The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First. 

BBRY Stock Prediction

Summary:

• TCL Communication, the exclusive licensee of the BlackBerry phone brand, has launched the BlackBerry KEYone Android phone in North America.
• The distinctive, keyboard-toting KEYone is apparently attracting many buyers. In spite of its $549.99 price tag, The KEYone is already the No.1 best-selling unlocked phone at Amazon.com
• The KEYone’s success is important to BlackBerry. TCL pays a royalty fee on every BlackBerry-branded phone it ships out.
• While TCL was responsible for the design and manufacturing, the KEYone still comes with the legendary software security suite of BlackBerry.
• BBRY has positive market trend signals based on its algorithmic forecasts.

TCL Communication (TCCL) launched the BlackBerry (BBRY) KEYone Android 7.1 smartphone in North America yesterday. TCL bought the global exclusive rights to manufacture and sell BlackBerry-branded phones last December. Its first handset, the $549.99 KEYone immediately became the no.1 best-seller in the Unlocked Phones category at Amazon (AMZN). Rogers of Canada also confirmed the KEYone received the most pre-orders among all BlackBerry models it has sold to date.

Better-than-expected market demand has already caused a shortage of KEYone units for sale in the U.S. The initial stocks supplied to Amazon and Best Buy’s online marketplace reportedly were all sold-out by May 31.

(Source: Amazon.)

TCL priced the KEYone like a premium handset, and it still attracted many buyers. TCL should double-up the production of the KEYone to prevent a short-supply crisis. It was a mistake of TCL  have underestimated the commercial appeal of the KEYone.

Steve Cistulli, President of TCL Communication (North America), has acknowledged that “extremely high demand” for the KEYone has indeed caused shortages. He promised that TCL is working hard to deliver additional stocks ASAP to its retail partners.

Being Unique Makes You Stand Out In the Crowd

The KEYone’s early success is due to its uniqueness. It is the only keyboard-equipped Android phone available on the market today. The Canadians and Americans did not mind (or probably still unaware) that a Chinese firm manufactured the KEYone. They just wanted a keyboard-equipped Android phone.

Like the banner stated below, the KEYone is distinctively Different. The die-hard fans and customers of BlackBerry are queuing to be the first people to own the KEYone among their peers. Keyboard warriors at the office and messaging enthusiasts know that a physical keyboard still offers the most accurate and fastest way to chat and email.

(Source: BlackBerry)

Business users, government employees, and educators also appreciate that the KEYone is still distinctively BlackBerry. TCL did the hardware but BlackBerry still equipped the KEYone with its proprietary productivity, communication, and security software suite. The KEYone has pre-loaded Hub, DTEK, Password Keeper, and all BlackBerry-made software.

No other Android phone can match its top-notch security features.

If you don’t know that TCL already bought the rights to use the BlackBerry brand, you will think BlackBerry Canada still made the KEYone.

Why BBRY Shareholders Should Care

Aside from the upfront payment that TCL paid when it bought the rights to use the brand, it will still pay royalty fees on every BlackBerry handset it ships out. There was no financial terms disclosed but I guesstimate BlackBerry is getting $25 to $50 royalty on every TCL-made BlackBerry Android phone.

TCL’s global reach can help it sell 10 to 30 million BlackBerry phones every year. TCL, which owns the Alcatel phone/tablet brand, was already the world’s no.8 top vendor of phones last year. It has distribution channels all over the world. Tier-1 carriers in America and in other countries carry Alcatel-branded smartphones for sale to their prepaid/postpaid customers.

The royalty fees from TCL selling 10 million BlackBerry handsets every year could be worth $300 million. Royalty fees are easy, zero-cost revenue. Getting an extra $300 million every year from TCL can help finance BlackBerry’s expansion as a software-focused company.

The monetization potential of BBM is also better if there are more people using it. Getting more people to use BBM is easier done when there are more people using it. The more BlackBerry phones that TCL sells, the more users there will be for BBM.

Conclusion

The halo effect from TCL selling millions of KEYone could help BBRY breach the $12 price level. Blackberry received a $940 million refund from Qualcomm (QCOM) yesterday, May 31. It could use a part of that money to help promote the KEYone in North America, Europe, and Latin America.

TCL can take care of the marketing in China, Asia, and Africa. However, the Chinese firm will be more enthusiastic in allocating marketing budget if BlackBerry also shows a willingness to help. Viral ad campaigns are necessary to attract the attention of Android phone buyers.

Both BlackBerry and TCL are going to benefit from the KEYone. It’s only fair that BlackBerry also helps in the marketing of TCL-made Android phones. BlackBerry cannot afford to be passive on its partnership with TCL. Without sufficient advertising budget, BlackBerry Android phones are going to fade away like Windows Phones.

The loyal business/government customers of BlackBerry still needs BlackBerry phones. TCL is keeping the BlackBerry brand alive and it is taking all the risks. It is only proper for BlackBerry to offer it any assistance it could give.

My buy rating for BBM is backed by its positive algorithmic forecasts. I Know First’s machine learning computers are confident that BBRY has more upside potential within the next 12 months.

Technical indicators also agree with the algorithmic forecasts of I Know First. Taking a long position on BlackBerry right now is the right thing to do.

(Source: investing.com)

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Past I Know First Success With BBRY

I Know First has been maintaining its bullish forecast of BlackBerry, such as its bullish article published on September 10, 2015. The transition from a phone maker to security software has benefited BlackBerry greatly. The company’s merger with Good Technology has resulted in numerous cost savings as well. Since the forecast’s release on September 3, 2015, BlackBerry’s stock has increased by 43.42%.

(Source: Google Finance)

This bullish forecast for BBRY was sent to I Know First subscribers on September 3, 2015. To subscribe today click here.