Canadian firm’s fleet-tracking service ‘Radar’ has made it a market darling again

 

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.

Industrial customers

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.”

 

Vinyl Records Are Popular Again, So Sony Wants Back In After 30 Years

 

The next major profit driver in the music industry may have nothing to do with streaming, connectivity or the cloud.

Last week, one of the biggest names in the music business, Sony Corp (ADR) SNE 0.67%, announced it will once again be producing vinyl records for the first time in 28 years.

It’s easy to read headlines about a retro push like vinyl records and write it off as a promotion or one-time event to appeal to an older generation of nostalgic music lovers. However, the vinyl record movement appears to be something much larger.

Billion-Dollar Industry

“People think millennials just stream and are just digital, but actually I think we are going to see increasingly over this coming year that young people still want something tangible and real and that’s where vinyl is taking on the role that the CD used to have,” says Vanessa Higgins, CEO of Regen Street and Gold Bar Records.Vinyl Records Are Popular Again, So Sony Wants Back In After 30 Years

Consulting firm Deloitte estimates that vinyl record and accessory sales will be a $1 billion industry in 2017 and that 20 million people will buy at least one vinyl record this year. In fact, in Japan, demand for vinyl records is too strong for vinyl record producer Toyokasei to keep up.

Last year, global vinyl sales surged 53 percent to their highest level in 25 years. A 500 percent rise in streaming music revenue since 2013 has cannibalized many other forms of revenue in the ever-changing music industry. CD sales were down another 10 percent in 2016. The chart below shows how music consumption has shifted from vinyl records to cassette tapes to CDs to digital downloads and now to streaming.

Related Link: Bob Seger Finally Joined The Streaming World: Here Are 8 Music Icons Still Holding Out

But even though vinyl production is making a comeback, vinyl records still account for just about 6 percent of total album sales. According to Jordan Passman, CEO of SCORE A SCORE, the uptick in the popularity of vinyl records has been fueled directly by the rise in streaming services like Pandora Media Inc P 1.5%, Spotify and Apple Inc. AAPL 1.02%’s Apple Music.

“As streaming continues to grow (and change), there will always be a market for the powerful emotional impact of something tangible, especially with a nostalgic tie,” Passman wrote earlier this year.

Good Rockin’ Tonight

In a much more general sense, the role vinyl records play in the future of the increasingly digital music industry could speak volumes about the degree to which the human race is satisfied with an intangible, virtual world. For technology companies working on virtual reality or other services intended to replace real-life experiences with digital ones, the vinyl record phenomenon could be a wake-up call that it may be more difficult than it seems to replicate the innate appeal of hands-on, real-world products and interactions.