Canadian handset manufacturer BlackBerry Limited (BBRY) has decided not to renew its licensing contract with T-Mobile US, Inc. (TMUS) after its expiration on Apr 25, 2014.
However, BlackBerry will collaborate with T-Mobile to serve its existing customers or customers who will purchase the former’s devices from T-Mobile’s current inventory. BlackBerry is in talks with other carrier partners to offer alternatives to customers who want to switch from T-Mobile.
The long–standing relationship between the companies was tainted after T-Mobile’s trade-in program in March 2014. The deal promised BlackBerry users a lucrative $200 for trading in their devices for a new handset. T-Mobile offered an extra $50 concession to customers who exchanged for a BlackBerry Q10 or Z10. However, 94% of the T-Mobile customers using BlackBerry phones switched to other smartphones.
BlackBerry recently reported mixed financial results for the fourth quarter of fiscal 2014.The bottom line significantly surpassed the Zacks Consensus Estimate but the top line missed the same. The improvement was mainly buoyed by recovery of inventory charges and continuous reduction in operating expenses. In the reported quarter, BlackBerry sold 3.4 million smartphones, out of which 2.3 million were BlackBerry 7.
BlackBerry is making serious effort to bring the company back to profits. Recently, as part of its restructuring program, the company reached a deal to vend most of its real estate holdings in Canada. BlackBerry will sell over 3 million square feet of properties and will lease back a portion of the assets sold. In Jan 2014, BlackBerry announced its objective to sell the holdings in a bid to strengthen its balance sheet.
Other Stocks
BlackBerry currently has a Zacks Rank #2 (Buy). Other better-ranked stocks in the wireless industry which are worth considering include SK Telecom Co. Ltd. (SKM) and Nokia Corporation (NOK). Both the stocks carry a Zacks Rank #1 (Strong Buy).
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