How BlackBerry Can Beat Apple And Return 400% To Investors

Yesterday, with great fanfare, BlackBerry Q10 and BlackBerry Z10 were introduced. Z10 is a touch screen phone and Q10 has the traditional BlackBerry keypad.

It is undisputed that BlackBerry does not come close to matching Apple’s ecosystem. However, Z10 and iPhone, when compared based on their specifications, are about even. Undoubtedly, both Apple as well as BlackBerry fans will take issue with the foregoing statement.

I am not in the business of recommending phones but rather in the business of uncovering investments that yield handsome returns. The main question for me is ‘How can BlackBerry beat Apple and generate a 400% return for investors?’

In my analysis, if BlackBerry stays on its present course, beating Apple and generating handsome returns is an uphill battle. However, there is an easy way for BlackBerry to outdo Apple where it counts.

It is no secret that Apple has a big problem in emerging markets. Apple products are simply too expensive for the masses in these markets. Apple cannot ignore emerging markets for two reasons. First, the growth is in emerging markets. Second, Apple has nearly saturated the developed world.

Unlike the United States, where some snobs would rather not be seen with a BlackBerry, BlackBerry remains popular in emerging markets.

There are plenty of Asian phone manufacturers capable of producing decent phones at low cost for emerging markets. To date such manufacturers have mostly relied on Google Android.

What if BlackBerry were to start licensing its BB10 operating system to the likes of Samsung, HTC, ZTE, and Huawei? These companies appear to be eager to reduce their dependence on Android and are likely to be eager licensees of BB10, and have proven capable of quickly flooding markets emerging markets with attractive phones. In the blink of an eye, Apple will be beat in the markets where it counts.

What will BlackBerry get out of such a licensing arrangement? Licensing will generate significant royalties and much faster proliferation of BB10.

From an investment perspective, BlackBerry will be treated mostly as a software company. Growing software companies are accorded very high P/Es. There are no direct comparisons in the mobile operating system. However, analyzing some other companies is instructive. Let’s take a look at Red Hat. Red Hat provides open source software solutions to enterprises worldwide. Red Hat trades at a trailing P/E of 73., the granddaddy of cloud based application software trades at a forward P/E of 88.

Hardware companies such as Nokia are traditionally accorded low P/Es.

In the foregoing scenario, BlackBerry can easily earn $1.70 per share and at a P/E of 30, much lower than that of growing software companies, the stock will return about 400%.

Of course, painting a scenario is a lot easier than executing that scenario. In my 30 years in the markets, the only way I have found to catch opportunities before Wall Street is to do many, many painstakingly detailed scenario analyses ahead of the time. Such advance analyses is the key to reading the tea leaves correctly from new developments as they come to pass and act with conviction quickly and early.



20 thoughts on “How BlackBerry Can Beat Apple And Return 400% To Investors

  1. May I just say what a relief to uncover somebody that truly understands what they are discussing on the web. You definitely understand how to bring a problem to light and make it important. More people really need to look at this and understand this side of the story. It’s surprising you’re not more popular since you definitely have the gift.

  2. When I initially left a comment I seem to have clicked on the -Notify me when new comments are added- checkbox and from now on every time a comment is added I recieve four emails with the same comment. Is there an easy method you can remove me from that service? Appreciate it!

  3. An intriguing discussion is definitely worth comment. I think that you need to write more about this issue, it might not be a taboo matter but usually people do not discuss such subjects. To the next! Kind regards!!

  4. You’re so interesting! I do not believe I have read through a single thing like that before. So good to find somebody with some unique thoughts on this issue. Seriously.. many thanks for starting this up. This website is one thing that’s needed on the internet, someone with a bit of originality!

  5. There are actually certainly several different information like that to take into consideration. That is definitely a great point to carry up. I supply the concepts above as standard inspiration having said that clearly you will find questions similar to the one you convey up where essential factor will be operating in sincere very good faith. I don?t know if very best practices have emerged around issues like that, even so I am certain that your job is clearly recognized as a fair game. Both boys and girls really feel the influence of just a second’s pleasure, for the rest of their lives.

  6. I just wanted to write down a small word to thank you for those fabulous secrets you are writing on this website. My long internet look up has at the end been paid with high-quality facts to write about with my family. I would repeat that many of us visitors actually are extremely lucky to be in a perfect place with very many special professionals with helpful opinions. I feel quite lucky to have encountered the webpage and look forward to many more exciting moments reading here. Thanks again for a lot of things.

  7. Hi there! I could have sworn I’ve visited this site before but after browsing through some of the posts I realized it’s new to me. Anyhow, I’m certainly happy I found it and I’ll be book-marking it and checking back regularly!

  8. Howdy! This blog post could not be written much better! Looking through this post reminds me of my previous roommate! He constantly kept talking about this. I will forward this article to him. Fairly certain he’ll have a great read. Many thanks for sharing!

  9. You are my aspiration, I possess few web logs and occasionally run out from brand :). “He who controls the past commands the future. He who commands the future conquers the past.” by George Orwell.

  10. It’s actually a great and helpful piece of info. I’m satisfied that you shared this helpful information with us. Please stay us informed like this. Thank you for sharing.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s