software that is security-focused. Now, the one thing that I can't get my head around quite yet is where they're going to exactly focus. They're offering software, everything that can track an employee's mobile device and its usage, to computer operating systems for guided missiles, to self-driving, autonomous cars. So, they're really all over the map when I read their transcripts, their conference calls. I would like to see where they're going to hone in on with their software.

Hill: Enterprise software, Simon. Not exactly a space they have to themselves. 

Simon Erickson: Well, the mobile device is transitioning. We used to know them as smartphones, and now they've become known as Internet of Things devices, which also need really good security. So now, I see that BlackBerry is referring to this as the Enterprise of Things.

Hill: [groans]

Erickson: I mean, it's going to be the next thing we're all hearing about. Again, you need good security, you need good software for lots of little mobile devices buzzing around.

Jason Moser: I think this is the time where we have to remind everybody that a clever little one-liner is not an investment thesis. Internet of Things, we can throw that around, everybody bandies that around, it's like, "Oh! It's the Internet of Things! Let's invest!" The Internet of Things is all over the place. Try to go a little bit further with it. The Enterprise of Things ... I appreciate the fact that, yes, that's what they're known for, that software side, the security side. But let's just take it one step at a time.

Fischer: It's true. But the image that they have is helping them. They signed 3,500 new customers in the last quarter, a 16% increase, and there are some large wins in there, some big, well-known companies. And not all of them are in the regulated industries where they've, in the past, done really well. So, they're expanding out. But, yeah, I would like to see where the profit center is going to end up being, because they're all over the map right now.

Erickson: Sure, and it has to be more than security. One of the reasons that BlackBerry lost out to the Apple iPhone was because it was all about the user experience. Apple caught up with BlackBerry on the security side, but at the end of the day, people are going to buy what's offering the best experience. BlackBerry has to understand that.