BlackBerry Ltd (NYSE:BB) schedules to release its third-quarter earnings for 2019 on December 20 even as uncertainty rocks the company’s stock. Seemingly transitioning to the software business is taking a toll on the stock company’s stock and revenue but only in the short term.
BlackBerry’s stock Performance
BB’s stock has sagged 5% last week alone, 15% over the past month and a disappointing 26% in the quarter. During the recently ended trading period, the company’s stock gained 2.72% closing at $7.55 and as such scored a market capitalization of $4.06 billion. The stock got a consensus rating of 2.6 ranking third at Zacks with a rating of 3 (HOLD). The stock’s price fell -48.66% from its 52-week high while gaining only 0.47% from its 52-week low.
Source: stockcharts.com
However, analysts covering the stock have given it a target price of $11.54 still a decline from its all-time annual high of $18.14. The stock’s disappointing performance in the past trading sessions is a natural precedent for the transition to software space. BB becomes the first tech company to make a sharp transition to the rapidly growing Enterprise of Things space and gaining traction from almost immediately. Analysts predict that uncertainty will continue to mar the company’s stock until the company gains traction in its new field and its flagship products drive in meaningful revenue.
Call for Rebranding
As BB continues to diversify away from smartphone manufacturing, some sectors of the tech space are already calling for the company’s rebranding. As reported by ZDNet, the company is better off adopting a new brand name as BlackBerry is often associated with its smartphones product line that it discontinued back in 2016.
BlackBerry is actively venturing into the Enterprise software, cybersecurity and the internet of things technologies. As it would be evidenced by its third-quarter financial earnings, the company will post revenue from its enterprise software and services, Licensing business and IP with nothing to show for its hardware product line from which it draws its name.
Acquisition of Cylance
Whether the company will yield to the suggestions to rebrand is no big deal; however, the company’s entry into cybersecurity is the real topic of discussion. The company recently acquired Cylance for a record $1.4 billion. In less than five years the company has moved from a household name in the smartphone industry to another leading role cybersecurity as evidenced by its new acquisition.
Under the terms of the acquisition, Cylance will continue to operate independently but under the BlackBerry umbrella. Cylance is a leading provider of antivirus, endpoint protection, original equipment manufacturing (OEM) and supply chain security products. The provider boasts a rich portfolio of clientele including federal government agencies, Fortune 500 and over 3,000 enterprise customers among others.
The company continues to strengthen its investments in security software adding to its existing portfolio including the U.K security consulting firm Encryption. The company’s soon to be announced Q3 earnings is expected to feature strong revenue from the sale of the company’s proprietary QNX embedded software.
BB’s QNX Software
Previous quarter’s revenue spiraled almost 30% thanks to its QNX business. Over the past quarter, the company has been involved in the efforts of diversifying QNX’s application further from the automotive infotainment market. The company’s team is exploring the software’s application on Advanced Driver Assistance Systems to enhance the driving experience. With multiple applications for the software, the company is bound to make good revenue that would go a long way in stabilizing its stock and attracting lots of attention from investors.