Is It Time to Load Up on BlackBerry Shares?

BlackBerry (NASDAQ: BBRY  ) , the company formerly known as Research In Motion, is hoping to change the smartphone paradigm with the release of BlackBerry 10, its newest iteration of BlackBerry OS. The stakes are high and the chances are low, but if BlackBerry can defy the odds and ignite a resurgence in its market share, investors stand to be handsomely rewarded. Judging by the recent run-up in shares, it's now up the House of Berry to deliver on the hopes of optimistic shareholders. Speculation aside, is there something worth holding onto with BlackBerry?

Not so viral
On Jan. 30, when BB10 was officially announced to the world, the company decided to get social with it by asking Facebook users if they will be picking up the new BB10 smartphone, and if so, to "share" for yes. The intent was to use the power of social media to virally spread the word that BB10 is on the way, but it also acts as a quick and dirty way to gauge interest. Out of more than 24 million "likes" BlackBerry's Facebook fan page has, the specific post received roughly 100,000 likes and 22,000 shares. Granted, this isn't a scientific study, but as an early indicator, perhaps the new BlackBerry isn't something the public is dying to get its hands on. In other words, smartphone users may already have their needs met elsewhere.

Slow launch
BB10 has already been made available in the U.K. and Canada, but it won't be entering the U.S. smartphone market until sometime in March. Allegedly, U.S. carriers take longer to test a new device, which is slightly problematic, given that the U.S. is the world's most important smartphone market, as it generates more ad impressions and revenues from app purchases than any other market. In the context of earnings, which are due out on March 28, there won't enough time to weigh in on BB10's reception in the United States.

Mr. Softy pushes hard
If regaining market share wasn't enough of a challenge for BlackBerry, couple it with the fact that Microsoft (NASDAQ: MSFT  ) and its Windows Phone ecosystem are hoping to make further inroads in 2013. At the end of 2012, IDC estimated that BlackBerry OS commanded 4.7% of the worldwide smartphone market, enough to be the No. 3 smartphone OS. By 2016, IDC expects BlackBerry to lose its No. 3 seat to Microsoft, which has the help of its far-reaching OEM network to aggressively drive the value of the Windows Phone experience compared with the competition. In terms of opportunity, it seems that BlackBerry has the most to lose. Given its resources, if Microsoft fails in the smartphone market, it won't even come close to putting the company out business. However, if BlackBerry fails, the question of solvency may quickly creep into investors' minds.

Unattended emerging markets
The reason Google's (NASDAQ: GOOGL  ) Android commanded a dominating 68.3% market share at the end of 2012 was largely the abundance of sub-$250 unsubsidized smartphones available in emerging markets. This race-to-the-bottom approach manufacturers have taken with Android puts Google in position to effectively corner the feature-phone market. At first, BB10's penetration into emerging markets isn't likely to be meaningful, considering the Z10, BlackBerry's first BB10 phone, will carry a $599 unsubsidized price tag. By the end of 2013, BlackBerry is expected to release a total of six BB10 devices, some of which will be intended for the lower-end market.

Transition year
At best, 2013 is likely to go down in the history books as a transition year for BlackBerry. BB10 is still very much within its infancy, and we won't see any real indication of its reception until the second half of 2013. At the same time, BB10 subscriber fees will be lower than what BlackBerry has charged for past iterations of its BlackBerry OS. Considering that its service revenues made up about 75% of BlackBerry's gross profit last quarter, this structural issue appears currently overlooked by investors, putting further pressure on the success of BB10. Combined, all of these factors don't lead me to believe that BlackBerry is a solid long-term investment.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


Read/Post Comments (9) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 06, 2013, at 8:34 PM, digitally404 wrote:

    Lol, InfoThatHelp... You are very amusing.

    Cover your short positions otherwise BB10 is going to doom you!

  • Report this Comment On February 06, 2013, at 8:35 PM, bunchofdonkeys wrote:

    You are fools indeed! First it was the palm comparison (that was why this model won't work)

    Then it was the- BB can't compete against Nokia...now lets call it "slow launch". When are you "fools" going to take your apple blinders off? This is REAL...this is actually happening lol

  • Report this Comment On February 06, 2013, at 9:15 PM, kzachmann wrote:

    The BBRY post on Yahoo does not allow investor comments .... not a good sign. By changing the name of the company it seems they have effectively stopped new shorts leaving only the option to cover current shorts on the down drafts. Again, if this was a designed play, not a good sign of confidence in the old RIMM standard. I do not have a current position in BBRY but the failure to disclose the delay for the US introduction would make me want to sell just on principle. At some point faith needs to be balanced with trust. I think BBRY will decline as a result of the games they seem to play.

  • Report this Comment On February 06, 2013, at 9:38 PM, TimKnows wrote:

    InfoThatSucks is still afraid of BlackBerry and that means a screaming BUY. Yet another useless article.

  • Report this Comment On February 06, 2013, at 9:51 PM, msassa wrote:

    " it seems that BlackBerry has the most to lose. Given its resources, if Microsoft fails in the smartphone market, it won't even come close to putting the company out business. However, if BlackBerry fails, the question of solvency may quickly creep into investors' minds."

    I think it is not a Microsoft problem that's correct but Nokia!!!

  • Report this Comment On February 06, 2013, at 11:39 PM, greenember wrote:

    "Out of more than 24 million "likes" BlackBerry's Facebook fan page has, the specific post received roughly 100,000 likes and 22,000 shares. Granted, this isn't a scientific study, but as an early indicator, perhaps the new BlackBerry isn't something the public is dying to get its hands on."

    They screwed themselves with this tactic lol

    In the Facebook for BlackBerry app in BBOS 7.1 and earlier, you can't "share" things (you have to use the mobile site in the browser, and we all KNOW how bad the browser is). No wonder not a lot of people 'shared' the post. I sure didn't, and I definitely would have if it worked from the app.

  • Report this Comment On February 06, 2013, at 11:41 PM, greenember wrote:

    @kzachmann

    " I do not have a current position in BBRY but the failure to disclose the delay for the US introduction would make me want to sell just on principle."

    Thorsten has said it's due to carrier testing and that they were disappointed they couldn't launch at the same time and that they are still working on trying to help move the process along as quickly as possible.

  • Report this Comment On February 07, 2013, at 3:26 AM, tt4u wrote:

    Whenever there's a Bbry bashing article, I can always be sure to find the unbiased, expert opinion of InfoThatHelp..lol

  • Report this Comment On February 07, 2013, at 4:07 AM, H3D wrote:

    R.I.P.

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