Blackberry was upgraded to buy from hold at TD Securities. $13 12-month price target. Despite a hardware sales miss, expect new software services to drive earnings power, TD Securities said.
- “BlackBerry is effectively transitioning to a cross-platform software/services company. In this context, the device business should not be banked on to generate profit,” says TD Securities, upgrading BlackBerry (NASDAQ:BBRY) to Buy after the company reported mixed FQ3 results, a 56% Y/Y drop in end-user phone sales, and a ~100% Q/Q increase in BES10 licenses.
- TD sees BlackBerry shipping 8.9M phones in FY16 (ends Feb. ’16) – less than the 10M the company has said it needs to turn a profit on hardware – at a 15% gross margin. ~75% of FY16 gross profit is expected to come from software and legacy services.
- BlackBerry has forecast its software revenue will double in FY16, and that its services revenue will fall by 50%. Shares are now above where they traded prior to the FQ3 report.
On top of laser weapons, passenger jets and space stuff Boeing is also, weirdly, building an ultra-secure Android smartphone called “Black” (not to be confused with theBlackphone). According to the Telegraph, it’s now enlisted BlackBerry’s help to make it even more secure, though it’s not clear how, exactly. Blackberry CEO John Chen said “we’re pleased to announce that Boeing is collaborating with BlackBerry to provide a secure mobile solution for Android devices utilizing our BES 12 platform” and quickly added, “that, by the way, is all they allow me to say.” The Boeing Black smartphone recently cleared the
FAA FCC and comes with all the stuff a spook or G-man could want.
That includes dual-SIM capability, which is unusual for a US-built device but would be very helpful for intelligence agents. (Incidentally, if you pull a Boeing Black smartphone out at airport security, doesn’t it automatically give you away as a spy?) It also has swappable backplates that allow satellite or radio capability, solar power chargers and biometric sensors. Security-wise, it includes disk encryption, hardware crypto capability and the pièce de resistance: a case that will delete all user data in case of tampering.
Though Boeing’s role in the whole thing may seem odd, it has an inside track with the defense and security community, and specifically developed its Boeing PureSecure system for mobile devices. At this point, BlackBerry is certified for use by the DoD, but as far as we can tell, Samsung’s Knox is still the only system okayed by the NSA to carry classified documents.