A BLACK MARK FOR BLACKBERRY

Blackberry mobile phones are made by Research in Motion. This time last year their stock market share value was 69.30 Canadian Dollars and now the value is only 15.46 Canadian Dollars. In the past year the share price has been almost completely downhill and as you can see below the price is now less then a quarter of last years value. What caused the Blackberry stock share price to drop dramatically? With all the bad news that they had last year, I believe the semi-strong form efficiency of stock market has reflected and reacted on the Blackberry market shares.

Founders and co-chief executives of Research in Motion, the company behind the Blackberry, Jim Balsillie and Mike Lazaridis have been running the company from the beginning. But being in the smart phone business they have not kept up with the requirements of the customer demand, in other words they didn't spend enough on R & D. That's why they have been falling behind their competitors.They have now stepped down and were replaced by incoming chief executive Thorsten Heins. Up to the point that they stepped down the company had been going downhill. It is hoped that the new CEO will breath some life into the company and get it back on its feet. Would this news help change Blackberry shares in the stock market? As I see it the handsets are a bit antiquated with a physical keypad and an old operating system. The only real selling points were the messenger service and a very good secure communication system that has US Government certification. But it is rumoured that the US Government is now testing I-phones, I-pads and Android based systems for possible certification and use. Blackberry has already lost customers such as the National Oceanic and Atmospheric Administration and energy drilling giant Halliburton announced they were switching to iPhones.

                                

There are at least two manufacturing systems here. Blackberry and I-phone use their own proprietary operating system whereas the Android operating system is licensed to a number of manufacturers such as Samsung and HTC. So Blackberry had a management that was not very innovative. Apple has a management that is very innovative and doing very well with almost every product they make. Sometimes they come up with a product that's not a winner but their track record is excellent. Google, with Android has licensed their operating system to other manufacturers who also are very innovative individually, so this spreads their operating system between competitors which will encourage growth. Both Apple and Android operating systems are doing well and it is expected by sheer weight of number shipped that the Android will sell more because of the multiple manufacturers. Most of the new touch screen phones are actually manufactured in China because of labour rates and product costs.

RIM’s share of the global smartphone market slid to 8.2 percent in the fourth quarter from 14 percent a year earlier, while Apple’s share rose to 24 percent from 16 percent in the same period, according to research firm IDC of Framingham, Massachusetts.

The Apple led the global tablet market with a 58 percent share in the fourth quarter 2011, down from 68 percent in the year-ago period, according to Strategy Analytics, a Boston-based, market- research firm.

Facing competition from smartphone makers like Samsung and Nokia, Blackberry-maker Research in Motion has chalked out an aggressive plan for India of increasing its footprint to 160 cities, besides launching new devices and latest Operation System 10 in the latter half of 2012. But Blackberry has always been late with it's introductions of new products so I will believe this when I see it.

The BlackBerry maker already has a presence in about 80 cities in the country now and is keen to tap the increasing demand for smart phones in India. I think this may help Blackberry in the short term but I do not expect it to raise their share value much or their reputation in the rest of the world.

If anybody still has any Blackberry shares what are you going to do? Sell them or keep them. I think anybody who hangs on to their Blackberry shares is very brave. Although the stock market is very unpredictable. Who knows they may rise from the ashes like a phoenix.

Sources: Google Finance; Bloomberg; RIM Quarterly Report