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BBRY Stock Collapses – Why BlackBerry Will Go Bust in 2014

BlackBerry (BBRY) stock keeps crashing, setting a new 52-week low last week at a mere $5.80 per share. BBRY stock is off more than 65% from its 2013 highs above $18.

bbry-stock-blackberry-logoAnd as we approach BlackBerry earnings on Dec. 20, BBRY investors can expect an early lump of coal in their stockings.

With each passing day, the end of the company formerly known as Research In Motion moves nearer.

And make no mistake, BBRY is going to disappear — one way or another. BlackBerry earnings in a few weeks should just be yet another nail in the coffin.

If BlackBerry earnings are as bad as some expect, we won’t have to wait long for the company to close up shop altogether.

Why BBRY Will Go Bust in 2014

While BBRY stock believers think the company is going to ride off into the sunset on a buyout, the chances of that are slim.

It’s not that there aren’t interested suitors that could play white knight. Reports emerged after the departure of long-suffering BlackBerry CEO Thorstein Heins that indicated Apple (AAPL) might have been mildly interested in a piece of the business.

However, the BBRY board refused to splinter the smartphone company. Facebook (FB) also passed on BlackBerry’s all-or-nothing stance.

In fact, the lack of ability to make a sale led to a deck shuffling at BlackBerry and the end of the too-good-to-be-true buyout offer of $9 a share from Fairfax Financial Holdings and Prem Watsa.

Even if some parts of BlackBerry’s business are attractive, who in their right mind would buy them now — when they can get them cheaper next year as the board panics further? Or perhaps interested parties are content to wait things out until they’re offered the fire sale prices of bankruptcy court.

Sure, I suppose we could see a BlackBerry buyout offer from a tech company that likes to buy first and ask questions later — Hewlett-Packard (HPQ), which bought a doomed Palm, and Yahoo (YHOO), which has been on a mobile shopping spree, both spring to mind.

But whether you think a deal will happen before or after a Chapter 11 filing, the bottom line is that BlackBerry is not long for this world.

BBRY Bleeding Cash

Regardless of philosophical arguments about whether you like the new look of BlackBerry smartphones that include the Z10 and Q10, or whether you think the BB10 operating system is slick, the numbers tell the real story.

BBRY is burning through cash, sales keep falling and the once-dominant tech company is worth less by the hour.

Customers don’t trust BlackBerry to be around and have abandoned ship, with sales crashing 45% in Q2 and the upcoming BlackBerry earnings report expected to be just as ugly.

I’ve written a lot on BlackBerry stock in 2013, and all of it has been bearish. In March, I advised buying BBRY puts to front-run a disappointing launch of the Z10 and Q10. And aggressive investors might want to get on the bearish train now to play the downside after earnings.

For the record, I don’t hold any enmity towards BlackBerry. Personally, I don’t short stocks or bet on the downside with options because I philosophically can’t bring myself to actively root against a company, its employees and its shareholders.

But like it or not, it appears BBRY is doomed.

Those are just the facts.

More on BBRY Stock and BlackBerry Earnings

  • Of course, a recent note from new BlackBerry CEO John Chen continues to assert that all will be well. (BlackBerry Blog)
  • The rise and fall of BBRY — an oral history. (BusinessWeek)
  • Details from November on how the BlackBerry buyout fell through. (Toronto Star)
  • When board members and senior execs abandon ship, it’s never a good sign. (The Slant)

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

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Comments
  • Frank Castle

    Can I borrow your crystal ball – in your case it seems more Magic 8 ball.

  • MartinJdub

    @Frank, when you’re done with it can I score it from you? Maybe I can use it learn how to write a fair, well researched and educated article.

  • rick

    do you, like, have your head in the sand?

  • http://hannibalmoot.tumblr.com/ Dr. Hannibal Moot

    We’ll do an author credability check at the end 2014. Here’s another one to watch.

    • charlie2010

      Luckily readers have short memories, otherwise we would stop reading every media outlets articles on Blackberry…does any iMedia outlet have any credibility on Blackberry?

    • Kirk Kirkpatrick

      Really? How many shares did you buy yesterday? Talk is cheap.

      • charlie2010

        If I had the available cash I’ld jump in now, definetly.

        • Kirk Kirkpatrick

          I find that hard to believe. It takes about 300$ to jump into BBRY options.

  • Surfer

    “Personally, I don’t short stocks or bet on the downside with options because I philosophically can’t bring myself to actively root against a company, its employees and its shareholders.”

    Aren’t you the same guy that wrote an article saying you were thinking about buying put options on Blackberry last winter?

  • Andrew Lee

    They have no debt and billions in cash, equivalents, and receivables. They already took their big bath on the 10. Learn to to read some financial statements which have audited facts.

    • wimaxter

      You are incorrect, they have 1 billion debt from cash injection

      • steve kolovos

        It’s not a debt of a billion. Look at the terms

  • Chuck

    Yawn. BlackBerry is dead. We’ve been hearing this for years now, yet BlackBerry continues to quietly bring innovative products to market.

    • knahro

      He’ll yeah, I am using the z30 right now and I am sure it is the most amazing phone out there but people need media approval to adopt a platform, not think about what they need in life. A fantastic technological genie

      • Kirk Kirkpatrick

        No people need their own perceptions. Like yours ” the z30 right now and I am sure it is the most amazing phone out” No it is not. And it has not been for a long time and this is what kills RIM./BBRY regardless of the Fanboi cheering in this comment section. I was a long time BBRY user and still own some older handsets (anybody need some?) But the device was passed years ago.

        As someone who writes programs for these platforms I can tell you there is no money in apps for BBRY. No money for apps means no software no matter how good the hardware/OS is. And QNX is no IOS, it is not even Android for god’s sake.

        How many of the “Chuck” or the “knahro” or the “Andrew lee” or any of the other people who say this author is incorrect, how many of you are buying call options or BBRY stock? Are you putting your money to back your words? I am.

      • John Gooch

        It needs an Ecosystem . Android – Google Play, Drive, gmail, etc. Apple – Airplay, iCloud, Carplay, etc.

        Blackberry? Where are the cloud based music , contacts, email, etc apps? What other products work well with it ala Apple TV and Airplay speakers?

    • Kirk Kirkpatrick

      Is this post a joke or a BBRY employee. Blackberry died when they put out the ad. “Amateur hour is over” and I immediately went out and bought puts. Do I need to say how up I am?

      I am smartphone developer for all smartphones. BBRY is NOT quietly bring(ing0 innovative products to market. And the reason why the press has been saying RIMM/BBRY is dying is that it takes a long time to die when one is as big as Blackberry/RIM.

      • stockjack

        With your mindsets…you can’t be a smartphone developer…you just don’t have what it takes to be a software developer.

        • Kirk Kirkpatrick

          Right, I don’t post with an alias. One can see what I have done. I have had apps available publicly for three years.

          There is no requirement for a software developer to be a Blackberry fanboi.

          I ask all of you, are you buying the stock? It is very low so now is the time to buy.

  • HollyBolly

    OPINIONATION – ONE PERSON’s IDIOTIC OPINION ON A SUBJECT

  • HollyBolly

    Headlilne News – The Slant is a rag blog and it’s editor will loose his job shortly. Oh do we have facts to back this up…ahhh no need for FACTS…Just need to have a Blog, a laptop and no brains!

  • charlie2010

    re: Why BlackBerry Will Go Bust in 2014
    3 years of relentless BB doomsday articles from the experts in the media and they still haven’t gotten it right . A broken clock is more valuable than the hundreds of iJournalist out there.
    ….BB has released the most modern OS, lets hear the expert doomsday’ers explain why 7 year old bloatware will have a better future than 1 year old BB10? These articles are beyond pathetic…

    • Kirk Kirkpatrick

      Really @Charlie? How many calls did you buy yesterday? A Jan 2014 10.00$ call is only $0.35. For $3500 plus some commission you can control 10,000 shares of BBRY which does not need to gain much to make a bunch of money. If BBRY Went to $9.00 by June of next year you would be up 10X in 6 months. A great deal!

      If you did not buy, then we all know who’s pathetic. How about it @disqus_Z7XXQc5nSQ:disqus @charlie2010:disqus@disqus_xkUAnXtdJu:disqus? Tell how many your bought. Or is this the fanboi chorus?

      • charlie2010

        You didnt address my question or critique of the doomdayers and expect me to answer yours, which is completely unrelated to my statement as well?

        • Kirk Kirkpatrick

          @charlie2010:disqus The Reality of the situation has already answered you. BBRY had a double digit market share in 2011. That is less than 1% now.

          The “bloatware” comments are not worth responding to. Your statement is un-attributed and its is an uninformed opinion. Why would someone “Address” this opinion? I seriously doubt you understand these OSes. At least your not a developer or you certainly wouldn’t make those statements.

          Here are some of the reason why the future is doom for BBRY.
          Can you tell me what is the share of development funds being spent by third parties on BB10 development? Is it that all of these developers, like me, just don’t understand the “superiority” of BB10? Or maybe it is because the DOOMSDAY sayers are correct?

          The question is really simple. One can buy a single share of BBRY for <$5 (down 2.5% today) at this writing. This means that one can "Get into" BBRY stock for nothing. Coffee money. I ask again, did you buy? Did you skip the starbucks and buy a share? IF no, how much stock do you put into your own opinion? I have 5 figures worth behind mine.

          • charlie2010

            re: Coffee money. I ask again, did you buy?

            I would if I could, cash strapped at the moment, thanks for asking.

            re: The “bloatware” comments are not worth responding to. Your statement is un-attributed and its is an uninformed opinion.

            Android and Apple OS millions of lines of code, BB10 about 100K. Please provide some evidence to refute this before stating its uninformed if you don’t mind.

            re: Is it that all of these developers, like me, just don’t understand the “superiority” of BB10?

            Just prior to BB10 release a well publicised report inddicted BB developers earned more on average than iOS and Android developers. It would appear many developers lack the business sense to determine that competing in an over saturated market where everyone expects everything for free is a tough way to make a living.

        • BJRCollins

          Late to the conversation here, but it does provide for some outside perspective. I believe Kirk is not addressing the critiques you mention for one glaring omission – two if you really want to sweat the fundamentals.

          Just from personal experience, has the passive-aggressive comment thread ever produced much in the way of real value, outside of the respective authors, and what is a generous yet quantifiable estimate of ROI?

          I always – never say always, absolutes kill delusions no matter how well meaning – always discover the structural rigidity of another’s argument when direct statement/unambiguous queries/verifiable (respectable resources only, yes to LexisNexis, no on Wikipedia. Using a personal blog is great for laughs but…), or even well researched theories are put into play.

          I don’t know either of you, and Kirk may very well end up eating crow. But if you engage, be aware of more than conjecture and obfuscation when reaching out for your particular weapon of choice.

  • Joe Blow

    The shattered screen is really the hallmark of the iFamily (i.e. iPhone, iPad, iJunk, etc.)
    Apple will probably sue the author for patent infringement!!!

  • Amanda Jane McGuire-Jones

    passed the point of caring – a phones a phone at the end of the day. But Everybody has their own tastes and what ever works for them.. BlackBerry – stay or go!!

    I am *NO* BlackBerry fan – last time l used a blackberry was Bold 9900. which one of the worst phones l had ever bought. But ever since the 9900 l vowed l would never go back to another blackberry again.

    But l think Blackberry did the right thing getting rid of Thorsten Heins. He was useless and killing BlackBerry. and holding the company back. Heins was awful.
    Like the sound of BlackBerrys new Ceo l think he will turn things around. its what blackberry need a good leader. said that all the long.

    I admit l am no blackberry and BBM fan. To be fair l did download BBM to try and give it a chance. I am not that keen on it. I have tried to give it a chance. Just can’t get into it. But I understand that its got its fan base. There are people that need this and love it – which fair pair.

    To behonest BBM needs a new face life – Get rid off Broadcast message, instead of Blackberrys own Smileys – ditch them.. and bring out iOS & Android’s Emoji smiley faces too BlackBerry.
    or make them look better than what they are.

    I may not be blackberrys fan. But l wish the company well & Good luck for their future.

  • xBURK

    Well, they’re getting a tax refund of a half billion dollars shortly. Not too bad. BlackBerry may die, but I still think BB10 is by far the best.

    • charlie2010

      So do the consumer reviews at CNET.com say as well, bb10 rated far higher than iphone and galaxy there, the only people trashing BB10 are the ‘experts’, people who actually own bb10 phones love them.

  • Mark Keefe

    Crazy! With one billion and more in cash and zero debt, it is totally impossible BBRY could go BUST in 14 or 15. BBRY will be up 400% PPS in less than 12 months and shorts who are smart made their money and are out now on to other stocks while greedy short which are the majority are still in and about to get burned this very month of December. Shorts have much more to lose than a long since worst a long can do is go to zero but a short can do that and end up in debt too and a smart long is NEVER going to just sink money into a company and hold long. We are going to trade too and make the money to cover all longs we hold so if one went to zero no loss at all.

    BBRY will be at $20+ in 2014 IMO

    • charlie2010

      re: BBRY could go BUST in 14 or 15
      Agreed, the doomdayers like to overlook that fact, BB would need to put together 10 more years of heartache just to reach the state of bankruptcy experts in the media infer they are in now. There ability to right size the company keeps their cash position in tack, year after year.

      • Kirk Kirkpatrick

        Again I don’t see the numbers. BBRY showed an operating loss over the last quarter of close to 1B$ and accelerating quickly. Their books show 12B$ in assets including $3B “intangibles”. This is a run rate of 2.5 QUARTERS given cash and short term investments. Their burn rate is increasing and they have a negative profit margin.

        Where is a ten year time frame coming from? Does this assume burring down to ZERO? Nonsensical.

        • Vincent Cooney

          Hi Kirk,
          I appreciate all your comments on the thread. They are much more informative than the majority, and generally evidence-based. So first-off, thank you.
          While it certainly doesn’t look good, I think that sentiment of losses “accelerating” quickly tries a little too hard to make a trend out of limited data over a transformative period.
          Much of the $1B was with respect to an inventory writedown of Z10 devices ($934MM) which were ordered in quantities that didn’t make any sense. This impaired revenue in the previous quarter to the tune of $1B (i.e. it was a ‘non-cash’ item). Do you make the assumption that the same approach was taken with Q10, Q5, and Z30 devices? I think another $72MM was related to restructuring.
          After those “mistakes”/one-time items are backed-out, there was an operating income of +$42MM on the quarter. Yes, I am aware that things were certainly not that good in the past quarter. But the “mistake” associated with Z10 inventory is not conventionally one that will be repeated in scale and quantity.
          So at the very least try not to mislead others on the point above. It may very well occur again (will make your counterpoint for you to save you trouble) but my educated guess is that the mistake will be of a more narrow variety.
          Do you have information on the quantity of devices ordered and purchased that you would like to share?

        • Vincent Cooney

          Essentially I am saying that your run rate is mischaraterized based on unfair assumptions on past inventory writedowns. I don’t think it is a fair assumption that they will be repeated. All else being equal, the sequential revenue declines you cite are overblown.

  • Mark Keefe

    That said, the best stock in the markets is IBM not AAPL. IBM will be trading a hundred years from now and has traded over a hundred years, is well diversified and patent filled. AAPL is a tech stock that Buffett warns about and just by total chance, I got in BAC around $4 or less and I remember two weeks later he bought one to three billion worth at 6.15 a share and the price jump and hung out around $7 for a while but most were saying BAC was going under and it plummeted to all time lows when some knew full well it was emotional selling only. Those sellers are sick now as will those selling BBRY be in the future because you cannot trade or invest with ANY emotions. Zero emotions when investing or trading or you are in for losses.imo

    • Kirk Kirkpatrick

      “”I think the Apple management and directors have done a pretty darned good job of running the company,” he told CNBC yesterday when asked for his thoughts on Carl Icahn’s suggestion that Apple buy back even more stock. Apple shouldn’t worry about Icahn, he seemed to suggest. Taking the idea further, Buffett said: “I do not think that companies should be run primarily to please Wall Street, and largely shareholders who are going to sell. I believe in running Berkshire for the shareholders who are going to stay, and not the ones who are going to leave.” _ Warren Buffet.

      Does not sound like Buffett is warning anyone about Apple. Another unsubstantiated post.

      IBM’s patent portfolio generates about 1$B in revenue every year. Apple’s generates multiples of this.

      The interesting part of @markkeefe:disqus’s post is that to my eyes, it seems based on pure emotion.

  • Mark Keefe

    I bet ya the writer of the article is short the stock.

    • Kirk Kirkpatrick

      I am short the stock. But I doubt he is or he would declare it. There is no reason to hide that fact.

  • stockjack

    I am with a thumb up my a$$ and wondering…Where is the author get his information?

  • Jimmie

    Blackberry hasn’t faced the fact that it is a business and sophisticated phone format, when the other smart/dumb phones are mainly phones of entertainment, which are no more then glorified toys for drama kings and queens. Target Marketing Blackberry…..Target Marketing. Wise up…OH!….very little sophistication in America these days…..look at Europe, Near East, and Far East, then come back and make entertainment phones for the children of this country. Listen or go Bankrupt…….