BlackBerry (BBRY +8.21%) CEO Thorsten Heins thinks the iPhone is very 2008. Over the past month, the beleaguered smartphone maker's chief executive has been a rah-rah cheerleader, even while consumers and analysts have yet to be convinced the company has turned a corner. Now, there is something to be said for aggressively optimistic CEOs, as long as their evidence is based in reality. With a mysterious million-phone purchase and plenty of corporate grandstanding, does Heins know something about BlackBerry that everyone else doesn't?
Confessions of a BlackBerry bull
Before we get to the good stuff, you should know that I've been a BlackBerry fan throughout its reorganization. A year ago, I highlighted the tremendous value of the company's patents, its licensing potential, and major support for the company from Canada's greatest investor. Things didn't play out exactly like I imagined, though.
The more than 100% growth in BlackBerry's stock price over the past year was not a deep-value crisis, sell-the-conference-table price correction. Despite some very opinionated haters, BlackBerry has slowly but surely convinced enough investors and analysts that not only was the company severely undervalued in the $6-$7 range, but that this was the rebirth of a disruptive tech giant. There remain plenty today who still believe BlackBerry is doomed, but the argument is more balanced and with the support of a tremendous rally. Without much hard evidence of a rebound, though, is it too early to break out the champagne?
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Though the recent turnaround was really the fruit of a multiyear effort, things have heated up in just the past couple of weeks. Yet, in typical BlackBerry fashion, it hasn't been the most conventional path.
Preempting its own upcoming earnings release by about two weeks, BlackBerry issued a press release regarding the sale of 1 million handsets to a "buyer," with shipments starting immediately. It's common for a company to keep its buyers anonymous, but this announcement was particularly vague. For one thing, it did not mention which BB10 handset (there are two: the Z10 and the Q10) was just picked to be America's Next Top Smartphone. And given the extremely large order, it is also a total mystery as to who bought all of them. The major U.S. carriers with which BlackBerry does business -- AT&T, Verizon, and Sprint -- all declined to comment on whether they had a hand in the transaction.
According to a Bloomberg report, the only carrier that did comment was T-Mobile, saying that it was excited to offer the device, but that it did not buy the 1 million phones. Corporations still use BlackBerrys quite extensively, but very few would be distributing 1 million phones to employees. For reference, retail behemoth Wal-Mart employs 2.2 million people, but most of them would not be eligible for corporate phones.
Being the single largest purchase in the company's history, the million-phone order is certainly encouraging for BlackBerry fans and investors, but it would be a little more comforting if we knew anything else about it.
iPhone sucks, BlackBerry is awesome
This week, Heins made quick headlines in his interview with the Australian Financial Review. In short, Heins believes Apple (AAPL +0.61%)'s iPhone has been eclipsed by a more aggressive, more innovative global market.
I happen to agree, on a casual-discussion basis, that the iPhone has slowed down in its rock-your-socks-off features and moron-proof user experience. But these are pretty bold words coming from the chief of a company whose phones went from global dominance to near irrelevance in a startlingly short period of time.
In the interview, Heins quips, "History repeats itself again I guess ... the rate of innovation is so high in our industry that if you don't innovate at that speed you can be replaced pretty quickly. The user interface on the iPhone, with all due respect for what this invention was all about, is now five years old."
If history does, in fact, repeat itself, then you probably don't have to say "again." But that's being nitpicky.
Again, I think Heins is more or less accurate in his description of the iPhone's product cycle. The market has realized this, too, if a little damningly, revaluing the company from super-growth market darling to technological laggard. Still, we haven't seen any usable proof that the BB10 platform and accompanying handsets are leaps and bounds beyond your iDevice. Specifically, Heins highlighted BlackBerry's superiority in multitasking, an area where the iPhone has struggled over the years. It turns out people do need to Google something while 3-way FaceTiming and listening to the latest David Bowie album. The new BlackBerry, we pray, accommodates the needs of these multitaskers.
Is BlackBerry actually fantastic and we just don't know yet? The company's earnings report comes out on March 28, and you can bet every bull and bear will be digesting the data immediately, and with 10,000 different interpretations.
Buy, sell, or hold?
According to Prem Watsa, the aforementioned Canadian superinvestor whom many equate to Warren Buffett and who owns nearly 10% of the company, BlackBerry is still a long way from its potential. He has often said that this turnaround will take three to five years, if not more. Going by that timeline, this may not be BlackBerry's phoenix moment but more market speculation.
I loved the company at $7 per share, and I am cautiously optimistic at $15, but I would wait and see if the earnings report can shed some light -- any light -- on what is happening at the mysterious fortress of forgotten technology that is BlackBerry's Waterloo headquarters.
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