Once an example of Canadian growth and technological innovation, former smartphone maker BlackBerry Ltd. (TSXBB)(NYSE:BB) has certainly not performed well at all in recent years despite a bold pivot and various large investments in other high-growth sectors. The former hardware maker has now shifted to an entirely software-focused business, and under a new management team led by CEO John Chen, has done an impressive job of making such a substantial pivot in a relatively short amount of time.
That said, the shift toward software used primarily in automobiles has faced several serious headwinds in recent years which has resulted in a significant reduction in investor optimism for the company’s QNX platform. The automobile sector as a whole is one which many analysts believe has already peaked in North America.
This new "peak-auto" world does not bode well for any tech company requiring higher levels of growth to support its valuation. The self-driving car segment which BlackBerry has targeted specifically with its strategic shift remains miniscule compared to the overall auto market, and while this segment does carry a potentially lucrative growth outlook, uncertainty remains rampant as investors ponder the speed with which investors will regulate such automation into reality.
Blackberry’s recent acquisition of software security company Cylance is one which bolsters the company’s competitive advantage in the niche of software security, but is one which some analysts believe was carried out of too hefty a valuation, reducing the benefit of what is otherwise a transformative long-term acquisition.
Invest wisely, my friends.
