Why BlackBerry (BBRY) Is Falling Today

NEW YORK (TheStreet) -- BlackBerry (BBRY) fell 5.5% to $9.87 Friday after confirmation from that Department of Defense that it isn't buying 80,000 smartphones from the Canadian company as previously reported.

Earlier this week the DOD issued a press release detailing a new mobile network for the agency. The mobile network will support more than 100,000 devices, including 80,000 BlackBerry devices. Some reports took that to mean the agency purchased 80,000 new devices from the Canadian company, but that is untrue.

In a statement given to The Verge, the DOD confirmed the network will simply support 80,000 BlackBerry smartphones that are already deployed. The agency announced no plan to purchase new devices from the company.

BlackBerry notably issues press releases when it sells units to enterprise customers. The company issued no press release concerning a sale to the DOD.

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 some concerns, 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.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.93%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 28000.00% 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.

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