Can BlackBerry (BBRY) Ever Claw Back Into The Black?

BlackBerry (BBRY), formerly known as Research in Motion, plunged nearly 30% last Friday, after the company reported first quarter earnings that surprisingly missed analyst estimates by a wide margin. For its first quarter, BlackBerry reported an adjusted loss of $0.13 per share, or $67 million, a vast improvement from the loss of $518 million it reported in the prior year quarter. Revenue rose 15% to $3.1 billion.

However, both profit and revenue completely missed the consensus estimate of $0.07 per share on revenue of $3.4 billion. The massive earnings miss took many analysts by surprise, who scrambled to revise their ratings on the troubled stock, which has already 90% over the past five years. Daily Chart
During the quarter, BlackBerry shipped 6.8 smartphones. Approximately 2.72 million of those shipments were BB10 devices, indicating that demand for its long-awaited operating system was more tepid than investors had hoped. By comparison, 7 million Windows Phones, the majority of them manufactured by Nokia (NOK), were shipped last quarter. This disparity caused BlackBerry to lose its third-place ranking to Microsoft (MSFT), claiming less than 3% of the market dominated by Samsung and Apple (AAPL). BlackBerry also didn't disclose any information about its enterprise subscriber base, which it once claimed would be the key to holding its ground against Apple and Google. Last quarter, BlackBerry reported that it still had 76 million global subscribers, down sequentially from 79 million. BlackBerry's silence and slumping BB10 shipments speaks volumes about its growth prospects this year. After the initial launch of its touch-screen Z10 smartphone failed to make a splash in a crowded market, many BlackBerry investors had hoped that the Q10, with its traditional physical QWERTY keyboard, would bring back old BlackBerry users. Unfortunately, this didn't appear to be the case, as many of those users have since moved on to Google, Apple, or even Windows Phone platforms instead. As a result, BlackBerry is now moving down from the high-end to the low-end, by introducing a cheaper, entry-level Q5, which bears more in common with Nokia's Asha 210 than its flagship products. However, the Q5 won't be available until later this summer. Even BlackBerry's Messenger service, which it hopes to compete with the likes of WhatsApp, iMessage, Facebook Messenger, Viber and Line, looks like a desperate attempt to stay relevant. BlackBerry once boasted that its messaging service has 60 million global users, which seems like an impressive number until it's scaled against WhatsApp's 200 million users. The road ahead is a tough one for BlackBerry. Whereas Nokia CEO Stephen Elop appeared to have saved his company from certain doom with an eleventh hour deal with Microsoft to manufacture Windows Phones, BlackBerry CEO Thorstein Heins appears to be stuck in the mindset of Nokia prior to Elop's arrival - proudly clinging onto a dying operating system in the hopes that its customer base of enterprise users will somehow continue supporting its products even as control of the entire app ecosystem shifts over to iOS and Android. Other News About BBRY BlackBerry's Comeback in Doubt as New Phone Sales Fizzle BlackBerry plunges nearly 30%. BlackBerry Still Doesn't Get it Does BlackBerry need to change gears fast before it hits a brick wall?

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Published on Jul 1, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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