On May 30, Zacks Investment Research downgraded BlackBerry Limited BBRY to a Zacks Rank #5 (Strong Sell).
A persistent decline in smartphone sales, lack of innovative product launches and wide losses have resulted in the downgrade action. Moreover, BlackBerry’s decision to retrench workers on a global scale further reflects the company’s inability to cope up with the spiraling expenses.
Over the last 60 days, Zacks Consensus Estimate for the company’s earnings has widened to a loss of 9 cents from a loss of 8 cents.
Meanwhile, in the fourth quarter of fiscal 2015, BlackBerry sold 1.6 million smartphones against 3.4 million in the same period last year. The count stands significantly below Samsung and Apple Inc.’s AAPL 82.4 and 61.2 million smartphone sales, respectively, for the same period. At the end of the reported period, BlackBerry held a mere 0.3% market share against Android and iOS’s strong 78% and 18.3%, respectively.
Notably, ever since Apple’s iPhone hit the market, BlackBerry and Nokia Corp. NOK have been facing intense competitive pressure. The situation worsened with the launch of Google Inc.’s GOOG Android software, which was an instant hit as well.
Meanwhile, Nokia vended its handset division to Microsoft amid rumors of a possible sale of BlackBerry’s smartphone business. Taking hints from Nokia’s improved performance post the sale of its handset business, we expect BlackBerry to benefit from the divestment of its loss-making smartphone business. Moreover, of late, the Canadian handset manufacturer has been exploring ways of offsetting escalating losses in its smartphone business.
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