Is It Time to Put BlackBerry (BBRY) Out Of Its Misery?

Shares of BlackBerry (BBRY) plunged 17% at the end of last week, after the company reported that it was laying off 4,500 employees (40% of its global workforce) and that it anticipates a quarterly loss of nearly $1 billion for its second quarter. That loss was three times wider than what analysts had anticipated. In addition, BlackBerry announced that it would only release four smartphones instead of six this year.

Finally, topping all that misery, the company announced that it expects 80% of its Blackberry 10 phones sold to retailers to come back. Daily Chart
Unlike its rival Nokia (NOK), which also suffered tremendously from underestimate Apple (AAPL) and Google's (GOOG) ability to disrupt the smartphone market, BlackBerry hasn't been able to release a single smartphone that has shown quarterly market share growth. Nokia was barely able to stem its bleeding by partnering with Microsoft (MSFT) to replace its aging Symbian OS with Windows Phone OS. Meanwhile, the 100,000 apps in its BlackBerry apps store pale in comparison to the 900,000 apps in Apple's app store, and lack many of the popular apps that Apple and Android users rely on. Instead, BlackBerry stubbornly held its ground and declared that it would accept the transition from a mainstream market to a niche one. It also went from a claim that its products would continue dominating the enterprise market, which later turned into an admission that it would rely on "niche" enterprise markets to survive. BlackBerry followed up its refusal to change with increasing stages of self-denial enhanced by episodes of convincing itself that the "BlackBerry faithful" would never abandon them for Apple or Android handsets. Most absurd of all were CEO Thorsten Heins' repeated statements to reporters that its smartphone was as powerful as a laptop computer -- something any tech consumer has known for the past six years. BlackBerry still has $2.6 billion in cash, but it could burn through that cash faster than most investors think. It already burned through $500 million in cash last quarter. While it's clear that BlackBerry is currently facing the abyss, some investors are still hoping that BlackBerry will be able to sell itself. There are rumors that Fairfax Financial Holdings, the company's largest shareholder with a 10% stake, could be interested in taking the company private. However, Fairfax could just as easily be looking for a way to abandon this sinking ship before it goes under. Other News About BBRY BlackBerry to Cut 40% of WorkForce After Big Loss Is there any hope left for BlackBerry? BlackBerry Warns of Big Loss, 4,500 Job Cuts; Shares Dive Is this the end game for BlackBerry? Other Stocks in the News Should You Follow in Sanofi's Footsteps and Invest in This Booming Biotech? Are investors wise to follow Sanofi's example? Why Are Investors Thrilled About This Company's Iron Treatment? Why did Rockwell Medical rally? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Sep 24, 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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