BlackBerry Ltd. (NASDAQ:BBRY), (TSE:BB) finds itself in a tight spot as its hardware unit continues to make losses. It was only last year that CEO, John Chen, said the firm was set to start growing after years of layoffs and restructuring. Recently announced job cuts continue to arouse concerns about the kind of impact they will have on the firm’s long-term prospects.
It is still unclear whether the layoffs will have an impact on the firm’s prospects on the Street. BlackBerry has found it hard to compete with the Apple and Samsung especially in developed markets. The firm’s prospects on the hardware side of the trade continue to be hurt by other big smartphone makers that control market share in terms of unit sales.
A company that resorts to cost cuts in the phone business is always sure to elicit concerns from the Street, affirms JC Clark Investments CEO, Colin Stewart. Unlike BlackBerry, Apple Inc. (NASDAQ:AAPL) has spent a lot on its iPhone product line and that product line continues to enjoy strong demand on the high-end where profit margins are high.
Blackberry’s Valuable Software Business
The success of the software business will come down to the number of clients BlackBerry can attract more so large firms. The software front is the firm’s last hope in the push for more shareholder value. Shareholders have been calling for the company to focus more on the software a front that continues to generate more value.
Further growth could be achieved with the connected car operating system QNX, where BlackBerry is a key player powering nearly 50 million cars worldwide. Shorting the stock may not be a good move as BlackBerry may turn out to be an acquisition target. The stock could appreciate in value because of the acquisition talk.
It will be interesting to see the kind of strategies that will come into play as BlackBerry moves to spur growth on the software front. It has the potential to offset any weakness on the hardware front after years of losses.