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BlackBerry, 7digital Extend Tie; Tweak Profit Sharing Terms

Zacks Equity Research

BlackBerry Limited ( BBRY) recently extended its mobile music service agreement with 7digital, a digital music provider based in the U.K.


The deal renewal will allow the existing BlackBerry World storefront customers to continue using 7digital “lockers” apart from buying and storing new music. Further, subscribers will enjoy the liberty to shift to new lockers within a 12-month period and 7digital will facilitate the entire migration procedure. 


Interestingly, apart from managing the prevailing lockers, 7digital will develop a app for BlackBerry users from which subscribers can continue to buy music.


Meanwhile, 7digital has decided to alter the profit sharing method with BlackBerry. As per the new reform, the music dealer will retain the entire profit margin earned on track sales which had previously been shared with BlackBerry. On the other hand, 7digital will receive monthly fees from BlackBerry for using its services till August next year.


Around two months back, BlackBerry landed a three-year deal with mobile payment company, EnStream LP, to deliver an advanced secure platform for monetary transactions that take place between banks and customers.


Earlier, the Canadian handset manufacturer reported first-quarter 2015 financial results wherein loss from continuing operations came in at $6 million. In the same quarter, the company sold 2.6 million smartphones, down 62% year over year. Availability of high-end Apple Inc.’s ( AAPL) iPhones and Google Inc.’s ( GOOG) smartphones has resulted in the deterioration.


Hence, we believe that such value-added services will not only improve revenues for the company but will also bolster smartphone sales while moving ahead.


BlackBerry currently has a Zacks Rank #2 (Buy). Cellcom Israel Ltd. ( CEL) with a Zacks Rank #1 (Strong Buy), is a better-ranked stock worth reckoning in the wireless industry.

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