A visit to trucking firm Titanium Transportation helps explain why BlackBerry’s stock is once again a darling in Canadian markets, having soared 70% in two months.
Nestled in an industrial area some 50 kilometres north of Toronto, the trucker is an early adopter of a new BlackBerry fleet-tracking service known as Radar, which uses $400 boxes to collect and transmit information on movement, temperature and physical contents of Titanium’s 1,300 truck trailers.
Efficiency gains tied to Radar should allow Titanium to get maximum utilization of its fleet, positioning it to cut the number of trailers by 5% and also reduce labour costs, company executive Marilyn Daniel told Reuters.
“Time is everything in our world,” she said. “Being able to tell a driver where exactly a trailer is as opposed to having a driver search through a yard for sometimes hours has been a definite improvement.”
Radar is emblematic of BlackBerry chief executive John Chen’s strategy for turning around the Canadian icon, by steering the company away from consumer electronics and back to its roots of selling products to businesses.
Beyond Radar, BlackBerry is also betting on other types of software for industrial customers. It is leveraging its QNX subsidiary’s software foothold deep inside car infotainment consoles to expand into self-driving technology, while promoting its cybersecurity software and services to thwart increased threats from hacking.
BlackBerry’s stock rallied after it showed signs of progress in quarterly earnings results at the end of March, followed by news in April of a nearly $1 billion cash windfall from arbitration with Qualcomm expected to fund future investments in growth. That comes in the face of an expected revenue decline to below $1 billion this year for the first time since 2004. At its smartphone peak, BlackBerry had annual sales of $20 billion.
Among the recent BlackBerry bulls are institutional investors such as Nokota Management, which took a new position with almost 4.8 million shares in the first quarter, and Oppenheimer Funds, which added 3.3 million more shares to its existing 4 million share stake, according to U.S. securities filings.
Iridian Asset Management and Connor, Clark & Lunn Investment Management, two of BlackBerry’s biggest shareholders, each raised their stakes by around a quarter as of the end of March. Nokota did not respond to requests for comment, while the others all declined to discuss their stakes in BlackBerry.
The strategy is not without risks. BlackBerry faces challenges entering the telematics market, where analysts say rivals include Omnitracs, Teletrac Navman, Tomtom NV , Trimble Inc and U.S. telecommunications giant Verizon Communications Inc.
Verizon last year paid some $2.4 billion to buy GPS vehicle tracking firm Fleetmatics Group Plc.
Radar “is not a unique and earth-shattering product,” said Nicholas Farhi, a partner at OC&C Strategy Consultants who advises companies on optimising logistics operations.
That’s why some investors advise caution, saying it is too soon to figure out how to properly value the new BlackBerry offerings.
“It’s not the type of situation you can justify from a valuation standpoint,” said Tim Ghriskey, chief investment officer at Solaris Asset Management, which manages more than $1.5 billion and exited the stock a decade ago, when BlackBerry phones were still dominant. “It is all about hope and promise.”