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BlackBerry Stock Is Doomed for Bankruptcy or Breakup

BlackBerry (BBRY) is down 25% year-to-date after the flop of its Z10 and Q10 launches, and investors should steer clear of this dog of a smartphone stock if they know what’s good for them.

According to one BlackBerry stock analyst, it’s not just continued steady declines that are a risk, but the very end of BBRY altogether via a strategic breakup or liquidation.

Analyst Kevin Smithen of Macquarie Group has gone on record saying that BBRY has failed at the consumer market and is slowly losing business customers, too.

This unfortunate truth will not change for BlackBerry stock, now or in the coming quarters.

“The future is bleak for BlackBerry as an operating business, in our view,” he wrote after ugly Q1 BlackBerry earnings. “BlackBerry has yet to adjust its supply chain for lower BB10 unit sales. We are concerned that rising BlackBerry and channel inventories could cause a significant drawdown in cash over the next few quarters.”

He went on to say that BlackBerry’s last option would be liquidation or breakup. And then he compared it to Palm, the disaster of a mobile company that was foolishly purchased for $1.2 billion by Hewlett-Packard (HPQ), which subsequently was forced to write down $885 million of that just a few years later.

Not a pleasant comparison, but I couldn’t agree more.

I have been bearish on BlackBerry stock for quite a while, for more reasons than I can count. But a short list includes:

  • BlackBerry’s CEO thinks tablets are a fad, showing how out of touch with the market and consumers the company is.
  • The Z10 and Q10 smartphone launches flopped hard, resulting in a surprise quarterly loss for BlackBerry stock at the end of June.
  • CEO Thorsten Heins continues to ask for patience despite being unprofitable with an unattractive smartphone line that consumers don’t want.
  • BlackBerry stock is a value trap, trading for a fraction of book value all across this year — even when it gapped up to $18, twice where it’s at now.

If you think BlackBerry stock is going to turn a corner anytime soon, keep in mind that the Z10 and Q10 were meant to simply bring the company onto equal footing, ostensibly, with Apple (AAPL) and its iPhone and Samsung (SSNLF) and its Galaxy phones. It failed miserably, and now an iPhone 5S or iPhone 6 is likely to hit the market in a few months to put BBRY farther behind.

Some make an argument about BlackBerry security and messaging advantages. But as Smithen hints at, those assets are losing value by the minute and other enterprise competitors keep moving in. Apple is not sleeping on enterprise, and Microsoft (MSFT) continues to throw money at the market with its Windows Phone OS and Lumia partnership with Nokia (NOK).

And then there’s Google (GOOG), with its Nexus line and neverending quest to outdo anyone in the tech sector. I wouldn’t count Google out, either.

There just isn’t a way out here for BlackBerry stock. Consumers have forgotten the brand, businesses are struggling to see its appeal and each passing day BBRY loses more money and sees its patents and software assets become less relevant in a fast-moving smartphone market.

Investors betting on a dead-cat bounce for BlackBerry stock here might get a brief one … but the long-term trend is decidedly down, and as Smithen writes, it will likely end in either bankruptcy or a breakup so it can be sold for parts.

Related Reading

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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Comments
  • HollyBolly

    Some people live in a little box and cannot see the big picture. If you have no vision, you wiill not be able to see BlackBerry’s future. Obviously, you are one of those people.
    The Z10 is the best phone I have ever used, but it isn’t about a smart phone it is really? It is about the best Operating System that has ever been released…onlly 100K lines of code…QNX is already in 67% of all infotainment systems in cars, it runs the space station, as well as nuclear plants. Your limited vision is impairing your judgemet.
    Investigate everything that has to do with QNX and maybe..if you are lucky enough…you will peek over the box you live in and see the future.
    You don’t know if there is a way out for the stock, there was for Apple. Why don’t you try being transparent in your blog? Oh, then you wouldn’t get paid by whoever is paying you to write this crap eh?
    Laughable!!! BlackBerry is going to clean up…just a matter of time….People won’t be LEMMINGS forever…they will start to do Due Dilligence before they spend their hard earn dollars and really….what has either Apple or Samsung done for anyone lately???? NOTHING!!! JMHO

    • Stanislaus Szczepaniak

      “best phone I have ever used”, “onlly 100K lines of code”, “it runs the space station, as well as nuclear plants” – anyone making investment decisions based on such natter, on par with Thorsten “we’ll sell tens of millions” Heins, must be out of their mind.

      The sooner BBRY disappears, the sooner telecommunications discussion forums will be cleared of such nonsense.

      • HollyBolly

        Did I say I was making investment decisions based on these facts? No, I did not. I only put some comments on another random blog in regards to a great Canadian Company.

      • ATInsider

        Regarding 10′s of Millions. Thorsen was dead on, and he refers to all the BES10 installations which stand at well over 20,000 of them. Major companies are going full out BES10. BBRY is the only smart phone maker that got the DoD ATO certification. That is the most strict and stringent testing procedures in all of North America and probably the world.

        Companies see this and they do not have to test BB10 because the testing has already been done. BlackBerry is a long term company and it will get very good for BlackBerry and the mobile industry in 2014.

        • Stanislaus Szczepaniak

          Nonsense. TH said he’ll sell tens of millions of devices.

          Well, he’s history soon anyway, driving into the sunset with Alicia Keys in their QNX Bentley and a $55m severance paycheck pinned to the dash.

  • Ian

    I smell buy time coming up for BBRY stock. They will still be around for quite some time. They just lunched a new oprating system (which is pretty darn good). Majority of fortune 500 companies are all using blackberry. It might not get the same hype as new ipad, but don’t kid yourself, this is a company that is slowing clawing back. People are always tlaking about QNX…. If you do a little research….QNX is tuff to beat.
    I see more people with Z10′s and Q10′s everyday, not to mention the new handsets to come. The company is one of the few that is going for a real turn around. These things just take time. They are in the “out with the old and in with the new ” stage right now. This makes it look like they are headed in the wrong direction, but they are moving forward.

  • Kris Erickson

    WOW, nice spin work. BB is not like Palm, it has no debt and 3 billion in cash. Q/Z10 did not fail last ER, which was -.13cents/share if you took out the money that was locked in Venezuela it would have been only -.03 cents/share. Also the Q10 had only been released in 2 countries when that ER was released.
    How soon do you think BB is going to die? With 3 Billion in cash which is about $6/share how long will BB go before this supposed breakup or liquidation is to occur? 1 Month, 1 year , 2 year, 3 years?
    Also Thor stated that the tablet as we know it is going to be dead in 5years, as to imply it will change into something else, and also he said its very hard area to be in.. ie Windows RT tablet – DEAD, Amazon I believe killed the Kobo too.

  • Donald

    Clearly Jeff is unable to think for himself. He is just parroting what other people have said. I don’t see any new information here.

  • Mikey

    This article is a joke.. lol ….I have an iphone ….and even i am beginning to think blackberry is for the smart people… : /

    • pepe

      All the guys from crackberry.com came to bash the article. The sad thing is that many of them own the stock, poor guys.

  • WalterB

    Did you just compare BlackBerry’s current position to Palm? What a joke this article is! I switched to the Z10 and think this is not only the best phone blackberry has ever produced but also is the best phone on the market! It blows away the iPhone for functionality!!!!
    BlackBerry’s problem is a public perception issue, especially in the USA. Hopefully they overcome this issue and if they do, the blackberry 10 lineup of Phones will be very successful.

  • Peter

    ” It failed miserably” no it didn’t. They sold 2.7 million BB10 phones, amazing for a brand new platform.

    • blacklightning

      One could very much say then that because the original iPhone sold 1 million in 74 days, it was a failure…

      • theflew

        There is a big difference in the market the iPhone launched in versus BB10. Also, Apple was riding the success of the iPod. If you owned an iPod and needed a phone the iPhone made a lot of sense. What reason would you give someone to get a BB10 device over the iPhone, Android or WP – really?

        • blacklightning

          It’s bluntly obvious that Apple is trying to be it all, end it all, but will not be able to compete at all. When QNX AKA BlackBerry’s new OS was in cars and health care, where was Apple? It wasn’t till BlackBerry bought QNX that Apple decided to try to copy BlackBerry. Apple doesn’t have a RTOS that doesn’t need iTunes to plug it in manually when it bricks itself. BlackBerry on the other hand does. Is BlackBerry a Palm? Absolutely not. Palm can’t do half the stuff BB10 can do vertically. Will it take some time to get to its vision? Absolutely! Apple didn’t succeed overnight when it acquired NeXT. Several years in fact… Has it been several years yet for BlackBerry? No. Also has BlackBerry come close to Bankruptcy like Apple has? No…

    • ATInsider

      Fully agree, combines sales of BB7 and BB10 are in excess of last quarters. BBRY is in a steady rise, not decline. Take WP8 for example, it has already been a FLOP in North America. BBRY is gaining ground, slowly but surely. Just wait for all the BES10 adoptions to take effect in 2014.

  • Andrew Arons

    Thanks for making me see how little the shorts know about the company! I am now going to load up on more shares!

  • NT

    BlackBerry is far from dead. I has a Z10 and have compared many of the other phones to it, iPhone is a joke as a user experience. I want to throw it out the Window when I start using it. Android is good but I find it slower to perform tasks.

    The largest problem with blackberry is marketing not the OS. The keep moving campaign tells people nothing about the product. The super bowl commercial was a disaster. Who ever made that decision to air it should be let go. In short. The marketing department needs to either change gears or be changed outright and blackberry needs to show people how it is a better platform

  • hb

    What a garbage article. Clearly written by someone with a strong bias and someone who either doesn’t understand technology or has never actually looked at the products. Wish I had the money now, cause I’d be buying big time.

  • Jack

    After my BlackBerry Curve died because of a bad battery, I was forced to switch to an iPhone 4. That lasted a few months. Not that the product didn’t work, but I got very tired of double-pumping applications to close them and then to get the out of the memory before the battery drained. When BlackBerry came out with the Q10, I bought it. Best decision I ever made.

  • Jack

    BlackBerry Q10 is a great phone despite what articles like this would have you think.

  • blacklightning

    The problem with you iTard analysts/media is that “if” BlackBerry is “so dead”, why the F#ck do you guys keep bringing it up? Knowing that you people wish death on this company shows that it is very much alive and that there isn’t a damn thing you can do besides wish death on it! Otherwise, it’s so called kicking a dead horse right?

    I can’t help but to think that you people are wife beaters, beating on your wives and saying over, and over, and over again that it is their own fault they’re getting beat on! Ya’ll need help, get it!

    • XLBBRY

      Good insight on the wife beating thing. I have a difficult time reading biased, cherry picked information, repeated ad nauseum…I wonder about the motives of anyone who wishes death to such a great company. They have the best product, the best security, and are very close to meeting their stated comeback goals.
      Even positive news over the past few months has been reported by some as negative, and my concern is the damage they do to public perception of Blackberry.
      A photo of a smashed Q 10? That thing has a stainless steel backing…I’d hate to see a photo of your wife after an argument.
      Good advice from blacklightning…get some help, you need it!

      • blacklightning

        It’s very early in the game, and TAT hasn’t been utilized to the fullest extent yet. I’ve seen some stuff to say that Apple won’t even be able to compete with when it comes to vehicles. The “WOW” factors are yet to be unveiled. BlackBerry wants the normal iPerson to think they are dead. It’s far from the truth!

    • ATInsider

      They keep bringing it up for one reason and one reason only, it grabs media attention. The same example can be said about Apple how there stock went way down, the media were bashing them.

      In regards to BlackBerry, they want to disintegrate BlackBerry from existence, why? Because BB10 is the greatest achievement in a the best mobile platform ever created to date. The only thing they need to work hard on is ecosystem, in terms of app development, and its looking great. Update 10.2 will have the updated Android app Player v4.3 I believe, once this comes out, it should help stop complete rubbish based articles such as this one.

  • peej

    I have the Z10 and have had it since its release date in Canada. The phone is amazing. Sure it has issues but so did my first Iphone way back when they first came out with the operating system they are still using. The major problem is the media and these articles. When I read things like this I feel as if apple is paying them. Has the writer used the Z10? Actually used it? You dont like the fact that you dont have to exit an app to check something else? Is there something wrong with being able to open multiple apps at one time? Is there something wrong with being able to write complete reports for work on your phone while listening to music and checking emails from multiple addresses, whatsapp, BBM, twitter, facebook all at the same time?
    The media has put such a bad spin on blackberry that the public is reading it and walking away. I was a blackberry user for years, switched over to iphone becuase I was having issues with my torch, but as soon as this BB10 unit came out I was glad to get rid of the iphone.
    Bottom line. The phone has issues, yes, but so do all the other phones on the market. The company as a whole has a marketing problem, they dont know how to market. BUT if you try the phone for more than the 2 minutes you get at the kiosk you will be pleasantly surprised.

  • Awesome101

    BB10 is awesome, just try it and you will know. I think this is time to buy Blackberry stock. Blackberry will always stay, may be as a smaller company but still much larger than current $4.5 billion cap. I have my share of disappointment with Heinz as well, but I think I agree with him about tablets being fad and one of the most useless product ever built. I have two of them and I have to find time to use them. Unless you are travelling or away from office, I don’t know what reason there could be use tablets. One other thing totally overrated is BYOD, I believe that companies are beginning to realize what a nuisance and waste of money BYOD is? Once companies go back to one platform, Blackberry will gain tremendously.

  • cooldeude41

    Checkout following videos. They will give you way more idea about Blackberry than these iTard analysts can ever give.

  • Mitchell Young

    The article is referring to BB outlook in terms of share price not technology. There have been many world class companies that have failed due to poor sentiment in the open market. Ie Nortel, Motorola, Nokia Once the market stops believing in a company it makes it extremely difficult for it to recover. That said, if BBRY does become cheap some major tech company can easily acquire them.

  • Tom

    I think this guy is out to lunch , he probably lost money on the stock a few years ago and now wants them to fail so he can feel better about it. Blackberry has a competitive product now but they need to start marketing the superior security aspect.

    Going forward personal and business data security will influence purchasing decisions. People are doing payroll and other major transactions over their phones. The very first major security breech that hits will not come from a blackberry but when it does this stock will soar.

  • Amanda Jane McGuire-Jones

    Yeah it’s well known bout blackberry – look at the playbook for example. Sorry but the company is a joke..

    Get rid of Thorsten Heins – he’s useless. They done the damage them selves.. BlackBerry users seem to think the sun shines out blackberrys arse. I was a blackberry user for 5 years and I ended up leaving in April and since moving the iPhone 5 – I have not looked back. The iPhone is really good and l can see why it’s the next top spot to Samsung. Sorry but apple would be at top spot for nothing. Everyday on twitter people are ditching Blackberry for android, iOS & windows.

    The whole blackberry company is a joke.. I personally have no time for what l call them #CrapBerry – never again. Think it’s disgusting how they have treated playbook users – before you know they will be upsetting their phone years. Sorry but they should just admit they have lost.
    They keep Releasing the same old crap over and over again.. The Q5 – looks like the old BlackBerry Curve – the Q10 & Q5 it looks awful and Hideous… Sorry dont like them & l wouldn’t be seen dead with them. They look ugly and they look crap. Sorry but l don’t see them lasting much longer.
    So what l am an iPhone user. Call me all the names under the sun – I ain’t bothed. Sorry BlackBerry have broken promises & nobody can trust them. The only thing that has kept BlackBerry Alive is BBM – but even that’s crossing over to android & iOS that’s another death nail in the coffin for BlackBerry..
    The Trueth is BlackBerry is dying – not everybody wants a BlackBerry. Thorsten Heins just comes across despite & Needy – he looks and sounds perthtic. Sorry but the fact remains that’s its bout Android,iOS & windows now.. Like it or not – that’s just how it is. Blackberry had so many chances and they failed hands down.. Heins had the cheek to call apple old.. Sorry but they are bringing another BB7 device – nobody wants it coz it’s crap… It’s the same old phone to what’s already out now… And he calls apple old.. Sorry but apple are light years ahead of blackberry. Hein even predicted tablet computes dying out in 5 years – more like he was talking bout his own crappy perthtic products… Even the 250 jobs – people that worked for blackberry have walked out coz they know blackberry is dying… So even people that work for blackberry know it’s a lost cause.
    Sorry but it’s the Trueth and it’s how it is..

    Rip BlackBerry 201? – like it or not – it’s coming!!

    • jdoe

      Wow. So much hate and so many words.

    • blacklightning

      Didn’t Apple just fire a bunch of people over the last year? That’s right, it’s called consolidation… Wouldn’t expect you to understand that. You probably have a 8th grade edumacation. That’s right, I said Edumacation… I also don’t expect you to understand the difference between a RTOS and a plain regular OS.

  • Dom

    LOL…what a stupid article. First of all I had an iphone4 and a SG3 and my Z10 is head and shoulders the best phone I ever had. Browsing the web on my Z10 is faster then my PC . I can not understand the hate for a phone or a company. Are these people paid by Samsung and apple to spread lies and misinformation? Blackberry is my favorite with android second and ios is third. All three are good and the more competition the better it is for consumers. The only people who don’t want competition is apple and google who pay for these pathetic articles.

  • BBX fan

    Sorry folks but you’re fooling yourselves-based on brand loyalty, SO KEEP GIVING YOURSELVES THE THUMBS UP, Blackberry (BBRY) stock is a bad investment. The reality is….. public perception of Blackberry is bad (deservedly so, poor marketing and a five year hiatus in innovation being the reason) So the stocks will suffer as a result. People love to kick a company when its down, and ladies and gentleman protect yourselves because Blackberry is down. I currently own a GS III, I enjoyed the Z10 for the week I had it-thanks to Best Buy, but now I have my reservations about coming back to any Blackberry OS-at least for the first generation of BB10, only because the company seems to be making some head scratching decisions, that appear more reactive than calculated (ie releasing the Q5 at an unsubsidized amount of $450 in markets already saturated with second tier Iphones and Android sets available for less money.) It makes me wonder whats happening behind closed doors over there in Waterloo- I imagine they’re pulling thier hair out. I hope that Blackberry can survive as a brand, but honestly I’m not convinced, the products are good (IMO)-minus the Q5(overpriced garbage), but the hole they’ve dug is huge.

    • ATInsider

      I am getting the BlackBerry Z30 on release. It will look quite nice beside my Z10. No Management is perfect in companies, though I do agree the marketing department within BlackBerry needs to be fired and replaced with competent people. BBRY does have a image issue, and hopefully in the near term they resolve it.

  • jdoe

    Berry damaging article!

  • goog2013_

    LOL,

    It is for fun to read a bunch of trapped bbry long bitching at the author.

    Same sh*t everyday being pumped: z10/q10 is a superior phone, bb10 has best security and BES rules the world.

    Before doing the pump, could not you just look around to see who is really using a z10/Q10? I guess lying on the Internet is not illegal anyway.

  • mike johnston

    What a load of crap this article is. This must be written from someone working for either Apple, Samsung, or short investors.

  • ATInsider

    How can a company that has $3.1B cash, up from $2.9B and continues to run debt free go Bankrupt? More Spineless Articles bashing BBRY with no facts to back them.

    Negativity Toward BlackBerry:
    http://blackberry300.blogspot.ca

  • speedjunkie

    Black Berry is out of their business……. Competition like iPhone and Android users give blackberry -40% on the stock market……. Black Berry should go bankrupt…… I hate BB 10 because they are not for people who want to have reliable and powerful smartphones designed for people who like to hang out or have friends…….