Why It Would Take a Miracle to Save BlackBerry Now

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Submitted by Investment Contrarians as part of our contributors program .

By George Leong

I have said it before and I will say it again: BlackBerry (NASDAQ/BBRY), formerly known as Research In Motion Limited, remains a non-factor in the highly competitive smartphone market.

The company, which had been edging higher on optimism from its new "Z10″ and "Q10″ smartphones, has yet to gain any traction based on its early numbers.

BlackBerry plummeted 23% on Friday morning, and there could be more disappointment to come for the company.

Chart courtesy of www.StockCharts.com

The first-quarter results were a train wreck for the company, which was betting the farm on its new line of smartphones that were years in the making and that many expected to gain significant market share.

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So far, while the phones appear to be gaining some acceptance, the company's growth is clearly well below what BlackBerry's CEO Thorsten Heins wanted.

The company's first-quarter revenues managed to climb 13% year-over-year and 15% sequentially.

Smartphone shipments increased 13% sequentially to 6.8 million in the quarter; but that won't cut it for this smartphone company.

Let me explain.

The shipments at BlackBerry significantly pale in comparison to those of Apple Inc. (NASDAQ/AAPL), which is estimated to see its smartphone shipments, driven by the "iPhone 5," reach 266 million in 2013, according to Katy Huberty of Morgan Stanley. (Source: Warden, S., "iPhone 5 could push Apple's Smartphone shipments to 266 million in 2013," The Full Signal web site, September 12, 2012, last accessed July 2, 2013.)

And there's also the widely acclaimed "Galaxy S4″ by Samsung Electronics; this company is expected to ship 80 million phones this year, according to Mark Sue at RBC Capital Markets. (Source: Saxena, A., "Samsung Galaxy S4 shipments to reach 80 million in 2013: Analyst," NDTV Gadgets web site, May 31, 2013, last accessed July 2, 2013.)

You don't have to be a rocket scientist to figure out that BlackBerry is in trouble and has a lot of catching up to do?I just don't see it happening. And Apple and Samsung are not going to sit idle.

Heins talks about the emerging markets and using cheaper BlackBerry smartphones to grow markets like China; but the reality is that Apple is speculated to be looking at launching a cheaper iPhone for the same markets. You know it's not going to be a war, but a massacre.

And don't forget that Samsung already dominates in the Asian smartphone and emerging markets, and the company is only just now picking up in the rest of the world.

BlackBerry also shipped 100,000 BlackBerry "PlayBook" tablets in the first quarter. By comparison, Apple could ship as much as 100 million "iPads" in 2013, according to David Hsieh, an analyst at DisplaySearch. (Source: Epstein, Z., "iPad shipments could reach 100 million in 2013," Yahoo! News, December 14, 2012, last accessed July 2, 2013.) BlackBerry's just not in the same league.

While I think the BlackBerry Z10 is a fantastic smartphone that compares favorably to my current Apple "iPhone 4," I'm just not convinced it's a better phone overall for most people's needs.

BlackBerry will have to convince buyers of smartphones that its new line is worth more than just a look, but I just don't see how the company will overcome the battering it's already receiving from Apple and Samsung.

This article Why It Would Take a Miracle to Save BlackBerry Now was originally published at Investment Contrarians



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: AAPL , BBRY , GOOG , NDAQ , NOK

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