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Why Is Everyone Talking About BlackBerry Stock? – The Motley Fool

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BlackBerry‘s (NYSE:BB) stock started the year at $6.58 per share, but it hit a nine-year high of $25.10 on Jan. 27. The stock subsequently retreated to the mid-teens, but still remains up nearly 140% for the year. Let’s see why this battered tech stock suddenly attracted so much interest, and where it could be headed from here.

These developments lit a fire under BlackBerry’s stock

BlackBerry’s rally started in early December after the company announced a partnership with Amazon (NASDAQ:AMZN) Web Services (AWS) to co-develop IVY, a new cloud-based automotive platform based on its embedded operating system QNX.

BlackBerry’s stock jumped again in mid-January after it sold some of its older patents to Huawei and settled its patent infringement lawsuit against Facebook (NASDAQ:FB). BlackBerry initially sued Facebook and Snap back in 2018, claiming their apps infringed upon its mobile messaging patents.

A trader checks a stock chart on a smartphone.

Image source: Getty Images.

On Jan. 25, BlackBerry announced another automotive deal with Chinese tech giant Baidu (NASDAQ:BIDU), which will integrate QNX into Baidu’s maps in forthcoming electric vehicles from GAC Group.

BlackBerry didn’t reveal how much money it received from any of those deals, but they clearly got the market’s attention. The Reddit-fueled short squeezes, which recently lifted GameStop and other shorted stocks to all-time highs, then brought even more speculators to BlackBerry, Nokia, and other unloved stocks — even though only 7% of BlackBerry’s shares were being shorted at the beginning of the year.

Where does BlackBerry go from here?

BlackBerry’s stock might have rallied, but the company’s underlying fundamentals remain the same.

Under CEO John Chen, who took the helm in late 2013, BlackBerry phased out its hardware business, licensed its brand to third-party smartphone manufacturers, and expanded its software and services business. It also aggressively sued other companies to boost its patent licensing revenue.

BlackBerry’s revenue rose 15% in fiscal 2020, which ended last February, but most of that growth came from its acquisition of the cybersecurity firm Cylance and higher patent licensing revenue.

An IT professional checks a tablet.

Image source: Getty Images.

In the first nine months of 2021, BlackBerry’s revenue declined 10% year over year to $683 million after it lapped those gains. Its QNX revenue also plunged as the pandemic disrupted the auto industry.

Its net loss widened from $111 million to $789 million during that period, mainly due to a hefty goodwill impairment charge. But its adjusted EBITDA — which excludes that charge, its stock-based compensation, and other expenses — rose 63% to $132 million.

That bottom-line growth was mainly supported by an increase in its high-margin licensing revenue. Analysts expect BlackBerry’s revenue to decline 14% for the full year, but for its adjusted EPS to rise 39%.

Next year, they expect its revenue to rise 9%, presumably as the auto sector recovers and its Spark suite of security services gains more customers. But its adjusted earnings are still expected to slide 17% as its licensing business faces tough year-over-year comparisons.

Based on those forecasts and the stock’s current price of around $15 a share, BlackBerry trades at nearly 100 times forward earnings and eight times next year’s sales. Those valuations might be reasonable for a high-growth cloud stock, but BlackBerry’s uneven growth doesn’t justify those premium valuations.

Beware of BlackBerry’s hype

BlackBerry has a habit of dressing up old deals like new ones, then obfuscating the actual financial benefits.

For example, BlackBerry’s AWS announcement last December was merely an update of a project that had been revealed nearly a year earlier. In the fine print of its latest SEC filing, BlackBerry says IVY-powered vehicles won’t actually start shipping or generating any meaningful revenue until fiscal 2023. Its work with Baidu is also merely an extension of a previous driverless partnership.

BlackBerry didn’t reveal its exact financial expectations for either deal, and the only visible benefit is the installation of QNX in new vehicles — which isn’t game-changing, since it’s already the dominant OS in new cars.

It’s also odd that BlackBerry didn’t reveal any details about its long-awaited settlement with Facebook. That lack of clarity is frustrating, since BlackBerry generated nearly a third of its revenue from its “licensing and other” segment in the first nine months of 2020, and it needs the business to keep growing to boost its margins and earnings.

Based on those facts, I suspect that none of BlackBerry’s big announcements since December will meaningfully boost its revenue in fiscal 2021 or 2022.

It’s time to take profits

At this point, BlackBerry’s investors shouldn’t look a gift horse in the mouth. A combination of hype and a market-wide short squeeze boosted this stock’s price to double-digit levels again, but these gains are unsustainable.

BlackBerry isn’t doomed yet, but its core business still faces significant challenges from other cybersecurity companies, and its licensing business will eventually run out of companies to sue and patents to sell. Therefore, investors should take profits in BlackBerry now instead of waiting for lightning to strike twice.

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Baby formula shortage worrying new parents in Ottawa | CTV News – CTV News Ottawa

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Empty shelves, a lack of options, and crying children; the ongoing baby formula shortage in the United States has made its way to Ottawa, and new parents say they’re desperate for answers.

“I hit panic mode as soon as I saw the shelves. Not only was there not the formula I needed, there was no formula at all. No brands, no different age categories, it was literally empty,” Melissa Lamb said.

Lamb says she stopped at four different stores before finding baby formula for her two-month old daughter, Lola.

“When you find some, you’re like, ‘I need to buy all of it that they have on the shelves.’ I didn’t because I want to save some for other moms who maybe aren’t as fortunate as me, who can obviously breastfeed,” Lamb said.

According to an audit from Field Agent Canada, baby formula is 21 per cent out of stock on Canadian shelves and slightly higher in Ottawa at 26 per cent. The shortages are a far cry from the estimated 40 per cent in the United States, but parents say they’re still concerned.

“I’m starting to get anxious again that we’re not going to be able to find it,” Janelle Côté said.

Côté’s six-month old daughter, Evie, suffers from acid reflux, and relies on Similac Sensitive formula; one of the many Similac products that were part of a major recall in the United States.

The recall ultimately led to a shutdown of baby formula maker Abbott’s Sturgis, Michigan facility; a major factor in the increasing supply issues.

“Within a month of taking this formula, we noticed it was gone. There was nothing. The shelves were constantly bare and then we found out there was a recall and that the recall was affecting other formulas because parents were having to buy our brand,” Côté said.

U.S. officials on Monday reached an agreement to allow Abbott to restart its largest domestic factory, though it will be two months or more before any new products ship from the site and retail experts in Canada say it could several weeks after shipping before shelves in Ottawa return to normal.

“I think you’re going to see something that’s four to six weeks from when that product starts to flow to when we start seeing a recovery at store level and that’s really assuming that consumers don’t continue to panic buy,” Jeff Doucette, General Manager of Field Agent Canada said.

The Ottawa Food Bank says the supply shortage has been affecting them for months, with some formula nearly impossible to purchase.

“In particular formula stage one has been almost impossible for us to find. Since January we’ve seen a 75 per cent decrease in the amount of formula we’ve been able to put out into the community,” Rachael Wilson, Executive Director of the Ottawa Food Bank said.

Wilson says 80 per cent of the formula the food bank receives is now donated items.

“We’ve never experienced anything like this. Having to order and pray that it shows up, it’s really challenging and stressful,” she added.

The supply chain delays mean Ottawa families will likely be forced to continue their hunt for formula for the next several weeks.

“I’m going to be at the mercy again of being on my phone, checking all these stocks at Walmart,” Côté said.

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What's fuelling record-high gas prices in Canada? – CBC News: The National

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Canada's inflation rate inches up again, to new 31-year high of 6.8% – CBC News

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The cost of living continues to rise at the fastest pace in decades, with Canada’s official inflation rate rising at a 6.8 per cent annual pace in April, a new 31-year high.

Statistics Canada reported on Wednesday that the cost of living crept higher mainly because of increases in the cost of food and shelter. Food prices have risen by 9.7 per cent in the past year, while shelter costs are up by 7.4 per cent.

Global factors, including the war in Ukraine disrupting the price and supply of grains, as well as outbreaks of bird flu and extreme weather events in the United States, are combining to drive up the cost of meat and produce.

Among the increases:

  • Fresh vegetables, up 8.2 per cent
  • Fresh fruit, up 10 per cent
  • Meat, up 10.1 per cent
  • Bread, up 12.2 per cent
  • Coffee, up 13.7 per cent
  • Pasta, up 19.6 per cent.

“Rising food prices are a global issue, and we can directly correlate those increases to what’s happening in Ukraine,” economist Royce Mendes with financial services conglomerate Desjardins told CBC News in an interview on Wednesday.

“Food is shipped from all over the world to Canada,” Mendes said, “and our weakening dollar makes it more expensive to import.”

Gasoline has been a major driver of inflation of late, but pump prices actually fell by 0.7 per cent in April after spiking by more than 11 per cent the previous month. Compared to where they were a year ago, gas prices are still up by more than a third, however.

Economists had been expecting the overall inflation figure to ease slightly from March’s 6.7 per cent level, but instead it went slightly higher. That’s a troubling sign that inflation has yet to peak, even though it’s at its highest level since 1991.

The U.S. has also seen its inflation rate skyrocket in recent months, but numbers for April suggest that the wave may have crested there, with the official figure cooling to 8.3 per cent in April from 8.5 per cent in March.

“Core inflation has been accelerating in Canada for a few months now, in contrast to the U.S.,” Mendes said. “What went up still isn’t coming down in Canadian inflation, and might not any time soon.”

The high inflation number makes it even more likely that the Bank of Canada will hike its benchmark interest rate at its next policy meeting in early June.

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