BlackBerry Sinking, But Holding Out Hope

PUBLISHED: 28 Mar 2014 @ 14:49 | Comments (0) | More info about Lou Gutheil

I am going to do my very best to be completely objective in this story. That will be difficult for me because I have never liked BlackBerry (TSX:BB) (NASDAQ:BBRY), either as a phone or as an investment. Now that I have got that off my chest, I can just feel the objectivity flowing through me. Here it comes: BlackBerry reported a 38% decline in revenue for the FY 2013, ending 01 March 2014.

If you’ve read my column for any length of time, you know that I enjoy reading conflicting headlines related to the same story. Here are a few of the ways the media at large is presenting the story:

Or how about this opening line in one story:

BlackBerry Ltd reported a much smaller-than-expected quarterly loss on Friday, sending its shares up nearly 7 percent, even as its smartphone sales continued to slide.

The people who wrote these must be descendants of the reporters who lauded the crew of the Titanic for polishing its rails and arranging the deck chairs so that passengers would feel comfortable and not jump ship.

I had a feeling from the very beginning that BlackBerry’s history could be a relatively short one, despite being headquartered in Waterloo, Ontario, the virtual heart of wireless county. By wireless, I mean Amish country. Those people have been wireless for generations. Wireless is relatively new to most of the rest of us. Even their vehicles have been wireless for centuries. They understand the reality of harnessing real horsepower without electricity or electronics.

I’m not poking fun at the Amish. They are amazing people. But, much like the Amish, BlackBerry seems to think that progress stopped at an arbitrary point in time. For BlackBerry it stopped with incorporating a QWERTY keyboard into a phone. Blackberry has been a one-trick pony type of company from the start. They lucked out by introducing their trick before others created more exciting tricks and built them into their phones.

Even Marcus Lemonis couldn’t turn this company around. Total revenues had been $2.68 billion in 2013. They fell by $967 million in FY 2014.

John Chen, BlackBerry CEO, said, “I am very pleased with our progress and execution in fiscal Q4 against the strategy we laid out three months ago. We have significantly streamlined operations, allowing us to reach our expense reduction target one quarter ahead of schedule. BlackBerry is on sounder financial footing today with a path to returning to growth and profitability.”

However, Brian Colello of Morningstar observed, “The big question still remains what BlackBerry can do on the demand side. A lot of their moves have been supply related and internal, but we’re still looking for strong signs that demand is improving.” Frankly, those signs aren’t visible, because they don’t exist. Chen still believes that keyboard-centric designs are what customers want, so he plans to introduce three new keyboard-centric models in FY2014.

Seems like Waterloo is going to forever be associated with a once great leader coming to its demise. Don’t be surprised if it happens again. Blackberry share price is up 1.66% to $9.23 on the NASDAQ this morning.

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