BlackBerry (BBRY) Stock: Abandon All Hope After Q3 Revenue Miss

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BlackBerry Ltd (BBRY) is a polarizing company. Unfortunately for investors, Wall Street’s one-sided opinion is that BBRY stock is a loser.

BlackBerry LTD BBRY Stock Abandon All Hope After Q3 Revenue MissToday, Wall Street is right.

While 35% year-to-date gains are nothing to scoff at, BBRY stock is trading in the red after an abysmal third-quarter revenue miss that indicates BlackBerry’s turnaround efforts are on shaky grounds.

Since its peak at more than $230 per share in 2007, BBRY now trades below $10 — and the fall ain’t over yet.

Time to Cut and Run

BlackBerry stock was down as much as 7% in early Friday trading as investors recoiled at the once-dominant mobile company’s results.

For those unfamiliar with why BBRY has been so severely punished by the stock market in recent years, I noted the dramatic drop in BlackBerry’s market share back in November:

Apple Inc. (AAPL) and Google Inc (GOOG) have already eaten BBRY’s lunch in hardware. With a market share that fell from 20% at its peak to less than 1% in recent quarters, it’s foolish to argue otherwise. Numbers don’t lie.”

blackberry market shareThat infinitesimal market share likely continued to fall in the most recent quarter, as revenue came in at $793 million in the third quarter, flamboyantly missing analyst expectations for $932 million in revenue, and coming in lower both year-over-year and quarter-over-quarter.

The good news? BBRY earned a penny per share in the quarter, which ended Nov. 29.

Wall Street was afraid that the company — which is a better punchline than business at this point — was going to lose money. Analysts expected BlackBerry to lose 5 cents per share in the quarter.

But while earnings were positive and beat expectations, that doesn’t mean BlackBerry is necessarily on the right track. (In fact, the company actually lost 28 cents per share, or $148 million, before various adjustments.)

The third-quarter was the first period that reflected sales of the BlackBerry Passport, and from the weak revenue number, we can at least get an idea of the answer to the question, “Will the Weird BlackBerry Passport Catch On?”

BlackBerry bulls, the poor people, will point to the company’s positive cash flow in the quarter as a bullish indicator. But even then, one quarter is hardly evidence of a sustainable long-term trend, and BBRY’s continued reliance on the lower-margin handset segment could be a death knell going forward.

Hope Isn’t Always A Good Thing

Hope is a good investor’s worst enemy. As the saying goes, “Hope is not a strategy.” Even if it were, there are few logical arguments to have hope for BBRY.

Although some loyal BlackBerry customers seem to believe that the newest iteration of the BlackBerry line, the BlackBerry Classic, is the best smartphone to buy now, can we really expect the Classic to drive BBRY stock higher? Granted, BlackBerry isn’t expecting the Classic to be a blockbuster, but the company still relies on hardware for a whopping 46% of its revenue … so it kind of has to be.

And while BlackBerry is increasingly focusing on software, services and its messaging applications, it hasn’t yet proven that those can be relied upon to drive growth throughout the whole company.

Third-quarter results were closely watched, and a lot was riding on BlackBerry’s earnings this time around.

But with sales continuing to fall off a cliff and no end in sight for BlackBerry’s nightmare, investors should abandon all hope after BlackBerry’s most recent miss.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/12/blackberry-ltd-bbry-stock-abandon-hope-q3-revenue-miss/.

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