BlackBerry Ltd (NASDAQ:BBRY)’s Turnaround Plan Boosts Investor’s Confidence

Posted by admin December 23, 2013 0 Comment 1998 views

BlackBerry Ltd (NASDAQ:BBRY) witnessed great spike on Friday, as the share price surged more than 15.5%, gaining $0.97 from its previous close. This surge helped the stock to climb 32% above its 52 week low of $5.44; however, it is still trading about 60% below its 52 week high of $18.32.

The volume was also magnificent as more than 139 million shares get traded during the session, compared to its 30 day average volume of approximately 17.8 million shares. As a reminder, the Company’s stock is trading way below its 2007 price of above $225 and its market value has been eroded to $3.79 billion.

Turnaround Strategy

Though BlackBerry Ltd (NASDAQ:BBRY) also announced 3Q14 earnings on Friday, it was the turnaround strategy revealed by the Canadian telecom company that boosted the investor confidence and stock prices.

The Company announced 5 year partnership with Taiwan based Foxconn Technology Co Ltd, where BlackBerry Ltd would not require paying upfront cost for devices which will be manufactured by Foxconn Technology at its Mexican and Indonesian factories. Initially Foxconn Technology will build low-end devices for emerging markets and over a period the deal could be extended for BlackBerry’s top-line smartphones.

Besides manufacturing, Foxconn Technology will also help with design, development and distribution of BlackBerry devices. In return, the Taiwanese company will part the profit on sale of such devices and bear the risk of write-downs if smartphones go unsold.

Foxconn Technology is the world’s largest electronic parts manufacturer and is also been executing large assignments for industry leader Apple Inc. (NASDAQ:AAPL).

Earnings Highlights

BlackBerry Ltd (NASDAQ:BBRY) posted net loss of $4.4 billion ($8.37 per share) for 3Q14 as compared to net income of $9 million ($0.02 per share) during a year ago quarter. However, loss accounts to $354 million or $0.67 per share, excluding inventory write-downs and impairment charges. Analyst on average had expected net loss of $0.44 per share on a consensus revenue estimate of $1.6 billion. The Company posted revenue of just below $1.2 billion.

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