BlackBerry Suffers a Black Eye Following Q1 Results

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A comeback for BlackBerry (NASDAQ: BBRY) looks distant. In fact, Q1 results leave many questioning if a comeback is even possible.

Shares sank nearly 28% after Q1 earnings left Wall Street disappointed.

At first blush, the report didn’t look too bad. But, it was the company’s surprising loss and uninspiring outlook that cast a dark cloud over shares.

The Canadian smartphone marker posted revenue of $3.1 billion, a 15% increase from the previous quarter and up 9% when compared to the same quarter a year ago. BlackBerry also trimmed losses to $84 million from $510 million during the period in fiscal 2013. But, analysts had been looking for a profit.

Some 6.7 million smartphones were shipped during the quarter, with 40% (or about 2.7 million) of those being for the new souped-up BlackBerry 10 devices.

Shareholders have been hanging on to the stock in hopes the BB10 will be the company’s savior. For now, they must remain on hold.

“We are still in the early stages of the launch, but already, the BlackBerry 10 platform and BlackBerry Enterprise Service 10 are providing themselves to customers to be very secure, flexible and dynamic mobile computing solutions,” BlackBerry President and CEO Thorsten Heins said in a statement.

Only on the market for five months, Heins stressed it was too early to comment on BB10’s reception, and he stressed on a conference call, “We don’t plan to run the company with a short-term device only strategy.”

A maturing and cooling smartphone market

BlackBerry 10’s success is crucial for the company’s survival. But, many headwinds stand in the way. Market bears maintain the smartphone market has matured and is now saturated.

Indeed, even leaders like Apple (NASDAQ: AAPL), Google, and Samsung (NASDAQOTH: SSNLF) are feeling the pain.

Apple shares have fallen from a 52-week peak of $705.07 to $385.10 on concerns of slowing iPhone sales both here and abroad. Sales have notably shrunk in the explosive Chinese market. Analysts report iPhone orders for Q3 and Q4 in the U.S. have been slashed, while sales in China are dropping at a very fast clip.

“We believe iPhone 5 (and) 4S sales in China have dropped much faster in Q2 from Q1 than expected," Jun Zhang, a partner at Wedge Partners wrote this month. Sales of the iPhone 5 and the iPhone 4S had been around 35,000 a day and have fallen 10,000 to 12,000 units a day, a 70% decline quarter-over-quarter, Zhang explained.

Taking market share from Apple is the Samsung Galaxy S4. Following the April launch of Samsung's flagship Galaxy S4 smartphone, units sales soared to 35,000 to 36,000 a day. Before the new smartphone's debut, sales of Galaxy S3 and older models had been around 10,000 units a day.

However, even though the Galaxy S4 got off to a stellar start, several report suggest sales of the device have slowed down. Digitimes’ supply chain sources claim that Samsung has begun cutting back component orders for the new S4 devices due to a “slowdown in demand.”

Bruised or broken?

A slow welcome for the BB10 was not the kind of meet-and-greet BlackBerry was anticipating. And while the highly anticipated BB10 keyboard device has just been on the market for roughly three months, retailers say there has not been frenzied demand for the model which does enjoy a cult-like following.

The question BlackBerry shareholders want answered is if the company is simply bruised or broken.

CEO Heins described 2014 as a “transition year for the company.” That’s what was expected this year.

The chief also sidestepped analysts’ question about whether the company had a long-term future as a device maker, or whether it would eventually be broken up and sold off in pieces.

Even patient investors have lost patience.

I love my BlackBerry phone, but I can’t say the same about the stock. Apparently, I have good company in that regard.

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Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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