NEW YORK (TheStreet) -- BlackBerry (BBRY - Get Report) shares closed down -5.1% to $7.28 in trading on Friday.
The stock was steadily lower all day following a blog post in which CEO John Chen refuted an earlier Reuters article that reported that the company would consider divesting from its handset production and focus solely on software.
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Sales of BlackBerry's handsets have been in steady decline. In the fourth quarter 2013 the mobile phone company saw handset sales drop 77%.
Despite the grim numbers Chen is not ready to give up on producing the company's hardware yet.
"I want to assure you that I have no intention of selling off or abandoning this business any time soon. I know you still love your BlackBerry devices," said Chen in the blogpost. "I love them too and I know they created the foundation of this company. Our focus today is on finding a way to make this business profitable."
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 few notable weaknesses, 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 reported poor results of -$11.17 versus -$1.20 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 Computers & Peripherals industry. The net income has significantly decreased by 531.6% when compared to the same quarter one year ago, falling from $98.00 million to -$423.00 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 Computers & Peripherals 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 -$564.00 million or 368.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.31%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 544.44% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: BBRY Ratings Report