Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why It’s Time To Bid A Fond Adieu to Research In Motion Ltd (BBRY)

If there’s any one factor that I need to choose to describe Waterloo, Ontario-based Research in Motion, or now Research In Motion Ltd (NASDAQ:BBRY)’s present downfall, I would undoubtedly opt for the management’s “lack of credibility.” The very fact that Mr. Heins and his men were not keen to discuss the sales figures of the company’s BB10 based devices until quite sometime into the quarterly conference call was proof enough that this company can certainly not be trusted anymore. And the Street responded to the real picture, as stock prices dropped by a whopping 29% for the once-acclaimed handset manufacturer.

BlackBerry Ltd (NASDAQ:BBRY)

While it’s true that the company’s losses have been far less than in the previous year and the cash pile continues to remain substantial (going up to $3.1 billion along with zero debt), that still doesn’t discount the fact that as much as 60% of Research In Motion Ltd (NASDAQ:BBRY)’s quarterly unit sales comprised handsets running on the older operating system. That’s a big disappointment, considering the fact that it’s been a full three months since the launch of the company’s make-or-break Z10 touch-based handset in the crucial US region. And the Z10 based on its newest BB10 operating system, was supposed to be the company’s answer to Apple Inc. (NASDAQ:AAPL)’s iOS-based iPhone and Samsung’s Galaxy line of handsets based on Google Inc (NASDAQ:GOOG)’s Android operating system.

The cons outnumber the pros

That apart, Research In Motion Ltd (NASDAQ:BBRY)’s subscriber base also fell by a considerable 4 million on a q-o-q basis, signifying the fact that customers are just walking into the arms of more attractive competitors. And that inevitably leaves good, old BlackBerry saddled with an unwanted yet substantial q-o-q rise in inventories as well.

So what are the real behind-the-scenes factors that might have led to most analysts preparing to write BlackBerry’s obituary these days? Time to do a reality check that should also be able to tell us why the company’s future prospects might as well be zero.

The broken ‘enterprise’ backbone

To start with, the fall in subscriber base for Research In Motion Ltd (NASDAQ:BBRY) is closely related to the fall in high margin generating service-based revenues for the company. This is because its subscriber base (or what’s left of it) mainly comprises government agencies, lawyers and professionals, in short the highly lucrative enterprise segment. However, recent tech trends such as the Bring-Your-Own-Device (BYOD) scenario has worked against BlackBerry, with offices allowing their employees to carry their own Apple Inc. (NASDAQ:AAPL) iPhones or Google Inc (NASDAQ:GOOG)’s Android-based devices.

And even if Google’s Android software platform has still not successfully managed to override the commonly-held perception about its susceptibility to malware, there’s always Apple’s walled-garden approach (read almost zero susceptibility to malware) to make up for that. And one should not forget rival Nokia Corporation (ADR) (NYSE:NOK)’s tie-up with Redmond-based Microsoft Corporation (NASDAQ:MSFT) that has resulted in the former’s offering of the Windows 8 phone operating system. After all, at the end of the day, Windows continues to remain the enterprise customer’s favorite operating software.

Nokia’s low-cost strategy

Nokia Corporation (ADR) (NYSE:NOK), despite its widely-publicized losses, continues to offer devices in a wide range of prices as well, with sales of its lower-priced handsets somewhat making up for the slim revenues generated by its higher-end Lumia line of phones. The strategy has resulted in rich gains in emerging markets such as India and other South East Asian countries, with the company’s Asha range of handsets having done especially well in recent quarters.

In fact, the company has gone ahead a step further and launched amazingly low priced handsets such as the Nokia 105 worth a meager $20, for people in cost-conscious emerging nations that are yet to upgrade to the smartphone experience. That should also give some time to Nokia Corporation (ADR) (NYSE:NOK) as the company waits for the Lumia range to gain popularity. Incidentally, a recent survey has revealed that Nokia’s Windows phone operating platform recorded a steady rise in market share at 5.6%, placing it a notch ahead of BlackBerry at third place, after Android and iOS.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.