BlackBerry shares plunge after $84 million net loss

Posted Jul 3, 2013 by Eko Armunanto
BlackBerry shares plunge after a stunned $84 million net loss as the new operating system and handsets failed to win over smartphone buyers. The sale of its “do or die” product Z10 hasn’t yet succeed so far, its shares closed down 28% in New York.
BlackBerry Z10
BlackBerry Z10
When BlackBerry announced its new operating system and handsets back in January, analysts described it as “do or die” for the company, but then many investors gave up on BlackBerry in dramatic fashion Friday following the $84 million net loss, wiping 28 per cent off the share price June 28. Gartner analyst Ken Dulaney says the prospects for BlackBerry are not encouraging. “Market conditions will make it extremely difficult for BlackBerry to rise above iOS, Android and Windows Phone 8 platforms,” Dulaney says. “Success in the consumer market is necessary to ensure long-term viability in business markets.”
As Bloomberg noted, the stumble risks undermining BlackBerry’s credibility with remaining supporters among consumers, analysts and corporate customers. The magazine says Maynard Um of Wells Fargo Securities LLC, one of nine analysts left who had considered BlackBerry a buy, cut his rating to hold. It suggests the slump also raises the possibility more developers may avoid the platform, following the path of app-maker Ideomed Inc., whose marketing chief describes BlackBerry as sliding toward MySpace-style irrelevance.
The long-delayed BlackBerry 10 operating system finally launched in January, during the company's fiscal fourth quarter. But the first BlackBerry 10 device, the touchscreen Z10, went on sale in only a few locations just a few weeks before the quarter ended – so that reporting period was essentially a wash. The first quarter was BlackBerry's first chance to prove the company is turning around. Unfortunately for BlackBerry, the quarter was a painful disappointment. Considering that BlackBerry 10 is meant to be the center of the turnaround, the company didn't mention the platform much in its news release. BlackBerry said that overall smartphone shipments rose 13 percent over the quarter to 6.8 million, but didn't say how many of those were BlackBerry 10 devices.
Chief executive Thorstein Heins told the BBC that the company was continuing to focus on the global roll-out of BB10 and was confident it would be a hit with customers. "We are still in the early stages of this launch, but already, the Blackberry 10 platform and Blackberry Enterprise Service 10 are proving themselves to customers to be very secure, flexible and dynamic mobile computing solutions," he said.
The Z10 is central to BlackBerry’s attempt to branch out beyond phones boasting a physical qwerty keyboard. The Waterloo, Ontario-based company last quarter shipped 2.7 million BlackBerry 10 devices, primarily its flagship Z10, about 25 percent fewer than analysts were expecting. “The question is can they stay relevant and remain one of the choices that is on the table,” said Charles Golvin, an analyst at Forrester Research Inc. in Cambridge, Massachusetts. “So far the answer is unclear.”
Speculation about a possible takeover continues. According to the Bloomberg report, the stock jumped in January after Lenovo’s Chief Financial Officer Wong Wai Ming said the Chinese company was looking at all opportunities, including BlackBerry. William Blair & Co analyst Anil Doradla sees a bid for BlackBerry as unlikely given the questions surrounding BlackBerry 10 and the fact the company could have been bought more cheaply last year. “Remember this was an $8 stock not too long ago, and no one bought it then.” Anil said. “If it was going to be bought off, it would’ve been bought off a year ago,” he added.