BlackBerry Outlook & A Short Recap

BlackBerry outlook: After launching the Z30 phone in Malaysia and announcing that it would reduce its workforce by up to 40%, BlackBerry Ltd (NASDAQ:BBRY) gave another surprise to investors and customers alike. The company will no longer market its phones to consumers. Instead, it will focus on corporate and professional clients, who have historically constituted the core of its subscriber base (yes, all of this happened last week; and there are still some more things that went on!)

BlackBerry Ltd (NASDAQ:BBRY)

However, this segment is also suffering from erosion. Many workplaces where Blackberry once dominated are now tending towards the use of iPhones and Android phones, as most employees are used to using them in their personal lives.  Furthermore, the trend of allowing employees to use their personally-owned devices for work is becoming stronger. As Blackberry continues to lose market share in the personal segment, this will reflect on lower adoption in the corporate world.

Nevertheless, BlackBerry still holds about a 38% market share amongst businesses with more than 10,000 employees, and more than a 33% share amongst government and financial institutions, according to Enterprise Management Associates Inc., an analysis company for the IT industry. Other products like the BlackBerry Enterprise Server, which helps companies manage their employees’ devices, are also hanging on to their market shares (higher switching costs are involved). Given this situation, management has assured that it will put a strong focus on its device management segment, going forward.

Friday came with more news from Blackberry. The company said it would post a loss of $950 million to $995 million for the three months that ended August 31st. The management stated that this huge loss had been caused by poor sales of the company´s recently launched touch-screen phone, the Z10.

As a result of these announcements, Blackberry’s stock fell 17% on Friday, to $8.72 per share, and continued to plummet during after hours, reaching $8.48. As its stock-market value and cash reserves shrink, one question remains: will Blackberry be able to survive as an independent company? Or will it need to be saved by a larger competitor, like Google Inc (NASDAQ:GOOG) did for Motorola Solutions Inc (NYSE:MSI), and Microsoft Corporation (NASDAQ:MSFT) did for Nokia Corporation (ADR) (NYSE:NOK)’s devices segment?

Internal sources have declared that the company is in fact trying to find a buyer by November. However, Blackberry founder, Marc Lazaridis, “has been [also] talking with private-equity firms about possibly mounting a joint bid” (WSJ). Check back here for more updates on the BlackBerry outlook.

Disclosure: Javier Hasse holds no position in any stocks mentioned

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