BlackBerry Could Be a 2014 Sleeper Stock

 | Dec 16, 2013 | 12:05 PM EST  | Comments
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This Friday, BlackBerry (BBRY) is scheduled to report its latest set of earnings -- and the report should be a disaster. It's going to be difficult to find anything positive in here, unless perhaps the company has burned through its cash at a much slower rate than expected.

What will be interesting about the report will be the performance of John Chen. He has yet to really make a public appearance as the company's new CEO. Chen has written a public letter to customers asking them not to leave, and he's done a couple of print interviews, but the earnings call will be his time to really unveil himself to Wall Street.

We know he's been at work behind the scenes, mostly getting rid of the old executives that he sees as stale. Two more were out the door today, including the head of mergers and acquisitions. (BlackBerry was still doing M&A?)

I've been writing a lot about "sleeper stocks" for 2014 in Real Money for the last couple of weeks. BlackBerry is one I continue to watch, as I think it has the makings of being a sleeper stock at some point next year -- but I don't think it's there just yet.

I think there's probably one final flush of the stock coming up soon. This could be when BlackBerry puts in a kitchen-sink quarter in which it announces a bunch of inventory writedowns and layoffs. It could also be when the company announces some kind of new or revised strategy and proclaims exactly what it will do with the handset business.

So far, it seems as though Chen is committed to keeping the handset business and focusing on the core enterprise and government customers. He also seems supportive of a cross-platform BBM social-networking app and its multi-device management (MDM) business. There's also the future of "the Internet of things." As of today, this is a negligible amount of revenue. However, it could explode in the next five years, and BlackBerry definitely has a play on this.

The value guys harp on BlackBerry's cash and patents. But we really need to get to the other side of Chen's restructuring before you know exactly what you're dealing with on the cash side. The bears continue to say that the company will exhaust its cash before it can turn things around.

Hopefully, Chen will chart out the future and how he'll manage the cash on Friday's call. At that point, it might be time to start looking more deeply at BlackBerry, once again, as a possible sleeper.

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