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.
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.
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 email@example.com or follow him on Twitter via @JeffReevesIP.