At least one analyst is still bullish on BlackBerry

It still sells more smartphones than some competitors and offers unrivaled security

Despite reports that BlackBerry is up for sale after a dismal second-quarter earnings report, one analyst believes the company isn't dying and is actually selling more smartphones than several other manufacturers.

The biggest disappointment in BlackBerry's quarter was a loss of nearly $1 billion, most of which was attributed to a write-down of unsold Z10 smartphones.

However, even with that write-down, BlackBerry sold 1 million Z10's in its first quarter of sales in early 2013, said Carl Howe, an analyst at Yankee Group. By comparison, it took Nokia a full year to sell more than a million Lumia smartphones by the end of 2011, he explained in a note issued to clients on Thursday.

In BlackBerry's second fiscal quarter this year, Howe said, BlackBerry smartphone sales exceeded those of the Motorola X and HTC One. He didn't provide sales figures.

"If BlackBerry is dead, those companies should be dead too -- and they aren't," Howe said.

While many analysts view BlackBerry's smartphone business to be its weakest link when compared to the value of its secure network and its patent portfolio, Howe said sales of the Q5 and Q10 with their physical qwerty keyboards and a 5-in. Z30 touchscreen device could do well with buyers. That's especially true for consumers wanting a larger screen device for use with Blackberry Messenger, a social network and email.

Writing down $1 billion of Z10 inventory in Q2 also "clears the way for better operating results in future quarters," Howe said.

Fairfax Financial Holdings has a preliminary deal to take BlackBerry private for $4.7 billion. There are also other potential suitors, including BlackBerry founders Mike Lazaridis and Doug Fregin and, reportedly, PC maker Lenovo and Cerberus Capital Management.

Howe doesn't believe that BlackBerry will somehow survive intact as an existing public company. "I believe they will go private one way or another and losses will happen for a while," he said.

BlackBerry also has $2.6 billion in cash to carry it through any rough times. "It will take a long time to run through that $2.6 billion," Howe said.

Management at BlackBerry also appears to "be working hard to live within its means" as it plans to cut the work force by 4,500, down to what Howe said would be a total of 7,000 workers.

The biggest factor favoring BlackBerry's future success is how many large companies -- he estimated one-third of the Fortune 500 -- still need the high standard of security that BlackBerry offers through its Network Operations Center and BlackBerry Enterprise Service software. One example is the recent announcement of auditing and consulting firm KPMG in Italy that it's buying 3,500 new BlackBerry 10 smartphones and migrating to BlackBerry Enterprise Service 10

"At firms like that, data must be secured in certain ways to avoid legal liability and some of the alternatives on the market are pretty ugly," Howe said. "Companies like KPMG can't deal with second-class security."

Howe told clients, in summary: "It's very difficult for a company like BlackBerry to go bankrupt when it has a multi-billion-dollar revenue stream from existing products and billions of dollars in the bank, regardless of how many reporters try to write its epitaph.... BlackBerry still offers differentiated value for security-conscious businesses, many of which cannot accept the lower levels of security offered by competing platforms."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at  @matthamblen or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

FREE Computerworld Insider Guide: IT Certification Study Tips
Editors' Picks
Join the discussion
Be the first to comment on this article. Our Commenting Policies