BlackBerry's (BBRY) Comeback in Doubt as New Phone Sales Fizzle

Poor sales and large operating costs losses spell a dim outlook for BlackBerry.

ByABC News
June 28, 2013, 2:00 PM

June 28, 2013 — -- BlackBerry's efforts to turn the company around with its new BlackBerry 10 software and phones are in doubt after a disappointing earnings report that sent its shares into a tailspin.

The Waterloo, Ontario-based company said today it shipped 6.8 million smartphones in the last quarter, down from 7.8 million during the same period a year ago. It posted a loss of 13 cents a share for the quarter when analysts had anticipated profit of 8 cents a share. The shares fell 29 percent today in intra-day trading, the biggest loss an over a decade.

However, even more troublesome is that there was no major boost from its new BlackBerry 10 devices, including the Z10 which was released in February and its Q10 released in May. The company only shipped 2.7 million of its new BlackBerry 10 devices, much lower than analysts had predicted. The company did not divulge how many were actually sold after being shipped to carriers and stores.

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Analysts have called the reports "dismal" and "disappointing," especially when looking at the outlook for the next quarter.

"BlackBerry (BBRY) reported a dismal fiscal first-quarter net loss but the firm's outlook for another loss next quarter is even more disappointing and indicates that the company's long-awaited BlackBerry 10 (BB10) launch has been a bust," Morningstar analyst Brian Colello wrote in his analyst note.

However, CEO Thorsten Heins, who took over a year and a half ago and has made a series of changes, including changing the name of the company from RIM to Blackberry, remains optimistic. "We are continuing on focusing on improving all areas of the business," Heins said on the company's earnings call this morning. "I am confident in the future of BlackBerry 10 and we have lots of new products to be built."

Heins referenced new products and services coming as well as enterprise support for BB10 devices. The company has begun to launch its Q5, a lower cost BlackBerry 10 phone, in numerous markets. He urged analysts to be patient and understand that this is not a sprint but "a marathon."

"It might be a marathon and not a sprint, but they got off to a pretty terrible start," Colello told ABC News. He added that the company has the cash to hang around for a while, he just doesn't see it regaining its 20 percent marketshare any time soon.

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And that's because of the very large lead of the iPhone and other Android devices. Even if BlackBerry has created an interesting new product with some features that the competing devices don't provide, it simply just reacted too late to the touchscreen smartphone trend.

"BlackBerry 10 was a major improvement, but it was too little, too late," Patrick Moorhead, an analyst at Moor Insights & Strategy, told ABC News. "Competition from both Apple and Samsung will keep BlackBerry from any significant gains at the high and mid-markets, and in the emerging regions, local, low-cost players are dominating.  This doesn't leave a lot of room for BlackBerry to grow."