Boston, MA 04/14/2014 (wallstreetpr) – Prem Watsa, CEO of Canada’s Fairfax Financial Holdings, believes that BlackBerry Ltd (NASDAQ:BBRY) is a promising stock for long-term. Fairrfax owns 10% equity stake and has $459 million in BlackBerry debentures that are convertible at $10 per share.
The stock loses its confidence in the market and down by ~50% in last 12 months and now trading at $7.28. The move was unusual for the smartphone maker who was dominating handheld email market once upon a time. BlackBerry is struggling in the smartphone market due to increased competition from Apple, Google and Microsoft in the U.S.
BlackBerry’s performance
BlackBerry Ltd (NASDAQ:BBRY) experiences profitability pressure due to higher external obligations. As of now, the Company has $1.25 billion debentures under its asset back lending facility. So, the increasing payment of interest and principal reduces funds for its operation. Excluding the non-cash charges associated with debentures, inventory write-down and restructuring expenses, the Company managed to report an adjusted loss of $42 million or $0.08 per diluted shares during 4Q2014.
In addition, the rising competitions over smartphone and decreased shipments have a significant impact over top line growth. During 4Q2014, about 3.4 million smartphones were sold that decreases the revenue for hardware that accounts ~37% of overall revenue. The significant down reduces the customer base and overall revenue to $976 million.
Competition
According to comScore’s quarterly report ended in January 2014, ~160 million people owned smartphone in the U.S. and the market continue to grow with increasing users. Apple being the top OEM with ~42% market share, followed by Samsung (~27%). Apple and Google together improved their smartphone market share in the U.S. It increased to 93.4% in February 2014 compared to 90.6% last year due to increased subscriber base for advanced operating features with Google’s Android and Apple’s iOS operating systems. So, the market is highly competitive and creates difficulty for penetration unless BlackBerry put themselves into a niche market with unique features in its products and services.
Final take
BlackBerry Ltd (NASDAQ:BBRY)’s cash balance of $2.7 billion as of March 31, 2014 may provide financial support to enhance its operation. The Company continues to focus on opportunities available in the market that help to report positive earnings and cash flow in coming years.
