Research In Motion Ltd (BBRY) Bombs, and Shares Tank

Alternatively, it is possible that the slowdown in Z10 shipments was more modest and device sales missed estimates because of lower-than-expected Q10 shipments. That scenario would be more troubling, especially if it indicated weak Q10 demand rather than supply constraints. One of the biggest points in favor of a BlackBerry comeback is that the company has devoted fans, whom most analysts expect to be the initial market for BB10 devices (especially the Q10). If even those fans are hesitant to buy the new BB10 offerings, it would be devastating to the company.

Looking ahead
Research In Motion Ltd (NASDAQ:BBRY) CEO Thorsten Heins said all the right things on the company’s conference call on Friday morning. He talked about investing heavily this year to assure long-term success, rather than generating short-term profits at the expense of long-term growth. However, investors are understandably skeptical about the company’s turnaround plans, given BlackBerry’s turbulent past.

I still think the company can secure a niche for itself within the smartphone market, while also broadening its software and service offerings. The Q10 smartphone just launched this month in the U.S., one of BlackBerry’s largest markets. Moreover, it could take a few months to see sales build, because — unlike competitors — BlackBerry relies heavily on bulk sales to government and enterprise clients. Corporate IT departments typically take several months to approve new devices, so investors should expect the fall to be make-or-break time for BB10 in the corporate and government market.

Fortunately, the company still has a very strong balance sheet, with more than $3 billion of cash and investments at the end of May. This gives BlackBerry plenty of breathing room to execute its business plan over the next several quarters and hopefully create some momentum around BB10. Investors betting on a quick turnaround were disappointed on Friday; the earnings report was definitely a setback.

Still, while BlackBerry’s prospects have dimmed, the curtain has not yet fallen on this former smartphone giant. However, time is of the essence in rebuilding the BlackBerry brand to produce a return to growth.

The article BlackBerry Bombs, and Shares Tank originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg owns shares of BlackBerry and also has long January 2014 $13 calls on BlackBerry. The Motley Fool has no position in any of the stocks mentioned.

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