Seeking Alpha
Venture capitalist, tech
Profile| Send Message|
( followers)  

According to an IDC research report, smartphones powered by Android OS grew from 69% in 2012 to 78.6% in 2013, eating into the share of iOS devices. iOS-based phone sales fell from 18.7% to 15.2% and BlackBerry (Nasdaq: BBRY) phones fell from 4.5% a year ago to 1.9% in 2013.

BlackBerry's Financials
BlackBerry's fourth-quarter revenues fell 64% over the year to $976 million, missing the market's projections of $1.1 billion. This was the first quarter since loss per share of $0.08 was significantly better than Street's projected loss of $0.55 per share for the quarter.

By segment, the hardware segment accounted for 37% of the quarter's revenues. Services accounted for 56% and software and other revenues brought in 7% for the quarter. During the quarter, BlackBerry sold 3.4 million BlackBerry smartphones to end customers, of which nearly 2.3 million were BlackBerry 7 devices.

Phone sales in the U.S. may be near zero for BlackBerry, but North America still accounts for 30% of their quarter's revenues. EMEA markets brought in 42% revenues during the quarter. The emerging markets of Latin America contributed 13% to the quarter and the remaining 14% came in from the Asia Pacific markets.

BlackBerry ended the year with revenue of $6.81 billion, falling from $11.1 billion a year ago. The loss per share increased significantly from $1.23 a year ago to $11.18 for the year.

BlackBerry's Focus on Emerging Markets
BlackBerry has realized it has lost the battle in the U.S. market and phone sales hopes, if any, lie outside the U.S. now. According to a recently released Consumer Intelligence Research Partners' report, BlackBerry's market share in the U.S. consumer market has fallen to 0.5%, making it an insignificant player in the market. The company is still selling phones to organizations, especially government organizations, but for the consumer world in the U.S., it is nearly over.

Things got worse this month, when BlackBerry announced plans to terminate its relationship with the country's fourth largest mobile carrier network, T-Mobile (NYSE:TMUS) because the network stopped carrying BlackBerry phones in their stores and started to advertise and promote users to switch to the iPhone instead.

As part of their emerging markets focus, BlackBerry is continuing to work on lower cost handsets. They are developing Jakarta, also known as Z3, that will cater to the Indonesian market. Additionally, they are developing Q20, a comparatively inexpensive version of their top-tier phone.

BlackBerry's Mobile Messaging Service
In keeping with the market's increased focus on the mobile messaging segment, BlackBerry recently announced plans to turn their popular BlackBerry Messenger (BBM) service into a revenue generating service. Like other service providers, BlackBerry has also started to sell paid stickers which could be used by both iPhones and Android-based smartphones. These premium stickers come in packs of 20-25 each and are sold for nearly $2 a pack. It is too early to tell how the sticker sales will help the BBM, but since the launch, BBM has started to climb back to the Top 50 iPhone download apps in the U.K., Canada, and India.

They also expanded their basic BBM offering by enabling increased size of file sharing and group chats. Users can now send files up to 16 MB compared with 10MB earlier, and also create groups to exchange messages.

BlackBerry needs to deploy these additional features to ensure that the BBM is still in the running for a preferred mobile messaging system. Last year when BBM had opened their app for iOS and Android phones, within a week, the app saw 20 million new users. Since then, BBM's user addition has slowed significantly and they recently ended the quarter with 85 million monthly active users, translating to 1 million new users per month. While these numbers may still be big, they appear small when compared with the user growth of WhatsApp, which was adding 1 million new users each day before they were bought by Facebook (NASDAQ:FB).

BlackBerry's stock is trading at $8.00 with a market capitalization of $4.15 billion. It touched a 52-week high of $16.59 in May 2013.

Disclosure: No positions

Source: BlackBerry's Struggles See No End