NEW YORK (TheStreet) -- BlackBerry (BBRY - Get Report) was falling 2.13% to $10.12 at 3:32 p.m. on Wednesday after a report that T-Mobile's (TMUS) trade-in program specifically geared to BlackBerry users, which expires Wednesday, resulted in a mass exodus away from BlackBerry devices.
TmoNews reportedly obtained an internal T-Mobile memo that stated the company experienced 15 times the usual amount of device trade-ins. But the more striking figure is that 94% of those customers moved to a non-BlackBerry device when they upgraded.
T-Mobile launched the trade-in program after BlackBerry CEO John Chen, along with some devoted BlackBerry customers, spoke out against T-Mobile via social media once the company started sending messages to BlackBerry customers with an offer to switch to the iPhone 5s for no money down. T-Mobile responded with the trade-in program, which offered a $200 credit for customers who traded in their BlackBerry devices and upgraded to a new device. Those who chose the BlackBerry Q10 or Z10 would receive an extra $50 credit.
TheStreet Ratings team rates BLACKBERRY LTD as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate BLACKBERRY LTD (BBRY) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BLACKBERRY LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BLACKBERRY LTD swung to a loss, reporting -$1.20 versus $2.24 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 49000.0% when compared to the same quarter one year ago, falling from $9.00 million to -$4,401.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, BLACKBERRY LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$81.00 million or 108.45% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of BLACKBERRY LTD has not done very well: it is down 20.84% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: BBRY Ratings Report