Despite being in different industries, BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) and Bombardier Inc. (TSX:BBD.B) possess a lot in common.
First of all, both have seen much better days. BlackBerry once dominated the smartphone market, only to be crushed by the iPhone and Android-based devices. Meanwhile, Bombardier was once a clear leader in the business jet market, but has since been put under strain through the development of its CSeries jets.
Each company even struggled to remain afloat at some point. Luckily, those issues happen to be largely handled, at least for now. BlackBerry received a capital injection from Fairfax in late 2013, while Bombardier raised billions in new funds earlier this year.
Now, their main worries are on the top line. BlackBerry\’s revenue continues to be shrinking, and software-based revenues are falling short of expectations. Meanwhile, Bombardier is well short of its target for CSeries orders, and have any momentum in this area.
How BlackBerry Ltd\’s proceed to embrace Android may give it a new lease on lifeBombardier Inc\’s CSeries a \’highlight\’ in Paris, but fails to generate new orders on first day
But if either company turns around, shareholders may go through some big gains. So, why is BlackBerry the better option?
BlackBerry\’s advantages over Bombardier
While BlackBerry may be struggling to win sales, it has some strong competitive advantages, as well as some prized assets.
To begin with, BlackBerry may be the undisputed leader in mobile security, that is of ever-increasing importance. The business\’s BBM messaging service has over 90 million active users as of last fall. Its QNX operating-system is well positioned in the lucrative Internet of Things market. And let\’s not forget about its 44,000 patents.
Combined, these assets are likely worth a lot more than BlackBerry\’s stock price. But here\’s the catch: BlackBerry is unable to take full advantage, simply because it has this type of bad brand. The good news is that BlackBerry\’s assets and capabilities could be extremely useful for another company\’s hands.
So, it ought to surprise no one that companies came knocking on BlackBerry\’s door. The most serious discussions occurred in January when unnamed sources said Samsung had made a US$7.5 billion offer. That\’s a lot more than 50% higher than BlackBerry\’s current market value.
Bombardier\’s situation is much worse. Rivals are heavily discounting their single aisle aircraft, putting serious pressure on the CSeries. And it\’s working. Both Boeing and Airbus are off to strong starts at the Paris Air Show, announcing nearly US$20 billion (according to list prices) in orders together. As of this writing, Bombardier has yet to announce any new orders for that CSeries.
Unlike BlackBerry, Bombardier has no prized assets that others would covet. And because Bombardier has roughly US$9 billion indebted, no competitor could be interested anyways.
So, if you are seeking a stock that may turn its fortunes around, Bombardier appears like a much longer shot. Personally, I would opt for BlackBerry.
The original version of this article can be seen at www.fool.ca