Bulls Are Running Back to BlackBerry

NEW YORK (TheStreet) -- Shares in the Canadian mobile solution provider BlackBerry (BBRY) soared 7% higher in premarket trading after hitting it out of the park on Friday's earnings release.

OK, maybe it was a double, not a home run, but analysts were expecting little more than a single. The quarterly loss was 80 cents per share, for a total of $423 million for the fourth quarter ending March 1.

The total loss for the fiscal year was an eye-popping $5.9 billion. Revenue continues to trend lower at a disappointing $976 million, less than half the $2.7 billion in the comparable year-ago quarter. Analysts anticipated $1.17 billion in sales, and the company's operational margin improved.

On an adjusted non-GAAP basis, the operational loss was $42 million, or 8 cents per share. That's significantly better than the consensus estimated loss of 56 cents per share.

The results also provide BlackBerry's latest CEO John Chen much-needed breathing room to continue executing his strategy to bring the overwhelmed company back from the dead. I'm impressed with the results.

Plus, this follows my bull thesis that I laid out in a Real Money Pro trade idea.

Friday's surprise earnings release helps validate my bull thesis. I've come out bullish in my recent articles, "BlackBerry's Party Is Just Getting Started" and "BlackBerry Chart Suggests Volatility."

After BlackBerry allowed Apple (AAPL) iPhones and Google (GOOG) Android phones to snatch market share, the company was left with little more than intellectual property and its enterprise solutions. Even Microsoft (MSFT) has turned Windows Mobile around and is once again making gains in both market share and total units deployed.

Unlike Microsoft and Google, BlackBerry has more or less abandoned the low-end consumer level mobile hardware business and has finally partnered with a third-party manufacturer to fill that shrinking need.

BlackBerry's renewed enterprise focus appears to be paying off, and is a significant factor in why I turned bullish. That's where the profit is.

The company's mobile platform is considered the top in class for mobile security and reliability. On Thursday, the BlackBerry 10 received Full Operational Capability to run on Department of Defense networks from the Defense Information Systems Agency. The BlackBerry 10 is the first mobile solution to receive FOC. It's a strong vote of confidence and gives credibility to the turn-around story.

The president doesn't use an iPhone. He uses a BlackBerry.

Given a choice between consumer or commercial products, commercial solutions offer greater margins and revenue reliability.

After the dust settles, expect shares to find support near $9 a share. If you get an opportunity to buy below, you may want to consider selling covered calls. (A covered call is when you buy a stock and then sell a call option to lower your risk, volatility and cost basis to reach profitability.)

I think BlackBerry is an ideal covered call candidate because of the higher volatility which results in a greater option premium. Also, I believe BlackBerry is worth over $10 in a liquidation sale.

It may also take a long time for the company to come back. Investors should anticipate speed bumps along the way. Selling a covered call is akin to wearing a seat belt for your ride on a roller coaster stock.

Look for more of my ideas on BlackBerry in Real Money.

At the time of publication, Weinstein had no positions in any of the securities mentioned.

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

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