Oh BlackBerry Where Have You Gone?

Andrew Klips |

BlackBerry Ltd. (BBRY) , once Canada’s tech darling known as Research In Motion, has been on a tumultuous ride for the last year from 52-week lows of $6.22 to essentially triple in value to $18.32 in January back down to end last week with a 14 percent loss to $8.73.  2-1/2 years ago, shares were around $70 each.  At the height of its market dominance, before it fell behind with touchscreens becoming popular, shares hit $148.13 in mid-2008.

The embattled smartphone maker has scrambled to try and regain some market share now dominated by Apple (AAPL) and Samsung, which uses Google’s (GOOG) Android operating system.  Waterloo, Ontario-based BlackBerry at one time had a stranglehold on market segments, namely corporate contracts for its cell phones, but the company has nearly fallen off the map in recent years with larger rivals stealing the show.  The release of the Z10 model and keyboard-equipped Q10 version, was thought to be a last ditch attempt for BlackBerry to regain some market share, but sales have been lukewarm at best.

In its favor, BlackBerry has announced contracts with some large organizations, such as the Department of Defense, Automatic Data Processing (ADP) and Univision Communications, but that’s a shell of its former self that once controlled about half of the North American smartphone market.

The problem, simply put, was letting the market get away from it by lagging behind in development of newer, cutting-edge phones, software, and features.  When others were taking the market by storm, BlackBerry was only then going back to the bench to try and catch-up.  Too little, too late.  After a year-long delay in unveiling its new touchscreen model and putting it on the market earlier this year, users complained initially of a counterintuitive format and glitches in the system.

Whereas the higher-priced Apple iPhone 5s sold out on its first day of sales last week, stockpiles of the Z10 are reportedly building up with the phone being given away with a two-year contract.  BlackBerry’s announcement of its new Z30 line of phones last week was drowned-out by Apple putting their new 5s and 5c iPhones on the market.

Shares of BBRY started to get a lift from lows in August after the company said it is pursuing strategic alternatives, which could include a partial or complete sale of the company.  Analysts question who would want all of it and what type of price it could command.  Further, it also could have potential customers raising an eyebrow about buying a phone or committing to a contract for a struggling company that may not be able to turn things around.

A share depreciation that began only two weeks ago accelerated on Friday, with BlackBerry delivering news that it expects to report a second-quarter-fiscal-2014 loss of nearly $1 billion and lay-off 40 percent of its workforce (4,500 people).  The firings are part of BlackBerry’s bid to cut operating expenses by about 50 percent in the next year and a half.  Revenues from the latest quarter are only expected to total about $1.6 billion, nearly half of the $3.04 billion that analysts expected.

BlackBerry says that it is ditching its efforts to sell to consumers and is re-focusing on its core competency of enterprise contracts, another move seen as desperation on the company’s part.  It was just a couple years ago that BlackBerry was re-focusing its efforts with the BlackBerry 10 operating system and “10” smartphone lines to grab some of the consumer market.  Although the company still has more than $2 billion in cash and a user base of 72 million globally, instead of “Where have you gone?” perhaps the better question is:  “Where are you going?”

Shares of BBRY are down by 6 percent in Monday morning trading at $8.21.


[Image courtesy of Wikimedia Commons]

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Symbol Name Price Change % Volume
AAPL Apple Inc. 114.48 -1.11 -0.96 34,562,530
AMZZ Amazonica Corp n/a n/a n/a 0
BBRY BlackBerry Limited 7.14 -0.12 -1.65 2,976,999
GOOG Alphabet Inc. 795.35 -3.72 -0.47 2,749,234


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