The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
BlackBerry, the smartphone maker formerly known as (Prince?) Research in Motion, is having a terrible 2013.
Okay. I'm sugarcoating the situation by merely referring to this year as terrible. It's been horrific. Deplorable. Ghastly. Apocalyptic even.
Shares of BlackBerry (BBRY) are down more than 50% this year. They fell as much as 4% at one point Tuesday and hit their lowest level since September 2003 in the process. But the stock somewhat mysteriously rallied as the day progressed and finished 4% higher.
You probably know the BlackBerry story by now. But here are the highlights (or shall I say lowlights?) of the year.
BlackBerry finally launched its Z10 touchscreen smartphone in January. The phone ran on the company's long-delayed new BlackBerry 10 operating system. Sales were not particularly good. Once again, a massive understatement.
Consumers had moved on from QWERTY keyboard phones that were great for e-mailing (but not much else) to fancier, PCs in a pocket such as Apple's (AAPL) iPhone and devices running on the Google (GOOG) Android operating system -- most notably Samsung's Galaxy.
Heck, even Microsoft (MSFT) and Nokia did a better job of catering to the shifting tides in the mobile landscape with the Lumia brand of phones that run on Mister Softee's Windows Phone OS.
There were some brief hopes this fall that BlackBerry would be saved by its largest shareholder -- investing and insurance firm Fairfax Financial. Fairfax's founder Prem Watsa has often been described as Canada's Warren Buffett.
But Watsa's plan to take the company private collapsed after no other firms were willing to actually buy BlackBerry.
Last month, the company abandoned its plan to review any strategic alternatives, ousted CEO Thorsten Heins after a brief tenure that began in January 2012, and is now focusing on the so-called "prosumer" market of professional consumers that actually may still prefer BlackBerry phones to those running on iOS, Android or Windows.
Now with BlackBerry stock trading at its lowest point in more than a decade, it's tempting to declare that the company may not survive for much longer. After all, analysts expect the company's sales to continue plunging in 2014 and that BlackBerry will keep bleeding red ink.
Yet here's the thing. I honestly believe that BlackBerry's stock may finally have bottomed. Don't laugh. Okay. You can chuckle a little. But hear me out.
Investors appear to be pricing in the imminent demise of BlackBerry. That seems premature. The company had $2.6 billion in cash as of the end of August.
Yes, that's down from $3.1 billion a quarter earlier. But even if BlackBerry ran through $500 million in cash a quarter for the foreseeable future, it has enough cash to get it through early 2015. And that $2.6 billion figure doesn't include a $1 billion investment it got from Fairfax in early November.
BlackBerry will release its next quarterly results (can't call them earnings, I am afraid) on December 20. So we'll soon get more clarity about the company's balance sheet.
But the biggest thing I think investors are missing with regards to BlackBerry (at least from a stock perspective) is that it won't take much for shares to rebound.
Expectations are for the company to continue its slow fade into tech obsolescence. With that in mind, the company should be able to easily ooze over Wall Street's low bar. And if that happens, the company could go from dog of 2013 to hero of 2014.
Just look at how two of this year's biggest winners on Wall Street have turned their fortunes around after a brutal 2012.
Best Buy 's (BBY) stock is up 250%. Hewlett-Packard (HPQ) has gained 90%. Neither company is financially healthy per se. Sales for both are expected to be merely flat in their next fiscal year compared to this year.
But they are less worse off now than they were a year ago. And that's in large part due to new-ish management teams taking a cold, hard look at the companies and making changes to get them on the right track.
In the case of Best Buy, CEO Hubert Joly and CFO Sharon McCollam deserve a huge amount of praise for making Best Buy more competitive with the likes of Wal-Mart (WMT) and Amazon (AMZN) again. Best Buy's revamped web site is really helping.
And HP CEO Meg Whitman, the former chief of eBay (EBAY), is saying all the right things about how it's going to take HP a long time to completely turn its fortunes around.
She's also been wise enough to focus more on organic growth in software and services as opposed to doing more deals. After all, it was the acquisitive sins of Whitman's predecessors (Carly Fiorina, Mark Hurd and Leo Apotheker) that made HP such a bloated mess in the first place. (Hopefully she doesn't now prove me wrong by going out and overpaying for a 3-D printer maker.)
And guess what? BlackBerry has a new leader too. John Chen is the interim CEO. And if there's anyone that can turn the company around, Chen seems like the right person.
For one, he's not a RIMM/BlackBerry lifer. He will be less emotionally wedded to the company's legacy and more likely to make rational decisions about how the company needs to change its ways in order to survive -- such as possibly ditching devices and focusing more on software and patents.
Plus, Chen has already been the architect of a miraculous tech turnaround. He took Sybase, a struggling database software developer, and made it into a mobile powerhouse. Chen became CEO of Sybase in 1998, returned the company to profitability in a few years and ultimately wound up selling the company to SAP (SAP) in 2010 for nearly $6 billion.
Now, I know what you're thinking. Chen doesn't have a dozen years to turn around BlackBerry. But all Chen has to do is talk a good game and stem the bleeding. If he does that, the enterprise and government customers that have yet to abandon BlackBerry will likely stick around.
And if Chen can find a way to make more money from existing customers as opposed to worrying about grabbing market share from Apple and Google, then the stock could easily bounce back.
Don't get me wrong. BlackBerry will never be dominant again. But it doesn't have to be for investors buying the stock now to be rewarded. All the company has to do is prove that the rumors of its death are greatly exaggerated. Chen should be able to accomplish that.
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