Did You Notice Blackberry's Game-Changer?

Summary

  • BlackBerry announced the final settlement of its arbitration win against Qualcomm this morning.
  • The money to be paid to BlackBerry is much higher than originally expected.
  • Makes BlackBerry shares compelling even here.
This past April, I penned an article on these very pages titled Did The Game Just Change For BlackBerry?

In the article, I talked about the $815 million binding/not contestable award that BlackBerry had won against Qualcomm in a contract dispute in the past between the two companies.

This morning BlackBerry announced that the arbitration panel has awarded a final payment of $940 million payable by Qualcomm on or before May 31.

Basically, that means within a few days, BlackBerry will see its bank accounts swell by almost a cool billion dollars net of attorney fees et al. Not a bad increase to anyone's bank account, no?

When I wrote the above article, I had said that investors should buy BlackBerry because the award was a game changer and also due to the fact that BlackBerry could be successful in its turnaround efforts.

Shares closed on the day of the article at $8.93 per share and are currently quoted at around $11 and change in early pre-market trade. A pretty sweet almost 25% in just about 5 weeks for those that went ahead and bought shares back then.

For those that did not, you are still not too late although I would ease in given the possibility of an overall market correction which no company will be impervious to.

BlackBerry will now have almost $2.7-$2.8 billion in cash and cash equivalents in its treasure chest which works out to about $5.35 per share in net cash using the 530 million shares outstanding as per BlackBerry's P&L dated Feb. 28, 2017.

BlackBerry is addressing a huge market with its crisis communication software which allows government agencies and corporations to keep track and account for their employees in real-time. Think about the implications for the armed forces of different countries or employees of companies that operate in areas of strife globally.

In addition, just last week Macquarie laid out a bull case based on BlackBerry's RADAR technology which is being by BlackBerry customers to improve efficiencies and load factor management in the trailer industry.

According to the analyst based on feedback from existing RADAR users, "seeing a reduction in the amount of trailers needed to manage existing sales thanks to the more efficient use of assets" the potential for meaningful sales and profitability is large.

Finally, if one considers the potential of BlackBerry's QNX technology for the automotive sector, BlackBerry's partnership with Ford for autonomous driving technology, and the possibility/potential of a BlackBerry tablet, the shares merit a look despite the rise in the last month.

Words to the wise and something to think about over this long weekend holiday.Having said all that, BlackBerry is not cheap given the fact that it is in the very early stages of its turnaround and thus earnings are still minimal. However, the company seems to be on the right track and paying about $6/share at the moment (net of cash) is not unreasonable by any means.

PS: Just an additional point to consider and something i have been thinking ever since I wrote that article back in the middle of April regarding BlackBerry's huge win in arbitration against Qualcomm. How defensible are their patents against the likes of Apple and its suppliers? If Apple and its suppliers are correct, Qualcomm is charging or overcharging for patents that were developed so long back that prices/charges should be a lot lower now if not zippo given commoditization.

Disclosure: I am/we are long AAPL, BBRY.
Original Link
https://seekingalpha.com/article/4076805-notice-blackberrys-game-changer