{"id":48553,"date":"2014-03-15T11:04:38","date_gmt":"2014-03-15T15:04:38","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=48553"},"modified":"2014-03-15T11:04:38","modified_gmt":"2014-03-15T15:04:38","slug":"my-boldest-call-ever","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2014\/03\/15\/my-boldest-call-ever\/","title":{"rendered":"My Boldest Call Ever"},"content":{"rendered":"

By WallStreetDaily.com<\/u><\/a> \"My<\/p>\n

Last Saturday, I stuck my neck on the block by arguing for a BlackBerry<\/b> (BBRY<\/a>) turnaround.<\/p>\n

I know\u2026 it\u2019s the ultimate contrarian call. But hear me out.<\/p>\n

I mentioned that four pillars hold the key to rebuilding BlackBerry.<\/p>\n

And I already covered the first pillar – automotive infotainment. This involved QNX – the software \u201cmicrokernel\u201d company that BlackBerry acquired, which is helping Apple<\/b> (AAPL<\/a>) embed its CarPlay system<\/a> into roughly half of its auto manufacturer partnerships.<\/p>\n

Let\u2019s dive into the final pillars today\u2026<\/p>\n

~ Pillar #2: Hardware<\/b><\/p>\n

While smartphones once made BlackBerry a dominant mobile force, they\u2019ve since bled the company dry for years.<\/p>\n

But in December – just one month after becoming BlackBerry\u2019s new CEO – John Chen struck a deal with Foxconn<\/b> (Taiwan: 2354<\/a>) to help stem the $1 billion in quarterly losses from unsold devices – mainly from the Z10, which bombed in the United States.
\n<\/a>
\nThe partnership signals BlackBerry\u2019s new strategy. Before, it kept trying to play catch-up in an overcrowded U.S. market – and kept getting crushed.<\/p>\n

But it\u2019s now taking a different approach, by focusing much of its hardware business in emerging markets.<\/p>\n

Starting in the next quarter, Foxconn will launch its version of the BlackBerry – the Z3 – for $200.<\/p>\n

Indonesia – the world\u2019s fourth-most populous country and one of the most underserved mobile markets – will be a prime target. So BlackBerry could actually get a jump on its competition.<\/p>\n

Importantly, the partnership also gives BlackBerry an opportunity to obtain materials at more favorable costs, reduce fixed costs and minimize inventory risk.<\/p>\n

Chen expects the Foxconn deal to make BlackBerry\u2019s hardware division cash-flow positive by February 2016.<\/p>\n

Pillar #3: BlackBerry Messenger<\/b><\/p>\n

BBM is a mainstay of BlackBerry\u2019s hardware. But it has much more value to the company.<\/p>\n

For starters, it\u2019s one of the world\u2019s most secure messaging services.<\/p>\n

And with spying and data breaches becoming more common, people are demanding better security for their digital data and communications.<\/p>\n

BlackBerry is obliging.<\/p>\n

In 2009, it paid $106 million for encryption firm, Certicom, in an effort to expand its security.<\/p>\n

Thanks to that deal, BlackBerry now has 130 encryption patents that use the most advanced encryption technology – Elliptic Curve Cryptography. Currently, the only other business using Elliptic Curve is the U.S. government.<\/p>\n

BBM is now embedded in Windows and Nokia X phones, and is available as an app on other phones, including the iPhone. BBM now has over 300 million subscribers, with 100 million new users every four months.<\/p>\n

With Facebook\u2019s<\/b> (FB<\/a>) recent $19-billion purchase of WhatsApp and Japanese e-commerce firm Rakuten\u2019s<\/b> (Japan: 4755<\/a>) $900-million buyout of Viber Media (another messaging app), this is a hot field. And with BBM, Chen holds a key bargaining chip.<\/p>\n

Pillar #4: Enterprise<\/b><\/p>\n

BlackBerry is the only company with the authority to operate on U.S. Department of Defense networks. The Pentagon recently announced that BlackBerry phones account for 98% of devices in a program aimed at bringing greater mobile access to DoD staff.<\/p>\n

This exemplifies BlackBerry\u2019s renewed focus on enterprise sales.<\/p>\n

Indeed, the firm is set to launch its new BlackBerry Enterprise Service (BES) platform, BES12, which will breed new enterprise applications for BlackBerry smartphones and other mobile devices.<\/p>\n

Companies like Daimler<\/b> (DDAIF<\/a>) and Airbus Group<\/b> (EADSY<\/a>) are among the customers that have adopted BlackBerry\u2019s older Enterprise Service 10 model. So with a more advanced version in the pipeline, we should see more high-profile clientele upgrade to BlackBerry Enterprise, too.<\/p>\n

Since government and business clients have traditionally favored BlackBerry, offering an ecosystem on par with Apple\u2019s App Store would make BlackBerry relevant in the enterprise world again.<\/p>\n

Two Ways to Profit From BBRY<\/b><\/p>\n

BlackBerry reports its earnings on March 28.<\/p>\n

Most people trading the stock are playing the short-term news.<\/p>\n

That\u2019s what you should do, too.<\/p>\n

Since the company\u2019s recovery plan is just starting, we\u2019ll likely see another rough quarter – which will knock down the share price. You could consider playing any potential downside by purchasing the March 2014 $8 put options.<\/p>\n

Otherwise, wait for a pullback below $8 to go long on the stock.<\/p>\n

Remember\u2026 BlackBerry is a speculative <\/i>play.<\/p>\n

However, Chen\u2019s sharp focus has already generated more optimism – BlackBerry shares are up 43% since he took over.<\/p>\n

Short sellers are dwindling, too. Short interest in BlackBerry has dropped to 17% from a peak of 33% in 2013. That means there are roughly 100 million fewer shares short weighing down the price.<\/p>\n

Conventional wisdom says BlackBerry is already dead. But the company still has time to act strategically, rather than panic.<\/p>\n

With $3 billion in cash, the company has a decent cushion until Q4 2015, when Chen foresees BlackBerry as cash-flow positive. Plus, by November of 2014, some of BlackBerry\u2019s intellectual property expenses on third-party patent royalties will expire, wiping out roughly $800 million in fixed costs.<\/p>\n

If the business stabilizes, BlackBerry could even become a realistic takeover target.<\/p>\n

I believe there\u2019s potential here. And so does major hedge fund manager, Dan Loeb. A few months ago, he revealed that his Third Point fund has a $10-million stake in BlackBerry.<\/p>\n

I\u2019m intrigued to see how this plays out.<\/p>\n

Your eyes in the Pipeline,<\/p>\n

Marty Biancuzzo<\/p>\n

The post My Boldest Call Ever<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

Article By WallStreetDaily.com<\/u><\/a><\/p>\n

Original Article: My Boldest Call Ever<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com Last Saturday, I stuck my neck on the block by arguing for a BlackBerry (BBRY) turnaround. I know\u2026 it\u2019s the ultimate contrarian call. But hear me out. I mentioned that four pillars hold the key to rebuilding BlackBerry. And I already covered the first pillar – automotive infotainment. This involved QNX – the … <\/p>\n

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