Bill Barker, a Motley Fool analyst known for his keen insights on macroeconomic trends, joins David Meier, an expert on corporate turnarounds, to discuss how companies rebound in changing landscapes. They dive into the current stock market dynamics, the looming Santa Claus rally, and the evolving challenges in cybersecurity. The conversation highlights the contrasting fates of BlackBerry and Garmin, showcasing Garmin’s remarkable comeback through strategic innovation, while examining the ongoing struggles of traditional automakers.
Blackberry's pivot into cybersecurity came late, facing challenges due to late entry and lack of proper sales force and marketing.
Garmin's successful second act was achieved by leveraging its expertise in GPS-enabled navigation, expanding product offerings and focusing on returning capital to shareholders.
Deep dives
Blackberry's Second Act: From Mobile Phones to Cybersecurity
Blackberry, once known for its secure mobile communications, has undergone a significant shift from being a mobile phone maker to specializing in enterprise mobility management suites for cybersecurity. The company's pivot into endpoint security, which focuses on securing mobile devices, comes late in the game and faces stiff competition from other cybersecurity providers. While 59% of Blackberry's revenue comes from its cybersecurity portfolio, the company's late entry and lack of proper sales force and marketing make it challenging to achieve a successful turnaround.
Garmin's Second Act: Leveraging GPS Technology for Diverse Products
Unlike Blackberry, Garmin managed to navigate a successful second act by capitalizing on its expertise in GPS-enabled navigation. The company expanded its product offerings to include fitness wearables, aviation navigation tools, auto infotainment systems, and more. Rather than making major acquisitions, Garmin focused on returning capital to shareholders, sustaining its business, and gradually exploring new product lines. This patient and steady approach paid off, with Garmin's stock experiencing substantial growth and establishing itself as a premier player in GPS-enabled devices.
Turnaround Candidates to Watch: Zippia, Everbridge, and Teladoc
In the realm of turnarounds, three companies worth keeping an eye on are Zippia, Everbridge, and Teladoc. Zippia, which provides labor market data, is waiting for the return of job listings to improve its business. Everbridge, a provider of emergency communications software, faces challenges after a CEO departure. The company needs to rebuild trust with customers and evaluate potential damage to its business. Teladoc, a pioneering telemedicine company, must address the commoditization of its industry and regain its innovative edge. Turnaround timelines range from several months for Zippia to potentially years for Teladoc, depending on the extent of business model damage and the presence of near-term catalysts.
When disruption strikes, what a company does next is crucial.
(00:21) Bill Barker and Deidre Woollard discuss:
- If we are already in a Santa Claus rally.
- The challenges facing big automakers.
- If cybersecurity’s challenges will fade.
(20:48) Mary Long and David Meier discuss the “second acts” of BlackBerry and Garmin, and take a look at 3 other stocks in the midst of a turnaround today.