BlackBerry Ltd (BBRY): Final Nail in the Coffin?


Last month, we talked about a major rally brewing at BlackBerry Ltd (NASDAQ:BBRY) and reasons behind a bullish sentiment around the Canadian company. But the stock has since fallen and the market has grown bearish amid lack of catalysts and positive news. This time, things look pretty grim for Blackberry.

Analysts aren’t very hopeful about BlackBerry Ltd (NASDAQ:BBRY) fiscal second quarter. The Street expects the struggling company to report earnings of just $221 million, the lowest quarterly figure in several years. Blackberry’s hardware and services revenue is falling. The company’s software transition is slow to say the least.

Earlier this month, BlackBerry Ltd (NASDAQ:BBRY) shares cratered massively after investment firm Goldman Sachs issued a “Sell” rating for the stock. Goldman Sachs analyst Gabriela Borges said in a report that Blackberry’s mobile software revenues are expected to decline amid strong competition from rivals like Microsoft, Citrix, and VMWare.

Blackberry’s CEO John Chen had claimed that Blackberry’s foray into the profitable autonomous driving car industry will do wonders for the company. But that doesn’t seem to be the case. Gabriela Borges said in his report that Blackberry’s efforts in the automobile sector won’t bear fruit as there are long production cycles in the industry. The analyst also said that Blackberry rivals have made “intense investments” in the sector, which are not easy to beat. Recently, Solaris Asset Management’s Tim Ghriskey said that Blackberry has very bleak chances of getting a strong footprint in the driverless cars industry.

Earlier this month, BlackBerry Ltd (NASDAQ:BBRY) investors were shell-shocked after Shared Services Canada, the Canadian federal agency, announced that it was ending its contracts with Blackberry. The agency has decided to buy latest devices from Samsung and Apple. Blackberry used to make a lot of money from SSC through enterprise services and subscription. In 2016 alone, Blackberry activated Blackberry Enterprise Server 10 for about 16,000 devices for SSC. SSC ditching Blackberry for Samsung is a strong sign of lack of confidence in Blackberry services. Blackberry used to differentiate its products based on the security of its platform. But a federal agency preferring Samsung over BlackBerry Ltd (NASDAQ:BBRY) shows that Blackberry has lost its product differentiation. In 2015, Email Transformation Initiative (ETI) of Shared Services Canada moved 550,000 email IDs to Microsoft servers from Blackberry services.

BlackBerry Ltd (NASDAQ:BBRY) has also practically stopped working on its Blackberry 10 mobile platform.  Blackberry 10 is marred with problems like slow performance, unresponsive apps and delayed updates.

Therefore, now maybe the right time to divest BlackBerry Ltd (NASDAQ:BBRY) position.

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  1. Such ignorance. Samsung’s Knox Security is based on technology they license from BlackBerry. That is Chen’s game plan, to make BlackBerry secure software available to all platforms and devices. And as to automotive, BlackBerry has a large development agreement with Ford, which is a self driving initiative.

    • Excellent point but reports say that SSC will use Samsung Android devices.
      and even if it provides its employees with Knox devices, the move is still a blow to Blackberry as the main company is now Samsung
      and every media report is taking this news as a big negative for Blackberry

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