BlackBerry (NASDAQ: BBRY)
Apart from Nokia, one of the most spectacular tech implosions in recent years has been the Blackberry Mobile. Once the “must have” of every tech executive, the Blackberry phone has seen its share of ups and downs. Accordingly, the companies share price has since seen much volatility. This has provided an excellent opportunity for investors to make profitable moves both on the long side and the short side. Within the last week Blackberry is back on our radar. Rumblings of share buybacks to offset employee incentives coupled with buy out rumours have hit the twitter sphere.
Blackberry started out life as Research In Motion Limited providing the RIM range of pager devices. In their earlier days, their paging devices enjoyed great success with IBM as a major customer. From 2013 through to 2015 the proprietary Blackberry Internet Service had seen a turbulent decline in subscriptions. Despite the obvious signs of decline by mid 2014 commentators such as Matt Hunter of CNBC were lauding CEO John Chen’s skillful management of the company’s costs. It seemed apparent that a rise in stock prices was around the corner. The intervening period since 2014 has seen much price action. Very recently, rumours have filled the markets of a revival with the prospect of a Zombie Blackberry leaving the grave.
As recently as March of 2015 Josh Ridriguez was offering us reasons to buy Blackberry. Firstly, the stock price is dirt cheap. Secondly, evidence was available that hedge fund managers and billionaires were piling into the stock. A third piece of evidence that was of critical importance was that Blackberry was no longer just a mobile devices company. The internet of things is just around the corner and with many of these companies, investors look to things like ecosystem and history of innovation. Whatever about your mobile device being “dans le vent” investors look for underlying signs of the innovation culture. To this end at least Blackberry is showing signs of potential success.
BBRY & AAPL
Within the last month rumours began to surface of AAPL lurking in the long grass. So why might AAPL be interested in its flagging long term rival? Well for one instance, the company still has a customer base of die hard executive level customers enticed by the excellent security and encryption services available through the ecosystem. Remember, it is not too long ago that governments sought to ban the use of Blackberry as they could no longer snoop on certain users. For many top level execs where information is king this is a major incentive to buy Blackberry. So what potentially could AAPL do? Blackberry could become an enterprise brand for a company product in the same way Microsoft bought rights to LUMIA from Nokia for a phone series. By May 11, daily volume was up from about 8.6 Million to over 10 Million. As of the last close volume was consistent at over 9.5 Million. As of the close on May 22, the company has a 52 week range of $7.16 – $12.63. On that day we saw a gap up from $10.27 to an early morning high of $10.52 comfirming the weight in the rumours.
In essence, it remains to be seen if the rumours are true. More cynical observers have noted that the rumours conincided with Blackberry’s announcement of job losses worldwide in late May. The markets certainly seem to be buying the rumours with a chance of gains over the coming weeks. However, if these rumours prove to be false we will see the stock to return back to the previous lows from earlier this year as well as volume returning to lower than average.