BlackBerry Still Attracts Many Investors

NEW YORK (The Street) -- At the bottom of an email I received from a successful money manager today were the words, "Sent from my BlackBerry 10 smartphone." This prompted me to see where BlackBerry (BBRY) was trading on this first trading day of 2014. Last I looked it was up nearly 4.8% on more than 25 million shares traded on the first trading day of 2014.

The latest headlines include reminders of what CEO John Chen revealed in December 2013, that the company will outsource the building of BBRY's phones to Foxconn Technology in Taiwan, a company that builds devices for a diverse client base like Apple (AAPL) and Amazon.com (AMZN).

It appears to be a desperate step to lower the cost of building hardware, and all manner of professionals, government workers and folks who still are loyal to the brand will continue to prefer what they're used to in a BlackBerry smartphone.

Whether the move to Taiwanese manufacturing saves significantly on expenditures, it's clear that investors are buying into Mr. Chen's vision of where BBRY is going. The following chart provides more evidence, especially when you look at what the stock has done since Mr. Chen's media conference on Friday, Dec. 20.

BBRY Chart

BBRY data by YCharts


On Nov. 30, 2013, the company confessed that its year-over-year quarterly revenue growth had plunged more than 56%. If that wasn't gut-wrenching enough, its trailing twelve month (TTM) operating margin and profit margin had fallen 41% and almost 63% respectively.

It lost around $4.4 billion in comparison to the year-ago quarter, where it turned a $14 million profit. Put another way, in the same quarter last year it earned 3 cents per share, but in the latest quarter, it lost almost $8.40 per share. Still, the company  had total cash of more than $3 billion and a book value per share of $7.78, or just about where the stock price was on Jan. 2, 2014.

More Good News for Investors

BlackBerry's interim CEO showed appropriate enthusiasm that the company's enterprise software and its surprisingly popular messaging app is catching on globally. For example, the app was the best-selling iPhone app in the rapidly growing Indonesian market, a country with around 120 million people.

BBRY's instant messaging app is called "BBM" and it's just beginning to become ubiquitous, or as Mr. Chen stated it, BBM is still in "startup mode." That's also code for "we haven't figured out how to make money with this yet."

Also keep in mind that it's BlackBerry Enterprise Service 10, which is yet to make the company big bucks, is at best promising as a revenue driver.

So the list of good news items for investors betting on BBRY is not a very long. It's more about conceding defeat to Apple and Google's (GOOG) Android. Figuring out how to get back into the money-making game takes time, and I'm not convinced BBRY has a lot of time, unless it'll eventually attract another potential acquirer or a strategic partnership that will see the fading company's potential.

Any kind of publicity is usually good for a struggling company, but during the trading session on Thursday, the New York Times reported that BlackBerry is in the midst of "laying off about 40 percent of its employees," including creative director Alicia Keys, who was appointed one year ago.

According to the Times, Chen is unlikely to replace Keys with a new creative director given the company's focus on its business and government user base.

Investors could consider that the chances of being successful with BlackBerry stock may be no better than Ms. Keys' job security, and all may be better off pursuing a singing career.

At the time of publication the author had positions in AAPL and GOOG but not any of the other companies mentioned in this article.

This article represents the opinion of a contributor and not necessarily that of The Street or its editorial staff.

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Marc Courtenay is the founder and owner of Advanced Investor Technologies, LLC, as well as the publisher and editor of www.ChecktheMarkets.com.

Courtenay holds a Master's of Science degree in Psychology from California Polytechnic State University, and is a former senior vice-president of Investments for two major brokerage firms. He's been a fiercely independent investment "investigator" and a consulting contributor to the investment publishing world for over 30 years. In addition to his role as an investment publisher and analyst, he serves as a marketing consultant to the investment media industries.

In his role as a financial writer and editor, he specializes in unique investment strategies, growth with income stocks, overlooked investment themes, tax-advantaged themes, risk management, technologies to capture gains and reduce losses, real estate related opportunities,effective wealth preservation techniques, and the use of ETFs for diversification and asset allocation. He also follows and frequently writes about technology, health sciences, energy and resource companies. Because of his training and background in Clinical Counseling and Psychology, he enjoys writing about investor behavior, the herd mentality, how to turn investment mistakes into investment breakthroughs and the stock market's behavioral trends and patterns.

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