Blackberry tries to get its groove back

By Chris Lau for Kapitall.

First, Nokia ( NOK) got its groove back by selling its devices unit. Now, BlackBerry ( BBRY) is set to do the same. Though the time frame in which BlackBerry will achieve this will clearly much slower, the embattled mobile maker is on the right track.

Nokia outperformed first

Nokia raced ahead of BlackBerry in the phone wars by selling the Lumia devices unit to Microsoft ( MSFT). By quitting a sector that lost money for years, Nokia gained a huge cash payout from its partner. It is now in a position to raise its dividend rate for shareholders, grow its position in the networking market, and concentrate on mapping solutions for automakers and device makers. Nokia recently announced it will buy Medio Systems. This company provides the analytic capability for tracking user activity for services and apps. Medio will help Nokia personalize map searches.

BlackBerry’s recovery is set to be slower than Nokia’s because the former Canadian mobile giant is still making smartphone devices, this strategy could still be a drag on its future prospects. The BlackBerry Z3 is an affordable device that caters to developing markets. This will shield BlackBerry from the competition it faced when it fought for market share in North America and in Europe. BlackBerry still wants to have some relevance in these markets, and is releasing a refresh to its keyboard-based Q10 device.

BlackBerry Z30 is comparable to high-end Apple and Android devices, but no one should expect sales to be that strong. BlackBerry is not spending much to advertise it.

MDM

Mobile Device Management, or MDM, is going to lead BlackBerry’s return to profitability. MobileIron Inc. ( MOBL) just became public, but investors are better off buying BlackBerry. BlackBerry’s shares are worth less than half of book, and one-third of sales. Investors largely ignore BlackBerry’s BES 10 solution that now has over 1 million installations (licenses issued).

In the next few months, investors should be cautious with MobileIron, while adding BlackBerry to their watch list. BlackBerry is scheduled to report earnings on June 19 2014. Chances are not that great the company will exceed expectations. At that time, the company might disclose more about how sales of the Z3 are doing, and finalize a release date for newer BlackBerry 10 devices. If prospects improve, this might represent a starting point in a recovery in its shares.

Disclosure: Author has a long position in BlackBerry

Do you think Blackberry is about to get its mojo working? Use the links below to start your own research.

Click on the interactive chart to view data over time. 

 

1. Research In Motion Limited ( BBRY, Earnings, Analysts, Financials): provides wireless communications solutions worldwide. Market cap at $5.15B, most recent closing price at $8.26.

 

 

2. Microsoft Corporation ( MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $313.81B, most recent closing price at $37.69.

 

 

3. Nokia Corporation ( NOK, Earnings, Analysts, Financials): Provides Internet and digital mapping and navigation services worldwide. Market cap at $28.29B, most recent closing price at $7.62.

 

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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