Blackberry In Free-Fall As Earnings And Sales Miss Big

Michael Teague |

blackberry sheikh 640x426Shares for Blackberry (BBRY), who could be credited for popularizing the very concept of the smartphone, dropped precipitously on Friday after the company released an unexpectedly dismal quarterly earnings report.

For the quarter ended June 1st, Blackberry reported a loss of $67 million, or $0.13 per share on an adjusted basis, on revenue of $3.1 billion. This is in comparison to the prior year period during which the company lost $510 million, or $0.97 per share on revenue of $2.8 billion. The quarterly figures were dismally short of analyst expectations that had adjusted earnings at $0.07 per share on revenue of $3.4 billion.

The company’s stock went into free-fall almost immediately, dropping nearly 26 percent to $10.25 per share, a loss of nearly $4 dollars on the previous day’s close.

The news is of particular significance because the company’s very existence has been in question since late last year during the run-up to the release of its new Z10 and Q10 phones. It was widely feared that the company that had played such an instrumental role in creating the smartphone market in the first place was finally on its way out of the game.

As recently as a few months ago, analysts were expecting the company to lose $0.15 per share on an adjusted basis. But these estimates were revised drastically upward as a number of analysts upgraded Blackberry’s stock based on very generous sales estimates.

As it turns out, the company sold 6.8 million smartphones during the quarter, less than expected. And only 2.7 million of those phones were from either the Z10 or Q10 lines, while previous projections had estimated a total sales figure that was at least 10 percent greater. Furthermore, 4 million subscribers dropped Blackberry during the recently ended period.

Blackberry’s efforts to put up a good fight, until today, seemed as though they might have been doing the trick. Thursday's close saw the stock trading for $14.48, well off its $6.22 52-week low. The poor earnings report, however, confirms what many had suspected: that the company’s turnaround was cosmetic, or had been advertised even before it had actually taken place.

This may be one case where a good number of investors had a jump on the analysts, however, as nearly one third of the company’s available shares were being sold short ahead of today’s news, even amid all the hype that the Blackberry was in the process of a great comeback.

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Companies

Symbol Name Price Change % Volume
BBRY BlackBerry Ltd 7.06 -0.11 -1.53 4,643,124

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