Stock: BBRY

        Blackberry, formerly known as Research In Motion, is a company that designs and manufactures phones running on it's Blackberry operating system. It made a powerful debut in the 1990's, quickly revolutionizing mobile email in a way that attracted enterprises across the globe. Known for its impeccable security, the company's stock reached a peak of $140 in 2008. With the crash of the US stock market and the cannibalization of its market share by other powerhouses such as Apple, Google, and Samsung, Blackberry's stock plummeted down to about $6 over the course of four years. Even though delays in the launch of it's BB10 operating system caused Blackberry to lose its dominance over other smartphones, its stock is still up an impressive 100% from its bottoming out in 2012.
        First, let's take a look at Blackberry's market share over the years. In the late 1990's, its revolutionary operating system gave it close to 100% dominance over all of the other phone companies. One of the most attractive parts of the system was the mobile e-mail system. This allowed the company to quickly gain footing in large companies, because it was the first "smartphone" of its day. However, as the mobile world advanced in the 2000's, Blackberry failed to follow. Touch screens, led by Apple, quickly took over the smartphone market. Blackberry took too long to follow this trend, and as shown by some of the previous touch screen phones it produced, it couldn't recapture market appeal. Yet its renowned security system still allowed it to hold on to a large portion of the smartphone market.
        In earlier years, Blackberry was the only phone that received clearance for use at the Pentagon. Now, with technologies quickly advancing, Samsung and Apple have also gained approval by the United States Department of Defense. This is a huge loss for Blackberry considering it used to be the sole company utilized by the Pentagon for its mobile division. Also, reports leaked by Edward Snowden reveal that certain European agencies have hacked into the Blackberry operating system, scaring off many of its loyal customers. The delay in the launch of its BB10 operating system also resulted in huge losses for the company. Now, with only a 3% share in the global smartphone market, Blackberry's future rests on how well its new BB10 phones perform.
        The Blackberry 10 operating system has many upsides, such as Blackberry Hub which allows users to see messages with the swipe of a finger. However, the lack of apps in relation to all of the other operating systems poses a huge problem for Blackberry. The release of its Z10 and Q10 smartphones was meant to help Blackberry regain some market share, but the results of their launches is yet to be seen. Emerging markets offer the highest growth opportunity for the company, but these two phones are relatively high priced. Another phone, the Q5, is to be released later this year. It is targeted at the younger demographic and is much cheaper than its predecessors. Currently, Blackberry is one of the only companies that produces phones with QWERTY keyboards, which should allow it to recapture much of the keyboard fans.

        Another problem with Blackberry is the fact that there is a large decline in its quarterly revenue, sometimes even an operating loss! This means that Blackberry isn't even at the point of breaking even. From a long term point of view, this is a terrible situation. But for all short-sellers of the company, it may actually be a good thing. The state of the company results in lower sales and earnings expectations from Wall Street, which the launch of the Z10 and Q10 might allow the company to beat. There is an expected 3 million or so device sales, and the company would actually be turning in a profit if it surpassed this value by a couple hundred thousand. Due to the volatility of the stock, if the company were to beat earnings in the coming quarter on June 28, the stock could shoot up as much as 10% in a single day!
        On the other hand, if Blackberry misses expectations, it may cause large institutional holders to drop all their holdings in the company. The stock is currently on a downward path, so this is a very likely possibility. However, the company has managed to stockade a $2.65 billion with no debt, which might allow the company to survive a couple quarters, even with an operating loss. There have also been takeover rumors by companies such as IBM. Having Blackberry operating as a subsidiary would greatly expand their presence in enterprise services, offering more connectivity between devices. At the moment, these are merely rumors.
        In the last few months, the debate over Blackberry's future has sparked extreme comments and rumors from both sides of the argument. The high volatility of the stock provides extreme risks to any who dare to invest. However, a single earnings beat could provide a large upside to the company. With their quarterly earnings approaching on Friday, June 28, investors should watch for their stock to either jump or plummet. It might be best to wait until after the earnings report is given, to decide whether the new operating system will sink or swim. Do not enter into Blackberry without a thorough evaluation and solid decision.

Disclaimer: Trading stocks has extremely high risks, and should not be taken to lightly without a thorough understanding. This is written from a purely commentary point of view and is not meant to suggest buying, selling, or holding a stock. All traders must do their own research prior to investing. We (StockQuests) are unaffiliated with all of the companies that are mentioned on this blog, and can't be held responsible for any losses that may occur. Invest at your own risk. This is not a suggestion to buy or sell BBRY. -->