BlackBerry Z10: Rebirth Or Overthrown Hail Mary?

Apr. 4.13 | About: BlackBerry Ltd. (BBRY)

Blackberry (NASDAQ:BBRY) has made a bold move for the future. It has finally unleashed its first fully touchscreen smartphone. BlackBerry once revolutionized the smartphone market and for some time was a device that no business person would leave home without. Now that the smartphone market has evolved by leaps and bounds, BlackBerry has found the need to step up its game to keep its head above water. BlackBerry's answer to the smartphone evolution is the new and improved Z10 smartphone.

As for what makes the Z10 special among other smartphones, there really isn't much in terms of hardware to set it apart. The Z10 has a 4.2 inch multi-touch display, an 8 mega pixel camera with face recognition; nothing too new or impressive. However, there are some interesting features that make the Z10 appealing. One feature of the camera, "Time Shift Mode," allows the user to capture moments just before or just after the picture was taken to get the perfect shot. A good example of how someone might use this feature would be if someone blinked while the picture was taken or a facial expression just wasn't caught at the right time. The 1.5 GHz dual core processor may not be what you might expect in a high-end market smartphone, but the new BlackBerry 10 OS makes up for the difference making it a very clean and quick device to use.

Other features include an intelligent calendar to remind you of certain events and suggest people that you might want to invite to your new appointments based on past events. The voice search and commands is a feature that is nice, but most certainly is not a new or unique. The video chat feature is similar to Apple's face-time feature but adds a screen share option so that the person that you are connected with can see what is being displayed on your screen. This feature may be attractive to business-minded individuals that may want to share documents or presentations via their phone if they are unable to make it to a meeting or quickly want to review a document with a client.

The last key feature of the phone speaks to the past of BlackBerry and the its connections to the business market. The feature is called BlackBerry Balance, and stands to have an impact on corporate smartphone usage. Many times, you will see an executive carrying around two, maybe three phones. One will usually be personal and the other ones will be for work use. BlackBerry is trying to combine those together in a safe and secure manner, in a feature called BlackBerry Balance. BlackBerry Balance is a unique feature that allows companies to separate the work information on an employee's smartphone from the personal data. With just one swipe and a password entry, the employee is taken to the corporate side of the phone where applications and information are secure and limited within corporate guidelines.

Can it Compete With the iPhone and Android?

This is the million dollar question that I am sure every shareholder of Apple, Google, and BlackBerry would love to know. The BlackBerry Z10 is a great move for BlackBerry, but the move may have been too little too late. The first generation of the iPhone came out in June of 2007 and Android released its first phone in 2008, putting both far ahead of BlackBerry in terms of how long they have been in the touchscreen smartphone market. BlackBerry has been making devices since 1999, and has been focused heavily on the corporate and business market, making corporate email and security a unique selling proposition for it for quite some time. Because of this focus, the company has struggled to capture the "hip" feeling of an iPhone or an Android device.

The BlackBerry Z10 may be the answer to that, but it may have been needed to be released three or four years ago. The iPhone is now a household name, and its reputation took quite some time to develop. When the iPhone first came out, it was seen as a device that only the wealthy could afford and pay monthly services for, since AT&T held the monopoly on the iPhone. Now the iPhone is held by many people and has become extremely commonplace and well-known. Brand imaging and public perception takes time to mold and Apple and Android understand this quite well.

BlackBerry is starting to realize that in order to have a big future in the smartphone industry, it needs to appeal to not only corporate and business users, but also the everyday consumer.

Should You Be a Shareholder or a Spectator?

The Z10 is going to either save BlackBerry or just continue the company's downfall. Over the past 10 years BlackBerry had early success in 2000s, and in 2008 when the economy and stock market took a dive, the stock price never recovered like many other large companies. To give a comparison, BlackBerry's quick ratio in 2004 was 6.05 meaning that they had enough cash, cash equivalents, marketable securities, and accounts receivables to extinguish its current liabilities six times over. Since 2004 that ratio has dropped drastically to 1.70. Its net income was on a good climb, reaching the top at $3.411 billion in 2011 and it took a serious dive in 2012 when it dropped to $1.164 billion.

If the Z10 can do just as well as Android or Apple in making itself something that people will buy and want, the stock price would be a great value at current prices. However, this is unlikely to happen right off the bat, and a more likely scenario is that the Z10 will do mediocre in the marketplace, leaving BlackBerry with a steep hill to climb back to relevance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article was written by an analyst at Catalyst Investments.

Disclaimer: Catalyst Investments is not a registered investment advisor or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. This information is not investment advice or a recommendation or solicitation to buy or sell any securities. Catalyst Investments does not purport to tell or suggest which investment securities readers should buy or sell. Readers should conduct their own research and due diligence and obtain professional advice before making investment decision. Catalyst Investments or anyone associated with Catalyst Investments will not be liable for any loss or damage caused by information obtained in our materials. Readers are solely responsible for their own investment decisions. Investing involves risk, including the loss of principal.