NEW YORK (TheStreet) -- BlackBerry's (BBRY) most recent earnings report was taken with a grain of salt by investors who cited its declining revenues. There are a lot of positive things happening at the company right now, but many investors have focused solely on the negative, and the stock has fallen more than 10% since the report.
BlackBerry has been painting an image of a stable company in its most recent press releases and conferences. Now that it is stable, BlackBerry may be entering a phase of growth, which will allow the company to expand its services and revenue and reward its investors.
BlackBerry's devices were once iconic, but its share of the device market has been decreasing to an insignificant level throughout the world.
John Chen, the new CEO of BlackBerry, decided four months ago to have Foxconn manufacture and distribute BlackBerry's lower-end devices to key markets. The first product of the partnership, the Z3 smartphone, is set for release in Indonesia and other Southeast Asian markets in the coming weeks, and should boost BlackBerry's bottom line.
Although analysts and BlackBerry enthusiasts are not anticipating the Z3 and other smartphone releases in the coming months to return BlackBerry to its previous dominance, they should still help the company recover somewhat.
The lower-end smartphones, which as recently as just a few months ago carried a negative or break-even margin, are now being designed and distributed by Foxconn with only the profits being returned to BlackBerry.
This means that BlackBerry will not be at risk of an inventory write-off, significant losses or the costs of research and marketing these phones. However, BlackBerry will continue to manufacture its higher-end smartphones, which carry a hefty margin.
"Our handset business must be made profitable and we're working on our supply chains with the likes of Foxconn, Wistron and other suppliers, all across the world," Chen said while discussing the latest quarterly results.
The new initiatives, combined with just 20 weeks of inventory (using fourth-quarter sell-through) of old smartphones, and the new mix of revenue and margins of newer BlackBerry devices, should allow BlackBerry's hardware segment to return to profitability in the coming months.
BlackBerry's current enterprise system has been estimated to equip of 60% of the mobile-device-management (known as MDM) servers among the largest enterprises. Not only will BlackBerry continue to take share with its superior products, but the announcement of BES 12 and EZ Pass should help increase these numbers (and revenues).
Currently, BlackBerry has more than 30,000 BES 10 commercial and text servers, and with the emergence of BES 12, more businesses should switch over and upgrade.
These additions not only allow BlackBerry to provide customers with one of the most advanced MDM products in the world, but BlackBerry will also generate revenue from the installation of these servers. BlackBerry announced the EZ Pass program, which will make it easier for companies to manage all of their smartphones, even if they're from different manufacturers and use different operating systems.
BlackBerry Messenger is perhaps one of the most undervalued aspects of the company. Active monthly users have increased by 5 million over the last quarter, to 85 million, with 113 million downloads.
While BlackBerry has not revealed a set plan for the monetization of BlackBerry Messenger, there are currently three prevalent methods that could be ideal for their application. Either an advertisement-based, enterprise-based, or "add-on" solution.
The add-on method is already in use with the ability of BBM users to purchase stickers in the application. This won't support a large revenue flow, but it will gauge the users and allow BlackBerry to better understand its user base.
Linking BBM with an enterprise solution could be profitable for BlackBerry and separate it from the competition, but an advertisement-based revenue model seems superior.
Using BlackBerry's .64 CPM (cost per thousand impressions), BBM could generate upwards of $225 million in yearly revenue in its current state.
Combined with the additional information that BlackBerry obtains about its users through BBM Channels, as well as a possible desktop expansion, BBM may explode into another major social media network and even be a step ahead of many of its competitors.
"But the more interesting thing, and the more exciting thing is, because so many of our users are also consumer, professional consumers, they use our BBM on a daily basis longer in duration every day, almost like 90 minutes on average, than anybody else. So this is really a very exciting area," CEO Chen said on the latest earnings conference call.
BlackBerry's penetration into both the consumer and enterprise markets combined with its wide array of products and services should not only allow it to become profitable in the current fiscal year (FY2015), but also establish the company as a force in the enterprise and hardware markets.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.