BlackBerry (BBRY) has taken its share of body blows lately. BBRY stock is down more than 35% in the past year and down almost 45% from its 2013 highs.
Now, BBRY stock is taking a gut punch from the commander-in-chief as the White House tests alternatives to BlackBerry phones that have long been the standard for the government thanks to their security features.
While any change away from BlackBerry is still “months away” and there is no indication of Obama giving up his BlackBerry, the fact that the administration is exploring an alternative is telling. BBRY stock has long relied on enterprise and government revenue to prop up the business even as its consumer side has crumbled, but the potential loss of the White House is a disturbing sign of just how far the BlackBerry brand has fallen.
BBRY Stock Troubles
BlackBerry users are abandoning the phone at an alarming rate, and not just for Android devices and iPhones from Apple (AAPL). Recent data shows a big jump in marketshare for Microsoft (MSFT) with its Windows Phone OS, to about 4% of the global market. And in the tiny, localized market of Romania there are actually even more Windows Phones than iPhones, believe it or not.
The fact that the White House may be leaving them behind too is just salt in the wound.
After all, BlackBerry announced late last year it was giving up on the consumer market. If the enterprise and government market gives up on BBRY, it literally has nothing left.
I remain convinced that with its big war chest and a sense of urgency to figure out mobile in the age of declining PC sales (and subsequently, declining Windows and Office licenses) it is crucial for MSFT to connect with enterprise sales. So it’s a little disappointing for Microsoft to see that the devices being tested by the White House are Google-powered phones from HTC and Samsung, instead of theoretically enterprise-friendly Microsoft gadgets.
But if and when Obama ditches his BlackBerry it could signal a broader shift away from BBRY at the federal level.
If and when state and local governments follow, all BlackBerry can cling to is the few companies that issue BlackBerry devices to employees and force them to use those gadgets despite personal preference.
And depending on corporate IT managers holding their employees hostage to unattractive technology is not an encouraging business plan.
So what does all this mean for BBRY stock?
I remain convinced that BlackBerry stock is nothing but a swing trade, and that the long-term prospects of this company are grim. BBRY stock has bounced in 2014 on rumors of a buyout simply for its BlackBerry Messenger secure messaging capabilities, and shares have nearly doubled from lows in December.
I know all it takes is one sucker willing to play buyer, as Hewlett-Packard (HPQ) did with Palm in 2010… but still, I don’t see anyone bidding for BlackBerry in the near future. I don’t trust the momentum of this snap-back in the short term, and I certainly don’t trust BBRY stock to last another two or three years given its steady declines as of late.
I say sell BlackBerry… not because of the White House move alone, but because it’s just one more nail in the coffin for a struggling BBRY stock.
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 firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.