BlackBerry Reports Q1 Loss, Stocks Plunge

7-1-2013 10-34-43 PM

Just five months ago, BlackBerry CEO Thorsten Heins unveiled two new smartphones and a completely redesigned coded-from-scratch OS, the centerpiece of its comeback strategy. The product launch was the culmination of two years of a floundering company looking for a path through its rebuilding phase. The launch itself was by most accounts a success. BlackBerry introduced two new smartphones that were well designed and paired with an operating system that was positively reviewed and brought some new features to market. By the end of the day, the company had done all it could to generate excitement, and all that was left was to wait and see if it would be enough.

It is now beginning to appear that it wasn’t enough. Stock prices have been on a steady decline since the official unveiling of the new gear. In fact, the day the new products were announced, stock prices dropped 12 percent on news that they would be released in the UK first, and not in the US until the end of March. When the phone finally did launch in the US, on March 22, shares fell an additional 13 percent on weak initial sales. The excitement built around the January 30 unveil had subsided.

Part of the issue has been the poorly timed releases of the devices, but a broader problem has been the widespread neglect the BlackBerry app store has seen from app developers. The store had just 70,000 apps at launch compared to Apple’s 800,000 and Google’s 700,000. Microsoft had even built up a store of around 150,000. To address the issue, BlackBerry created a tool for developers to port their Android apps into the BlackBerry app store. This did little to generate activity, so BlackBerry added more than $4 million in incentives, essentially paying developers to add their apps to the store. The move helped, bringing BlackBerry’s total to 120,000 apps, but overall availability is still far from competitive and continues to pull BlackBerry’s stock price down.

The downward spiral has picked up momentum recently as BlackBerry announced poor Q1 results, reporting a loss of $67 million, or 13 cents per share, on $3.1 billion in revenue. Analysts had expected a 6 cent profit on $3.36 billion. The poor performance sparked an overnight 28 percent drop in the company’s already battered share price.

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