After BlackBerry (NASDAQ: BBRY) reported a quarterly earnings that showed the software revenue is improving, the stock settled in the $11 range. It looks as though the new trading range for the stock is in the $10 - $11 region.
BlackBerry has a cushion to support its turnaround efforts of moving from smartphone sales to enterprise software. It has $1.9 billion in net cash, which it may use to buy small companies, grow its intellectual property in secure communications, ADAS (autonomous driving), or IoT.
The QNX system, which many automotive companies adapted in its infotainment systems, is gaining traction but is not a big profit-maker for BlackBerry. Still, the company will likely continue investing in this area. ADAS is a growing area for technology companies. BlackBerry’s history in building secure communications will serve it well.
Since it will take a while before the tech solutions in cars plays out, BlackBerry will rely on sales of UEM. The enterprise mobile device management solution is growing in the double digits. Revenue growth would have picked up in the quarter had the company not switched to a subscription model. Investors should expect the switch will give profit margin a solid lift in the quarters ahead.
Takeaway
BlackBerry stock may trade in a narrow range but will reward investors in the long-term, provided the software strategy plays out.
