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Is This the Perfect Time to Sell BlackBerry?

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I made a prediction about BlackBerry (NASDAQ: BBRY  ) in December:

"I'd expect RIM's share to climb some more until the product actually launches. And that's likely to be the end of the good news," I said. "In other words, I see RIM hitting a final peak in January or February of 2013. It's all downhill from there."

Jumping the gun?
It's way too early to tell if that prognosis was absolutely correct, but all signs point to "yes" so far. The company stepped up to the plate with a massively underwhelming selection of new smartphones. The supposedly life-saving BB10 software has its bright spots, like a revamped notification system and nifty photo management tools, but doesn't seem to make up for the hardware difference. Swing and a miss.

In addition, the crucial American debut was pushed back to the end of March -- for most major networks. Faithful Verizon customers have to wait another month as Big Red gets its BlackBerry ducks in a row for an April launch. That delay might not seem like a big deal, but it's huge for a company that has released only one new U.S. product since September 2010. BlackBerry cannot afford to rest on its fading laurels while the competition runs circles around it.

Speaking of which, BlackBerry's born-obsolete handsets are about to get lapped again. The new BlackBerry Z10 hardware looks a lot like last year's Samsung Galaxy S III, and Sammy will introduce the Galaxy S IV on March 14 -- a couple of weeks before the new BlackBerrys become available to American customers. That may or may not be enough to put Galaxy S IV phones on American store shelves before BlackBerry Z10 and Q10, but it's most certainly early enough to make potential buyers aware that there's a new generation in town.

On top of that, rumor has it that Apple (NASDAQ: AAPL  ) is accelerating its iPhone release schedule. Cupertino is even going with two distinctive models if early reports are right -- one high-end handset for the current iPhone crowd and a lower-end, less costly version for price sensitive markets. One potential target for the low-end Apple phone could be corporate accounts, which buy phones in large batches and would appreciate a more utilitarian Apple take on telephony. That's another roadblock in front of BlackBerry's path to prosperity, and perhaps a fatal one.

Word on the Street
Analyst firm MKM Partners found that less than 10% of the 100 best-selling apps for Android and iPhone handsets are available for BlackBerry 10 today. That puts the Canadians at a huge disadvantage. Without quality apps, nobody will want to buy the handset. Without hardware sales, developers won't spend their limited time and resources to support another failing platform.

So which died first -- the chicken or the egg? Either way, it's a poultry catastrophe.

That's why MKM gives BlackBerry 10 a 10% chance (fittingly enough) to pull the company back from the grave.

Early estimates of international BlackBerry 10 sales are not too encouraging, either. MKM sees Z10 sales adding up to 400,000 units this quarter. Canaccord Genuity cut its 1.75 million unit estimate to 300,000 after checking retail channels in Canada and the U.K. The Z10 reportedly sold out in many locations, but more likely due to limited supply than solid demand.

Why are you such a hater, Anders?
Look, I wish things were different. BlackBerry could been a contender, but chose to walk a different path -- and get totally lost. I like competition. I'm a big fan of consumer choice. That's why it pains me to conclude that BlackBerry is indeed going down the tubes. If BB10 was the Canadian team's Hail Mary pass, it flew way off target. The stock peaked at $17.90 per share just before the platform was unveiled, and that looks like the final hurrah.

If you rode BlackBerry to a double over the last six months, I would suggest cashing in your chips today. The BB10 speculation frenzy is behind us, and the stock can only go down from here. My bearish CAPScall on BlackBerry stays up as the shares go down.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Read/Post Comments (9) | Recommend This Article (5)

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 26, 2013, at 7:00 PM, powerphrase wrote:

    Under the Table $$$. Short analyst. Want to harm peoples hard earning Money.

  • Report this Comment On February 26, 2013, at 8:20 PM, sammycooool wrote:

    Have we ever read so much crap in one place before? Articles like this one really ruin it for other authors trying to break into the business. I don't want to paint all the articles here as garbage but this one doesn't help the situation any.

  • Report this Comment On February 26, 2013, at 9:03 PM, jwyoungy wrote:

    Wow, what a stupid article. Go ahead bud, short the crap out of it now and I'm sure you will do just fine. Never mind that blackberry just ramped up production because demand is higher than even blackberry had thought likely. Also, Virizon in not launching in April, they are launching in March acording to them! As for a "massively underwhelming selection of new smartphones" you must be talking about the last two iphone launches because the reviews of the blackberry 10 would disagree with you. I think blackberry will release sales numbers after the first week of March to help build hype in the US and when that happens, shorts better be ready to bail because that will be the last time they see the stock below $17.00

  • Report this Comment On February 26, 2013, at 11:42 PM, noway22 wrote:

    Another "Short" inspired article, getting less creative lately

  • Report this Comment On February 27, 2013, at 12:01 AM, Arthur1111 wrote:

    "MKM sees Z10 sales adding up to 400,000 units this quarter. Canaccord Genuity cut its 1.75 million unit estimate to 300,000 after checking retail channels in Canada and the U.K. The Z10 reportedly sold out in many locations, but more likely due to limited supply than solid demand."

    Not true. The reduction of the estimate was due to the US launch of the Z10 in March rather than February. Canada, UK, and UAE sales were the best in BlackBerry's history.

    Try not to hide some information. You may get some respect.

  • Report this Comment On February 27, 2013, at 6:08 AM, shal112 wrote:

    No now is the time to cover your shorts before its to late.

  • Report this Comment On February 27, 2013, at 8:58 AM, Crestington wrote:

    I remember the article and it was before blackberry's launch when the stock was at $12 and also recommended to buy apple which tanked 15% since then.

    Blackberry's book value is 17.50 a share and sentiment is overly bearish so the bar is so low that any results they post are going to lead to a spike in share price.

    Most people I talk to are very unhappy with apples products and go on about how great the Z10 is. It is still early for blackberry and management has been doing a good job with the launch and progression of the platform. The big plus is that they are already releasing payment services through NFC and that the platform is incredibly easy to develop for, apps for vehicle control are already coming into fruitition.

    For me, anything under $13 a share is a good buy for such a speculative stock.

  • Report this Comment On February 27, 2013, at 8:59 AM, infektu wrote:

    No, it isn't. Nice strategy, those question marks in the title, though.

    When Canaccord Genuity (or any other firm) cuts a 1.75 million unit estimate after 7 days to 300,000 then they need their head checked. Or their trading accounts.

  • Report this Comment On February 27, 2013, at 9:22 AM, THINKLyndon wrote:

    I would say it's a perfect storm given Samsung's announcement that it is going to target the Enterprise I wrote last year that I believed Apple [$AAPL] would buy RIM [$BBRY] and I'm more convinced now than I was then.

    You can read my blog [link below] about it but essentially, Apple has lost its innovation advantage, BlackBerry 10 is going to be its Windows 8 and the iPhone with Enterprise grade secure email would be a slam dunk!

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