BlackBerry (NASDAQ: BBRY ) is by no means in an enviable position. Despite a healthy war chest of $3.2 billion, the company's sales seem to be in perpetual decline as devices based on Google's (NASDAQ: GOOG ) Android and Apple's (NASDAQ: AAPL ) iOS have made BlackBerry devices, for the most part, irrelevant. It shouldn't take more than a trip to your local Verizon or AT&T store to figure out that today's hot mobile devices don't come from BlackBerry. Following the company's recent (yet again) disastrous earnings report ($4.4 billion net loss, revenues down 56% year over year) and its announcement that it has signed a five year agreement with Foxconn to build low-end BlackBerry phones, it's pretty clear that BlackBerry is finished.
Looks like nobody wants BlackBerry 10
In the most recent quarter, BlackBerry ended up selling about 4.6 million phones. This is down significantly from the year-ago period, but the real problem is that 3.2 million of these phones – 70% of the units sold – were actually much older BlackBerry 7 devices. While it has been clear for a while, this figure drives home an important point: BlackBerry 10 is a flop.
This is not a surprise, particularly given the very stiff competition in the high end of the handset market. The Apple iPhone is a well-loved work of art and there are countless Android phones out there that, frankly, are quite good (and some may argue that those, too, are well-loved works of art). There's no beating the iOS software ecosystem, but Android is so ubiquitous (and it is so rapidly gaining share) that it is a natural target for software developers and should be as rich, if not richer, than what iOS offers in due course. There was simply no room for an alternative operating system from a company that doesn't have seemingly infinitely deep pockets (i.e. Microsoft).
BlackBerry's new strategy: grovel
BlackBerry's new strategy at this point seems to be to target emerging markets with low-cost smartphones via its deal with Foxconn. While this does seem to make sense, particularly as BlackBerry's current sales base is dominated by BlackBerry 7 devices, this is an exercise in futility. The same forces that kept BlackBerry 10 from catching on in the mid-range to the high end are the same ones that will keep BlackBerry from regaining share in the low end: very powerful Android players.
It's tough to see how selling either low-end BlackBerry 7 or BlackBerry 10 devices into a market where the likes of Samsung (NASDAQOTH: SSNLF ) simply have more marketing clout (and control of just about the entire smartphone supply chain) and scale is going to be particularly fruitful. With enough marketing and with low enough prices, BlackBerry can regain a foothold, but it would probably be marginally profitable – at best.
Foolish bottom line
BlackBerry will likely be a highly volatile, very speculative stock. While there is probably money to be made by playing the swings, long term investors should really think twice before parking their hard-earned investment dollars in a company that has done nothing but destroy shareholder value since its all-time high in 2008. How many people got burned "buying the dip" hoping for a rebound? Think twice before you risk joining their ranks and instead pick a higher quality name with better prospects. As hated as Apple seems to be these days, it is simply a much safer, higher-quality play than BlackBerry will ever be.
More compelling ideas from the Motley Fool
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report, "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.