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TheStreet Open House

If New BlackBerry Has No Buyers, Does It Exist?

NEW YORK ( TheStreet) -- BlackBerry's (BBRY - Get Report) new smartphone hit the street March 22 to little fanfare. AT&T (T - Get Report) didn't even put up signs or floor displays in several locations, including at least two stores in Manhattan.

The new Z10 smartphone was unveiled nearly two months ago and is just as much a technology upgrade as an operating system improvement. The new smartphone is supposed to be BlackBerry's answer to Apple's (AAPL - Get Report) iPhone and Google's (GOOG) Android phones. The company is vying for third place, meaning its direct competitor is phones that run the Windows 8 operating system.

That's all well and good, but BlackBerry is taking serious chances with this -- and it chooses to drop the phone so shortly after Samsung launches its Galaxy S4. The new Galaxy is direct competition for Apple and Google -- what was BlackBerry thinking?


OK, let's take a look at BlackBerry for a second. The company's stock closed Monday at $14.23, down almost 5%. There are rumors that "an established partner" just ordered 1 million BlackBerrys, and speculation says it's Brightstar, a company whose business is distributing smartphones to retailers.

But the market doesn't seem encouraged. Goldman Sachs downgraded the company on Monday to "neutral" from "buy," and set a price target of $17.

There is always the question as to whether BlackBerry has the chops to make a new operating system work. The company had the lion's share of the early (business) smartphone market -- but that was then.

The BlackBerry brand fell out of favor as more people turned toward touch screens and phones that act more like personal assistants than telephones, and that trend has only accelerated. Late last year, the company lost 1 million customers in just one quarter, prompting a 48% drop in revenue in its fiscal third quarter.


BlackBerry still has some standing in government agencies, but even that is on the decline. In August 2009, more than 77% of federal managers carried a BlackBerry. By September 2011, that figure had dipped to less than 50%. In May 2012, National Oceanic and Atmospheric Administration program manager Stefan Leeb said his group was no longer buying BlackBerrys and that there was an intention in place for his agency to be off those systems by June 1. And NOAA isn't the only government agency with a change of heart.

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