Of the 444 million smartphones expected to be sold outside of China, the U.S. and U.K., if BlackBerry took just 4.3% market share, this would equate to over 19 million smartphones. If we add in the same market share in other parts of the world, this adds another 20.38 million. With a potential total of over 39 million smartphones to be sold, this would work out to almost 10 million a quarter. Considering BlackBerry shipped 6 million in the last three months, this would represent a significant increase.
They Do These Two Things Better Than The Competition
In the field of technology, one thing that has been proven over and over again is companies that spend on research and development generally prosper. This gives us a second reason to consider BlackBerry. The company is outspending their competition on R&D.
Some have argued that Apple Inc. (NASDAQ:AAPL)’s recent stock decline is in direct correlation to the company’s relatively small expenditures on R&D. Theoretically, lower R&D spending means less innovation. In the company’s current quarter, Apple Inc. (NASDAQ:AAPL) spent just 1.85% of revenue on R&D. By comparison, Microsoft Corporation (NASDAQ:MSFT) spent 11.78%, Google spent 13.30%, and BlackBerry led the way with 14.3%.
The third reason to consider the stock is, the percentage of cash and investments relative to BlackBerry’s market cap. is nearly absurd. At current values, Google Inc (NASDAQ:GOOG) has the lowest percentage of cash and investments to market cap. With about $46 billion in cash, versus a market cap. of about $257 billion, 18.12% of Google Inc (NASDAQ:GOOG)’s market cap. is the cash and investments on the balance sheet.
Both Microsoft and Apple Inc. (NASDAQ:AAPL) have a high percentage of cash to market cap. at about 28% and 37% respectively. However, BlackBerry beats them all with a percentage of 40.1%. While investors could ignore this high percentage if the company was burning through cash, last year BlackBerry produced $1.89 billion positive free cash flow.
BlackBerry finally has released BlackBerry 10 and the company doesn’t need to be number one or two to be a good investment. With management spending on R&D and a ton of cash on the balance sheet, the stock looks poised to outperform. In the end, I have to change my tune on BlackBerry. The company might not be the best in the smartphone business, but based on these numbers, the stock seems cheap at current levels.
The article 3 Times Better Than The Competition? originally appeared on Fool.com and is written by Chad Henage.
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