BlackBerry Has a Lot to Prove Tomorrow

Tomorrow won't be easy for BlackBerry (NASDAQ: BBRY  ) .

The struggling smartphone pioneer will host its annual shareholder meeting, and executives have to be braced for a whole lot of bellyaching from its battered investors.

The stock has lost 34% of its value in the past five trading days since posting brutally disappointing quarterly results.

The shares have shed nearly half of their value since peaking in January on hopes that BlackBerry's BB10 mobile operating system update would save the out-of-favor handset maker.

It didn't.

BlackBerry stunned investors two Fridays ago by revealing that just 2.7 million of the mere 6.8 million smartphones shipped in its latest quarter were the Z10 and Q10 devices powered by the new platform. If the early adopters didn't hop on the BB10 buzz when the handsets hit the market earlier this year, it's highly unlikely that mainstream BlackBerry users will follow suit.

Despite throwing more than $4 million at developers to port their apps for BlackBerry's new devices and the aggressive marketing push through wireless carriers worldwide, BlackBerry is toast as a mobile platform in a world where Apple has the high end of the market cornered and Google has turned into the choice of the masses.

Investors probably didn't have to wait until last month's quarterly report to know that BlackBerry was in trouble. Earlier in the month, market tracker comScore reported that BlackBerry's share of the U.S. smartphone market had fallen from 5.9% in January to 5.1% in April. When you consider that the BB10 devices were introduced in that span of time, yet BlackBerry's market share still suffered a steep slide, the shocking quarterly report probably wasn't all that shocking.

Apple's iOS and Google's Android, on the other hand, saw their combined market share in this country grow from 90.1% to 91.2% in just three months. BlackBerry's rollout didn't do anything to make anyone believe that there will ever be room for more than two major mobile operating systems, and it's not as if life is even all that good at the top. Apple's shares and Asian makers of Android handsets have been struggling lately.

Things won't get any easier for BlackBerry, which followed up its disappointing fiscal results by warning that the current quarter will be saddled with another operating loss.

The good news for BlackBerry investors is that the company closed out its latest period with more than $3.1 billion in cash and equivalents. A desperate BlackBerry could also raise shareholder value by spinning off either its hardware or software and services businesses.

It's a safe bet that the splitting up its business will come up at some point on Tuesday morning during the meeting. Investors may not like the answer they get, but BlackBerry executives aren't going to be happy with the questions that they get, either.

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Comments from our Foolish Readers

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  • Report this Comment On July 08, 2013, at 6:30 PM, shirtbrigade wrote:

    Q: How can production of the same phone as everyone else, minus a lot of apps that I am sure will come in time, constitution a plan for recovery?

    Q: Do you have an R & D visionary in your company?

    Q: When will you seek to enforce your patent rights, or has Obama and the Supreme Court essentially killed the purpose and value there?

    Good questions. Last one.

    Q: Can you prove every penny of those receivables will be collected?

  • Report this Comment On July 08, 2013, at 6:31 PM, shirtbrigade wrote:

    constitution = constitute

    XOXO

  • Report this Comment On July 08, 2013, at 7:05 PM, derkman wrote:

    This article was just totally laughable!! Thanks so much for the laugh man!!!

  • Report this Comment On July 08, 2013, at 8:24 PM, alexmach1 wrote:

    Just a couple of points :

    1) "Investors probably didn't have to wait until last month's quarterly report to know that BlackBerry was in trouble.... comScore reported that BlackBerry's share of the U.S. smartphone market had fallen from 5.9% in January to 5.1% in April" : This is a U.S. report and BB10 phones were available in the U.S. only in April so kind of hard to conclude anything on BB10 with this.

    2) They are not going to split up anything....you think they worked on this OS and made all these phones just to quit after 90 days because Wall Street didn't get its immediate mind blowing results?

  • Report this Comment On July 09, 2013, at 1:08 AM, sliderw wrote:

    Why doesn't The Motley Fool have a service that recommends short ideas like BBRY? Why oh why?

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